2021 (6) TMI 694 - AT - Central Excise

Levy of Penalty under Rule 26 of Central Excise Rules, 1944 - Clandestine removal - incriminating records or not - HELD THAT - The presumptive decision in absence of any evidence may not be accepted that too when there has been subsequent decisions of this Tribunal based upon the directions of decision of Hon ble Apex Court in the case of COMMISSIONER VERSUS RA. CASTINGS PVT. LTD. 2011 (1) TMI 1302 - SC ORDER wherein it has been held that the appellant is merely commission agent; and that unless and until there is corroborative evidence to support the allegations of providing raw material by the appellant to the main manufacturer without discharging the liability, the alleged guilt, cannot be confirmed against the appellant. Perusal of Rule 26 makes it abundantly clear that unless and until there is sufficient evidence about the mens area/ intent on the part of the appellant which prove that he knew or had reason to believe that excisable goods with which he is involved, he is transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner dealing with such excisable goods, are liable for confiscation, he cannot be penalised under Rule 26. The entire record does not reveal any evidence or the document produced by the Department to reflect or to prove the same. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against imposition of penalty under Rule 26 of Central Excise Rules, 2002 based on connivance and collusion with manufacturers in clandestine removal of excisable goods.

Analysis:
The appeal was filed against the imposition of a penalty of ?2 lakh on the appellant, M/s. Kailash Traders, for their involvement in the clandestine removal of excisable goods. The preventive officers of Central Excise, Raipur, gathered intelligence indicating the appellant's role as a commission agent for manufacturers engaged in clandestine activities. A search was conducted at the appellant's premises, leading to the imposition of the penalty under Rule 26 of Central Excise Rules, 1944, for connivance and collusion with the manufacturers. The appellant challenged this penalty before the Tribunal.

The appellant argued that previous decisions in their favor supported their case, citing Final Orders from 2018. On the contrary, the Departmental representative highlighted a decision against the appellant in similar circumstances in 2017. The Tribunal considered these arguments along with the evidence on record. The adjudicating authority's findings were based on undisputed entries recovered from the appellant's premises. However, the Tribunal noted that previous judgments lacked evidence against the appellant and relied on presumptive decisions. Referring to a 2011 case, the Tribunal emphasized the need for corroborative evidence to establish guilt, especially concerning the appellant's knowledge or belief regarding the excisable goods' liability for confiscation.

The penalties were imposed under Rule 26 of Central Excise Rules, 2002, which requires evidence of the appellant's mens rea or intent regarding the excisable goods' liability for confiscation. The Tribunal found no such evidence in the record or documents provided by the Department. Considering the lack of proof of the appellant's knowledge or belief in the goods' liability, the Tribunal set aside the presumptive order under challenge and allowed the appeal.