2019 (10) TMI 1215 - AT - Central Excise

Imposition of penalty u/r 26 of CER - demand on the ground that company had cleared the goods at concessional rate in DTA before obtaining permission from Development Commissioner and also required NFE was not achieved - HELD THAT - The consequential penalty to the demand of duty in respect of consignment cleared during the period 01.01.2008 to 07.05.2008 during which period, the appellant was not employee in the company, therefore, whatever clearances were made, the appellant had no role. Since the appellant has no dealt with the good for which the demand was confirmed and even he was not involved in making any documents related to such consignments, he cannot be implicated in the case of short payment of duty committed by the company - there are no reason for imposition of any penalty upon the appellant under Rule 26 - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the appellant in connection with duty demand confirmed against the company.

Analysis:
The appellant, an employee of M/s Chandra Pretecto Ltd., was penalized ?10 Lacs under Rule 26 of the Central Excise Rules, 2002, due to duty demand confirmed against the company for clearing goods at a concessional rate in DTA without obtaining permission from the Development Commissioner and failing to achieve the required NFE. The appellant challenged this penalty through the present appeal.

Analysis - Issue 1:
During the proceedings, the appellant's counsel argued that there was no clandestine removal of goods as they were cleared after payment of duty at a concessional rate. The company had applied for permission from the Development Commissioner in January 2008, which was granted on 08.05.2008. Importantly, the appellant only joined the company on 01.10.2008, after the transactions in question occurred from 01.01.2008 to 07.05.2008. Given that the appellant was not an employee during the relevant period and did not participate in the transactions or related documentation, it was contended that no offense could be attributed to the appellant. Reference was made to a previous Tribunal decision to support this argument.

Analysis - Issue 1 (contd.):
The Revenue, represented by the Joint Commissioner (AR), reiterated the findings of the impugned order during the proceedings. However, after considering both sides' submissions, the Tribunal found that the penalty imposed on the appellant was unwarranted. It was established that the appellant had no involvement in the consignments cleared during the period in question when he was not an employee of the company. The appellant had no role in the clearances or related documentation, and the penalty was based solely on a statement provided by him. Consequently, the Tribunal concluded that there was no justification for penalizing the appellant under Rule 26 and set aside the penalty, allowing the appeal in favor of the appellant. Additionally, two other related appeals were adjourned to a future date for further consideration.