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2018 (4) TMI 1453 - AT - Central ExciseClandestine removal - benefit of SSI exemption - whether the benefit of small scale exemption is required to be extended to the assessee, when the final product stands removed by clandestine manner? - Held that - the issue stands decided by the Tribunal decision in the case Premier Rubber Factory vs. CCE 1989 (10) TMI 145 - CEGAT, MADRAS , laying down that, exemption cannot be denied even if the goods are removed clandestinely - benefit of SSI Exemption to be allowed. Penalty on the Director u/r 26 of Central Excise Rules, 2002 - difference of opinion - Whether in the facts and circumstances of this case, a penalty of ₹ 5 lakh should be imposed on Shri Pritpal Singh, Director under Rule 26 of Central Excise Rules, 2002 - majority order - Held that - though the difference of opinion is on the merits of imposing penalty under Rule, 26, the issue has become infructuous and redundant in view of both the points raised by the learned Counsel for the respondent - there could be no proceedings further by appeal against the impugned order which dropped the demand against Shri. Pritpal Singh, Director. The reference is returned to the Division Bench for further decision.
Issues:
- Benefit of small scale exemption in case of clandestine removal - Imposition of penalty on the Director Issue 1: Benefit of small scale exemption in case of clandestine removal The Appellate Tribunal considered whether the benefit of small scale exemption should be extended to the assessee despite clandestine removal of goods. The Commissioner (Appeals) upheld the allegation of clandestine removal but granted small scale exemption to the respondent under Notification No. 8/2003-CE. The Revenue argued that in cases of clandestine removal, exemption cannot be granted, citing a Tribunal decision. However, the Tribunal referred to precedents like Premier Rubber Factory vs. CCE and P.R. Industries vs. CCE, Delhi, which held that exemption cannot be denied even in cases of clandestine removal. The Tribunal found no fault in the Commissioner (Appeals) order, rejecting the Revenue's appeals. Issue 2: Imposition of penalty on the Director Regarding the penalty on the Director, the appellate authority set it aside, reasoning that penalizing the manufacturing unit fully made a separate penalty on the Director unjustified. The Tribunal noted the Director's involvement in the clandestine activities, including controlling production and personnel. The Tribunal also referred to a previous case where a penalty on the Director was upheld. The Member (Technical) disagreed with the Member (Judicial) and imposed a penalty of ?5 lakh on the Director under Rule 26 of the Central Excise Rules, considering the Director's significant role in the clandestine activities. The matter was referred to the President due to the difference of opinion between the Members. Third Member's Resolution on Penalty Imposition The third Member addressed the difference of opinion on imposing a penalty on the Director. However, it was noted that the Director had passed away, rendering the penalty issue moot. The learned Counsel for the respondent presented evidence of the Director's death and highlighted that, as per the Government's litigation policy, no appeal could be made for penalties below ?10 lakh. As a result, the issue of penalty imposition on the deceased Director was considered infructuous, and the reference was returned to the Division Bench for further action. In conclusion, the Tribunal rejected the Revenue's appeals against M/s Isher Alloys Pvt. Ltd. and the Director, upholding the decisions related to the benefit of small scale exemption and the penalty imposition, considering the circumstances and legal precedents cited during the proceedings.
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