2010 (1) TMI 446 - HC - Central Excise

Wrong mention of rule Abatement by buyer EOU in evasion of duty. Penalty imposed on buyer under Rule 209 of erstwhile Central Excise Rule, 1944. Question framed by revenue talk about penalty levied under Rule 209A. Held that- penalty, as a matter of fact, imposed on Director under Rule 209A. Appeal not pertaining to said director. Appeal deserve to be dismissed.

Summary

Issues Involved:
1. Interpretation of Rule 209A of the Central Excise Rules.
2. Applicability of Rule 209A in a case involving receipt of goods from another entity.
3. Imposition of penalty under Rule 209A on the purchaser of goods.
4. Jurisdiction of the CESTAT in determining the applicability of penalty rules.

Analysis:

Issue 1: Interpretation of Rule 209A of the Central Excise Rules
The case involved a dispute regarding the interpretation of Rule 209A of the Central Excise Rules. The appellant contended that the Tribunal had not considered the provisions of Rule 209A properly. The Tribunal had held that Rule 25 applies to producers and manufacturers, not purchasers, leading to the conclusion that the penalty under Rule 25 could not be imposed on the respondent. The appellant argued that the Tribunal wrongly relied on a previous case for determining the applicability of Rule 26 to the Director. However, the Court observed that the penalty was imposed under Rule 209A, not Rule 25, and the appeal was dismissed on this ground.

Issue 2: Applicability of Rule 209A in a case involving receipt of goods from another entity
The respondent, an export-oriented unit, was found to have issued a consignment note to procure fabrics from another entity, which were not received. Investigations revealed that the fabrics were cleared in the local market, and attempts were made to cover up the transactions. The Director of the respondent admitted to not receiving some goods but claimed to have received others. The show-cause notice led to the imposition of a penalty, which was later deleted by the CESTAT. The appellant challenged this decision, arguing that Rule 209A should apply. However, the Court found that the rule did not apply to the purchaser in this case, resulting in the dismissal of the appeal.

Issue 3: Imposition of penalty under Rule 209A on the purchaser of goods
The penalty of Rs. 10 Lacs was imposed on the respondent under Rule 209A of the Central Excise Rules. The appellant contended that the penalty should apply to the respondent as a purchaser of goods. However, the Court held that Rule 209A did not extend to the respondent as a purchaser, leading to the dismissal of the appeal.

Issue 4: Jurisdiction of the CESTAT in determining the applicability of penalty rules
The CESTAT had allowed the respondent's appeal and deleted the penalty imposed. The appellant argued that the Tribunal had erred in its interpretation of the penalty rules. However, the Court found that the Tribunal's decision was correct, as Rule 25 applied to producers and manufacturers, not purchasers. The Court concluded that no substantial questions of law arose from the Tribunal's order, leading to the summary dismissal of the appeal.