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2018 (2) TMI 621 - AT - Central ExcisePenalty u/r 26 of CER 2002 - clandestine removal - Held that - Revenue has not placed on record any evidence to show that the said two Coils/Cutters were aware of the clandestine activities of M/s Pasondia Steel Profiles Ltd. and were having any knowledge about such illegal activities, if any of M/s Pasondia Steel Profiles Ltd. In the absence of any such evidence about the knowledge, the imposition of penalties upon the appellants are not proper - appeal allowed - decided in favor of appellant.
Issues: Imposition of penalty under Rule 26 of Central Excise Rules, 2002; Denial of Cenvat credit; Allegations of clandestine activities.
The judgment by the Appellate Tribunal CESTAT, ALLAHABAD, involved the challenge to the imposition of penalties of ?5,00,000 each on the appellants under Rule 26 of the Central Excise Rules, 2002. The Adjudicating Authority had confirmed a demand of over ?12 Crores against M/s Pasondia Steel Profiles Ltd. for allegedly selling H. R. Coils as C. R. Coils. The appellants were accused of cutting the coils into smaller lengths and sending them to various persons. The Adjudicating Authority denied Cenvat credit to M/s Pasondia Steel Profiles Ltd., alleging the appellants' involvement in the clandestine activities of the company. Upon review, the Appellate Tribunal found that while the Adjudicating Authority suspected the appellants' complicity in the clandestine activities, no concrete evidence was presented by the Revenue to prove their awareness or involvement. The Tribunal noted the lack of evidence establishing that the appellants were aware of or participated in any illegal activities conducted by M/s Pasondia Steel Profiles Ltd. As a result, the Tribunal deemed the imposition of penalties on the appellants unjustified and set them aside. Both appeals were allowed, providing consequential relief to the appellants. In conclusion, the Tribunal's decision highlighted the necessity of concrete evidence to support allegations of clandestine activities and the importance of proving the knowledge and involvement of accused parties in such activities. The judgment emphasized the requirement for a strong evidentiary basis before imposing penalties under the Central Excise Rules, ensuring fair treatment and due process for all parties involved in such cases.
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