2022 (6) TMI 1211 - AT - Central Excise

Levy of Penalty u/r 26 of CER 2002 - Allegation of clandestine removal - Failure to account for the manufactured goods properly and on visit of the officers the excess goods were found which was lying unaccounted - Polished vitrified Tiles - appellant claims that the unaccountal of goods is due to mis-match and cessation of the factory and the concerned staff has left the job - Confiscation of such excess found goods - Redemption Fine - Penalty - HELD THAT - It is found from the facts that the appellant in his statements recorded by the investigating agency nowhere stated that the goods found excess in the factory were lying for clandestine removal therefore the serious allegation made by the department that the goods were kept for clandestine removal without payment of duty is not supported by any evidence. The appellant has stated in their statement that the unaccountal of goods is due to mis-match and cessation of the factory and the concerned staff has left the job therefore even though the goods were found unaccounted for which the company has been imposed with redemption fine and penalty personal penalty cannot be imposed on the Chairman and MD of the company who is not looking after the accountal of the goods manufactured. The only lapse on the part is that being the Chairman and MD of the company he has not ensured that the proper accounting of the finished goods is being done or not for which a token penalty can be imposed. The penalty is reduced from Rs. 5 Lacs to Rs.1 Lac - the impugned order stands modified to the above extent - Appeal allowed in part.

Summary

Issues:
Penalty imposed under Rule 26 of Central Excise Rules, 2002 upheld by Commissioner (Appeals) - Appellant failed to account for manufactured goods properly - Excess goods found unaccounted - Confiscation, redemption fine, and penalty imposed - Appeal against penalty reduction from Rs. 5 Lacs to Rs. 1 Lac.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad was directed against the Order-In-Appeal where the penalty imposed under Rule 26 of Central Excise Rules, 2002 was upheld by the learned Commissioner (Appeals). The penalty of Rs. 5 Lacs was imposed on the appellant due to the failure to account for the manufactured goods properly, leading to the discovery of excess unaccounted goods during an inspection, resulting in confiscation, redemption fine, and penalty imposition.

Despite several notices, no one appeared on behalf of the appellant during the proceedings. The learned Superintendent (AR) representing the revenue reiterated the findings of the impugned order during the hearing. Upon careful consideration of the submissions made by the learned AR and perusal of the records, the Hon'ble Member (Judicial) Mr. Ramesh Nair reviewed the case.

The Commissioner (Appeals) had upheld the penalty under Rule 26 based on the finding that the Chairman & MD of the appellant company was involved in the possession of finished excisable goods without proper accounting, intending to clear them without issuing Central Excise Invoices or paying Central Excise Duty. However, the appellant's statements to the investigating agency did not support the allegation that the goods were kept for clandestine removal without duty payment. The appellant attributed the unaccounted goods to mismanagement and staff turnover, stating that the goods were not intended for clandestine removal. The Hon'ble Member noted that while a token penalty could be imposed for the lack of proper accounting by the Chairman and MD, a personal penalty for clandestine removal was not justified.

Consequently, the penalty was reduced from Rs. 5 Lacs to Rs. 1 Lac by the Appellate Tribunal, modifying the impugned order accordingly. The appeal was partly allowed in favor of the appellant. The decision was pronounced in open court on 08.06.2022 by Hon'ble Member (Judicial) Mr. Ramesh Nair.