2022 (6) TMI 40 - AT - Central Excise

Levy of penalty u/r 26 of Central Excise Rules, 2002 - clandestine clearance - cigarettes - HELD THAT - In view of the decision in M/S LUCKY TOBACCO COMPANY PVT. LIMITED, R.B. SHUKLA, RIZWAN KHAN, MURLI DHAR OJHA, T.K. GHOSH, MOHAMMAD HASSAN HASHMI, BHARAT KUMAR PATEL VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS, CENTRAL GOODS SERVICE TAX 2019 (5) TMI 369 - CESTAT NEW DELHI where it was held that there is no evidence to establish manufacture and clandestine removal of alleged quantities by LTCPL on the basis of which demand of ₹ 657,50,888/- could sustain, it is found that the cause of action against these appellants also does not survive. The appeals are allowed.

Summary

Issues:
1. Duty, penalty, and interest demanded from distributors of cigarettes.
2. Imposition of penalty on distributors for alleged involvement in clandestine clearance of cigarettes.
3. Appeal based on previous Tribunal decision regarding Lucky Tobacco Co. Pvt. Ltd.
4. Rival contentions between the appellant's counsel and the Authorized Representative.
5. Final decision based on the Tribunal's previous order in the case of Lucky Tobacco Co. Pvt. Ltd.

Analysis:
1. The appeals were made against the order-in-original demanding duty, penalty, and interest from distributors of cigarettes. The distributors were accused of purchasing cigarettes manufactured and clandestinely cleared by Lucky Tobacco Co. Pvt. Ltd., leading to the imposition of a penalty of Rs.2 lakh each under Rule 26 of Central Excise Rules, 2002. The distributors were found to have abetted the clandestine clearance of cigarettes by Lucky Tobacco Co. Pvt. Ltd., resulting in the penalty imposition.

2. The appellant's counsel argued that a previous Tribunal decision regarding Lucky Tobacco Co. Pvt. Ltd. had found the allegation of clandestine clearance unsustainable, leading to the setting aside of penalties imposed on Lucky Tobacco Co. Pvt. Ltd. and others. Based on this, the counsel urged that the penalty on the distributors should also be set aside in the interest of justice.

3. The Authorized Representative relied on the impugned order, presenting a contrasting viewpoint to the appellant's counsel. However, the Tribunal, after considering the rival contentions and the previous order in the case of Lucky Tobacco Co. Pvt. Ltd., decided that the cause of action against the distributors did not survive. Consequently, the impugned order-in-original against the distributors was set aside, along with the penalties imposed on them. The appeals were allowed with consequential benefits, aligning with the decision in the case of Lucky Tobacco Co. Pvt. Ltd.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, and the final decision rendered by the Tribunal based on the previous order regarding Lucky Tobacco Co. Pvt. Ltd.