2018 (1) TMI 1007 - AT - Central Excise

Penalty on Director u/r 26 of CER - clandestine activity by manufacturing unit - Held that - there is no contest to the issue that the Director of the Company was the involved party in the clandestine activity of the manufacturing unit. As such, penalty upon his is liable to be upheld - appreciating that the penalty on the main assessee stands reduced 25%, the penalty in the present appeal is reduced to ₹ 25,000/-, in case, the appellant deposits the same within a period of 30 days - appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty imposed on the Director of a company under Rule 26 of the Central Excise Rules, 2002.

Analysis:

1. Issue: Penalty imposed on the Director of the company.

Analysis: The appellant, who is the Director of a company engaged in the manufacture of Cigarettes, was penalized under Rule 26 of the Central Excise Rules, 2002, for his involvement in clandestine activities related to the manufacturing unit. The penalty of &8377; 1 lakh was imposed on the Director along with a demand of &8377; 5,36,511/- on the manufacturing unit. The Appellate Authority upheld the penalty on the Director stating his active involvement in the surreptitious manufacture and removal of cigarettes.

2. Issue: Reduction of penalty for timely payment.

Analysis: The appellant's advocate argued for a reduction in the penalty imposed on the Director, citing that the penalty on the manufacturing unit was reduced to 25% after full duty payment. The advocate agreed to deposit 25% of the penalty within 30 days. The Appellate Tribunal acknowledged the Director's involvement in the clandestine activities but reduced the penalty to &8377; 25,000, provided the appellant makes the payment within 30 days. Failure to do so would uphold the original penalty of &8377; 1 lakh on the Director.

3. Outcome: Penalty reduction and final decision.

Analysis: The Tribunal, after considering the arguments and facts, reduced the penalty on the Director to &8377; 25,000, contingent upon the timely payment of 25% of the penalty within 30 days. The decision highlighted the Director's active role in the illicit activities of the manufacturing unit, leading to the penalty imposition. The appeal was disposed of with the specified penalty amount and payment deadline.

This detailed analysis of the judgment highlights the issues, arguments presented, and the final decision rendered by the Appellate Tribunal regarding the penalty imposed on the Director of the company under the Central Excise Rules.