2023 (6) TMI 98 - AT - Central Excise

Penalty under Rule 26 of Central Excise Rules, 2002 - Clandestine Removal - BOPP bags by describing plastic bags, BOPP etc showing as bought out goods with a view to remain within the SSI exemption limit - Confiscation - HELD THAT - As regard the facts of the case, the appellant though maintained that the goods dealt by the appellant is trading good. However, the appellant could not produce any evidence that the said goods were purchased from different parties other than M/s. Shubham Polymers. In the statement of 7 buyers, 4 buyers have accepted that they have received the Bopp bags which leads to the conclusion that the appellant have been dealing with the goods i.e. BOPP Bags manufactured by the M/s. Shubham Polymers with intention to avail SSI exemption by M/s. Shubham Polymers. With this undisputed fact the good dealt with by the present appellant are indeed liable for confiscation. Therefore, the penalty under Rule 26 was rightly imposed. However, considering that the entire goods dealt with by appellant all goods are not manufactured exclusively by M/s. Shubham Polymers. On the basis of the buyers statement. Accordingly, the penalty of Rs. 10 Lacs is on higher side and same deserves to be reduced. Hence, the penalty reduced from Rs. 10 Lacs to Rs. 4 Lacs. Appeal allowed in part.

Summary

Issues involved: Penalty imposed under Rule 26 of Central Excise Rules, 2002 on the appellant firm for dealing with goods manufactured by another firm to avail SSI exemption.

Summary:
- The appellant, a trading firm, was penalized for dealing with goods manufactured by another firm to avail SSI exemption. The main issue was whether penalty under Rule 26 of Central Excise Rules, 2002 was rightly imposed on the appellant.

Submission by Appellant:
- The appellant argued that since there was no proposal for confiscation of the goods, the penalty was wrongly imposed. They also presented exculpatory statements from involved individuals and buyer statements supporting their case.

Submission by Revenue:
- The Revenue reiterated the findings of the impugned order, supporting the penalty imposed on the appellant.

Judgment:
- The Tribunal noted that the main appellant had settled their duty liability under the SVLDRs scheme. The appellant was penalized as a co-noticee for dealing with goods liable for confiscation. The Tribunal found that the appellant's dealings with the goods manufactured by another firm were indeed liable for confiscation, justifying the penalty under Rule 26.

- However, considering that not all goods dealt with by the appellant were exclusively manufactured by the other firm, the Tribunal reduced the penalty from Rs. 10 Lacs to Rs. 4 Lacs. The appeal was partly allowed in favor of the appellant with the modified penalty amount.