2023 (3) TMI 1007 - AT - Central Excise

Levy of penalty on partnership firm as well as on partner - Clandestine clearance - stocks verified at the premises of the Appellant did not tally with their DSA records and excess stock was found in the factory premises - HELD THAT - The Appellant has been able to demonstrate that the seized goods which were provisionally released were cleared on payment of proper Excise Duty as it is evident from the documents produced like DSA, ER- 1 Returns, etc. Therefore, once the duty of Rs.2,09,704/- has already been paid in the normal course, the Department cannot be once again recover this amount from the Appellant. The confirmation of Rs.2,09,704/- as Excise Duty to be paid as held by the Adjudicating Authority is infructuous and is set aside. From the order portion of the OIO, it is seen that the Adjudicating Authority has not given the option of payment of penalty @ 25% which he was required to do. The Tribunal Ahmedabad in the case of COMMR. OF C. EX., AHMEDABAD VERSUS KALPESH FOUNDERS ENGINEERS 2009 (7) TMI 1024 - CESTAT AHMEDABAD held that it was observed that when the Adjudicating Authority as also Commissioner (Appeals) acted illegally and contrary to the first Proviso to Section 11AC of the Act, and no option to pay penalty of 25% within 30 days was given to the assessee the fault lies with the authorities and not with the assessee - Therefore, relying on this case law, option given to the Appellant to pay 25% of Rs.2,09,704/- as penalty. The Appellant should pay the same within the 30 days from the date of communication of this order. Penalty imposed on the Partner - HELD THAT - The Hon ble Punjab and Haryana High Court in the case of VINOD KUMAR GUPTA VERSUS COMMISSIONER OF CENTRAL EXCISE 2012 (5) TMI 173 - PUNJAB AND HARYANA HIGH COURT have held that Partnership firm is a firm in mercantile usage, however, penalty imposed on the proprietorship or partnership firms would mean penalty on the proprietor or partners therof, therefore, imposition of penalties one on the proprietorship firm and second on the proprietor would amount to imposition of penalty twice, which cannot be sustained in the eyes of the law - the penalty on the partner Mr. Moinuddin Ansari is set aside. Appeal allowed in part.

Summary

Issues involved:
Seizure of goods, Central Excise Duty, Confiscation, Redemption fine, Penalty imposition, Clandestine clearance, Personal penalty on partner

Seizure of goods and Excise Duty:
In a case involving the seizure of goods valued at Rs.2,67,890, the Appellant partnership firm faced allegations of Central Excise Duty amounting to Rs.2,09,704. Despite the provisional release of the seized goods, the Adjudicating Authority imposed penalties and confirmed the Excise Duty to be paid by the firm and the partner. The firm contended that the Excise Duty had already been paid through regular clearance of goods, supported by documentary evidence. The Tribunal found in favor of the Appellant, setting aside the confirmation of Excise Duty as the amount had already been paid in the normal course.

Penalty imposition and Clandestine clearance:
The Adjudicating Authority failed to offer the Appellant the option of paying a reduced penalty rate of 25%, as required by law. Citing relevant case law, the Tribunal emphasized the necessity of providing such an option and granted the Appellant the opportunity to pay the reduced penalty within a specified timeframe. Additionally, the Authorized Representative argued that the discrepancies in stock records indicated clandestine clearance, justifying the penalties imposed on the partnership firm. However, the Tribunal ruled in favor of the Appellant, allowing the reduced penalty payment option.

Personal penalty on partner:
Regarding the personal penalty imposed on the partner of the firm, the Appellant contended that since a penalty had already been levied on the partnership firm, imposing a separate penalty on the partner was unwarranted. Relying on pertinent case law, the Tribunal agreed with the Appellant, setting aside the personal penalty on the partner based on the principle that penalties on the firm and its partners cannot be duplicated.

Final Decision:
The Tribunal partially allowed the Appeals, setting aside the confirmation of Excise Duty, granting the Appellant the option to pay a reduced penalty, and overturning the personal penalty imposed on the partner. The decision was based on legal precedents and principles ensuring fair treatment and adherence to penalty imposition regulations.