2018 (1) TMI 1260 - AT - Central Excise

Penalty on employees u/r 26 of CER - penalty imposed on the ground of aiding and abetting the main manufacturer M/s. Pioneer Alloys Castings Ltd. in their activities of clandestine nature - Held that - admittedly the appellants were the salaried employees of the manufacturing unit M/s. Pioneer Alloys Castings Ltd. The Tribunal in the case of Tejas Net Works India Ltd. Vs. Commissioner of Central Excise Pondicherry 2013 (11) TMI 1415 - CESTAT CHENNAI has set aside the penalties imposed upon the two employees on the ground that the penalty already stand imposed upon the company thus not justifying imposition of separate penalties on the employees - penalty on both employees set aside - appeal allowed.

Summary

Issues:
Imposition of penalties under Rule 26 of the Central Excise Rules on accountants working with a manufacturing company for aiding in clandestine activities.

Detailed Analysis:
The judgment deals with the challenge against the imposition of penalties of ?10,000 each on the appellants, who were accountants working with a manufacturing company engaged in clandestine activities. The penalties were imposed under Rule 26 of the Central Excise Rules for aiding and abetting the main manufacturer in such activities. The demand of duty was confirmed against the manufacturing company, and identical penalties were imposed on them along with a separate penalty on the CEO of the company.

The appellants contended that they were salaried employees working under the directions of the CEO, with no separate role justifying the imposition of penalties. The consultant for the appellant cited various Tribunal decisions stating that penalties on employees working under the directions of the company's top management are not justified if there is no intention on their part to commit the offense.

After considering the arguments from both sides, the Member (Judicial) noted that the appellants were indeed salaried employees of the manufacturing unit. Referring to previous Tribunal decisions, such as Tejas Net Works India Ltd. and Rammaica (India) Ltd., it was highlighted that penalties on employees were set aside when penalties were already imposed on the company, and employees were merely following instructions without personal gain from evading duty payment. The judgments of the Hon'ble Supreme Court in cases like Nagpur Alloy Castings Limited further supported the view that penalties on employees in such circumstances were illogical.

In line with the precedents and decisions cited, the Member (Judicial) set aside the penalties imposed on the employees, allowing their appeals with consequential relief to the appellants. The judgment was pronounced in open court on 03.11.2017.