2022 (7) TMI 1029 - AT - Central Excise

Levy of penalty on Directors u/r 26 of CER, 2002 - exemption under a notification that granted area based exemption was wrongly obtained by the Company and its Directors - contention of the Department that a Company was not entitled to claim area based exemption was rejected - HELD THAT - Learned counsel for the appellant has placed the decision of the Tribunal in M/S KOTDWAR STEELS LIMITED, SANJEEV JINDAL, DIRECTOR, SANJEEV GUPTA, DIRECTOR, DINESH CHANDRA JOSHI, BRIJMOHAN AGARWAL VERSUS CCE, MEERUT 2016 (10) TMI 385 - CESTAT NEW DELHI by which ten appeals were allowed. The contention of the Department that a Company was not entitled to claim area based exemption was rejected. The impugned order in so far as seeks to impose a penalty of Rs.5 lakhs on the appellant, therefore, deserves to be set aside and is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against penalty imposed under rule 26 of the Central Excise Rules, 2002 for wrongly claiming area-based exemption.

Detailed Analysis:
1. The appellant, a former Director of a company, filed an appeal challenging the order passed by the Commissioner, Central Excise, imposing a penalty of Rs.5 Lakhs under rule 26 of the Central Excise Rules, 2002. The matter was initially filed before the Allahabad Bench of the Tribunal and later transferred to the Principal Bench at Delhi.

2. The order highlighted that the company and its directors wrongly obtained exemption under a notification granting area-based exemption, leading to the imposition of penalties. The appellant contested the penalty based on a previous Tribunal decision dated September 27, 2016, where appeals allowing area-based exemption for companies were upheld.

3. The appellant's counsel cited the Tribunal's decision from 2016 where appeals allowing area-based exemption for companies were upheld, contrary to the Department's contention. The counsel argued that since the penalty was based on the company's entitlement to claim area-based exemption, it should be set aside based on the precedent.

4. The Authorized Representative for the Department did not contest the factual position presented by the appellant's counsel. Considering the arguments presented, the Tribunal accepted the submission of the appellant's counsel and set aside the penalty of Rs.5 lakhs imposed on the appellant. Consequently, the appeal was allowed, and the impugned order dated December 27, 2011 was overturned.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision to set aside the penalty imposed on the appellant based on the incorrect claim of area-based exemption by the company.