2023 (5) TMI 563 - AT - Central Excise

Levy of penalty Personal Penalty on accountant - Rule 209 A of Central Excise Rules, 1944 - valuation of captively consumed yarn - failure to include the expenses such as bonus, gratuity, interest and marketing expenses and in the cost of yarn which has been used captively - no personal hearing was accorded to the appellant - principles of natural justice - HELD THAT - It can be seen from the plain reading of the Rule 209 A that the person who is to be penalized under this provision needs to have physically dealt with the dutiable goods and have done certain acts which have made the subject goods liable for confiscation. He is consciously in the know of this very fact that by acquiring possession of such goods by transporting such goods and dealing with in other manners, will be render the goods liable for confiscation. The appellant was only an accountant who was doing normal accountancy work. The issue of valuation of captively consumed yarn is a matter of the interpretation and therefore the penal provision of Rule 209 A of Central Excise Rules, 1944 cannot be invoked against the person who is only involved in maintaining the accounts of the company. The Order-In-Original has not followed the principle of natural justice, as no personal hearing was accorded to the appellant. It is also no where mentioned in the Order-in-Original as to what efforts had been made by the department to serve notice of personal hearing to the appellant. Thus the matter was decided against the appellant in gross violation of principle of natural justice. The Order-In-Original concerning the penalizing the appellant under Rule 209 A of the Central Excise Rules, 1944 is concerned, same is without any merit - Appeal allowed.

Summary

Issues involved:
- Valuation of captively consumed yarn
- Invocation of Rule 209 A of Central Excise Rules, 1944
- Violation of principle of natural justice

Valuation of captively consumed yarn:
The officer of Central Excise Department visited the factory premises and found that the assessee had not valued the captively consumed yarn properly. A demand show cause notice was issued for Central Excise duty and a penalty was imposed. The Appellant contended that the issue had been settled in favor of the assessee in previous cases. The Appellant argued that Rule 209 A cannot be invoked against him as he was only an employee handling accounts and not involved in physical movement of goods. The Appellant also highlighted the lack of personal hearing during the proceedings.

Invocation of Rule 209 A of Central Excise Rules, 1944:
The Tribunal analyzed Rule 209 A which imposes penalties for certain offenses related to excisable goods. The Tribunal noted that the rule requires the person to have physically dealt with the goods and knowingly engaged in activities that render the goods liable for confiscation. In this case, the Appellant was only an accountant and not directly involved in handling goods. The Tribunal cited precedents and held that Rule 209 A cannot be invoked against a person who is not physically dealing with the goods.

Violation of principle of natural justice:
The Tribunal found that the Order-In-Original did not follow the principle of natural justice as no personal hearing was provided to the Appellant. The Tribunal emphasized the importance of adhering to natural justice principles in adjudicatory proceedings. Citing a judgment of the Hon'ble Bombay High Court, the Tribunal underscored the necessity of ensuring fair procedures and personal hearings before reaching decisions. Ultimately, the Tribunal set aside the Order-In-Original concerning penalizing the Appellant under Rule 209 A of the Central Excise Rules, 1944, deeming it without merit and allowed the appeal.

*(Pronounced in the open court on 12.05.2023)*