2008 (7) TMI 426 - HC - Central Excise

Whether the Tribunal has committed substantial error of law in setting aside the personal penalty imposed under Rule 209-A of the Central Excise Rules, 1944 though the Respondent had knowingly concerned himself in fraudulent acts in contravention of provisions of the rules and dealt with goods which are held liable to confiscation under Rule 173Q of the Rules? Held that - The findings of the Tribunal in relation to deletion of penalty in hands of the respondent-assessee have to be appreciated notwithstanding with the fact that the reduction of redemption fine and deletion of penalty under Rule 173Q of the Rules in hands of the Company are under challenge. The explanation tendered by respondent-assessee has not been met with by the adjudicating authority. As against that, the Tribunal has recorded that the requirement of Rule 209A of the Rules to show and bring on record that the officer had knowledge, is absent, and there is a categorical finding that the officers were not aware about the provisions to be followed, had no knowledge of Central Excise law, and upon being pointed out, had reversed the entry/debited the amounts. No substantial question of law arises. Appeal dismissed.

Summary

Issues:
- Applicability of personal penalty under Rule 209-A of the Central Excise Rules, 1944 on the respondent-assessee.
- Justification of penalties imposed on the officers of the Company under Rule 209-A.
- Reduction of redemption fine and setting aside of penalties under Rule 173Q of the Rules in hands of the Company.
- Confiscation of land, building, plant, and machinery under Rule 173Q(2)(a) of the Central Excise Rules, 1944.
- Sustainability of demand under Rule 9(2) for excise duty.
- Knowledge requirement for imposing penalties under Rule 209-A.

Analysis:

The judgment revolves around the imposition of penalties on the respondent-assessee and the officers of the Company under Rule 209-A of the Central Excise Rules, 1944. The respondent-assessee's counsel reframed the question regarding the Tribunal's error in setting aside the personal penalty imposed under Rule 209-A. The Tribunal found that the penalties on the officers of the Company were unwarranted as there was no evidence to show their knowledge of the goods liable for confiscation, leading to the penalties being set aside.

Regarding the proceedings against the Company, the adjudicating authority made various orders, including confiscation of goods, imposition of penalties, and demand of duty. The Tribunal reduced the redemption fine, set aside penalties under Rule 173Q, and held that the confiscation of land, building, plant, and machinery was not justified due to the Company not being habitual offenders evading duty.

The Tribunal also found that the demand of excise duty under Rule 9(2) was unsustainable as the goods were found in the factory premises. The respondent-assessee contended that the penalties deleted in the Company's case should be raised as a substantial issue of law. However, the Tribunal concluded that the respondent-assessee was not liable for penalty under Rule 209-A as the knowledge requirement was not satisfied.

The Tribunal's decision was based on the lack of evidence showing the respondent-assessee's knowledge of the provisions, leading to the penalties being set aside. Despite the possibility of a different view on the same facts, the Tribunal's finding that the respondent-assessee was not liable for penalties under Rule 209-A was upheld. As no substantial question of law was raised, the appeal was dismissed, and the notice was discharged.