2010 (9) TMI 74 - AT - Central Excise

Penalty- The revenue found shortage of stock and recovered some documents showing clandestine removal of goods. Commissioner imposed duty and penalites on the company. He imposed penalties on some officers (Authorized Signatories) of the company also. Tribunal while confirmed duty and penalty on company, removed penalties on some authorized signatories on the basis that their active role could not be proved.

Issues Involved:
1. Confirmation of duty demand and penalties against M/s. Shree Ganesh Knit (India) Ltd.
2. Imposition of penalties on the Managing Director and Joint Managing Director.
3. Imposition of penalty on the Manager and Authorized Signatory.
4. Confiscation of land, building, plant, and machinery.

Issue-wise Detailed Analysis:

1. Confirmation of duty demand and penalties against M/s. Shree Ganesh Knit (India) Ltd.:
The Appellate Tribunal upheld the confirmation of duty demand of Rs. 2,87,27,466/- and Rs. 4,06,745/- against M/s. Shree Ganesh Knit (India) Ltd. The Tribunal found sufficient evidence of clandestine removal of goods based on the recovery of incriminating documents from various premises, including the residence of Shri Rameshbhai Babulal Marwadi and the office premises of the company. The statements of employees and contractors corroborated the findings. The Tribunal also upheld the imposition of interest under Section 11AB and penalty under Section 11AC of the Central Excise Act. However, the Tribunal remanded the matter to the original adjudicating authority to re-quantify the penalty for the period from May 1994 onwards, as the penal provisions under the Additional Duties of Excise (Goods of Special Importance) Act, 1957 were not applicable before May 1994.

2. Imposition of penalties on the Managing Director and Joint Managing Director:
Penalties of Rs. 30,00,000/- each were initially imposed on Shri Arvindkumar Ganeshmal Dugar and Shri Shreyaskumar Ganeshmal Dugar. The Tribunal reduced these penalties to Rs. 5,00,000/- each, considering that the penal provisions under the Additional Duties of Excise Act were not applicable before May 1994. The Tribunal found that both directors were actively involved in the clandestine removal of goods and had knowledge of the same. The evidence included their admissions and the corroborative statements of other employees and contractors.

3. Imposition of penalty on the Manager and Authorized Signatory:
The Tribunal set aside the penalty of Rs. 5,00,000/- imposed on Shri Babulal Chimanlal Shah, the Manager and Authorized Signatory. The Tribunal noted that no active role was attributed to him in the clandestine removal of goods. He was merely following the directions of his superiors and was not personally benefited. The Tribunal relied on precedents where penalties were set aside in similar circumstances.

4. Confiscation of land, building, plant, and machinery:
The Tribunal set aside the confiscation of land, building, plant, and machinery. The Tribunal found that since a penalty was already imposed on the appellant, there was no justification for confiscation of these assets.

Conclusion:
The Tribunal upheld the duty demand and interest against M/s. Shree Ganesh Knit (India) Ltd. but remanded the matter for re-quantification of the penalty for the period from May 1994 onwards. The penalties on the Managing Director and Joint Managing Director were reduced, while the penalty on the Manager was set aside. The confiscation of land, building, plant, and machinery was also set aside.

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