1997 (12) TMI 321 - AT - Central Excise

Summary

Issues:
Levy of penalty on the appellant under Rule 209A of the Central Excise Rules, 1944 based on misdeclaration of facts regarding the sale of polished granite slabs.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Madras involved the issue of imposing a penalty of Rs. 1,00,000 on the appellant for misdeclaration of facts related to the sale of polished granite slabs. The charge against the appellant, as outlined in the show cause notice (SCN), accused him of willfully misdeclaring facts to mislead investigating officers about the sale of polished granite slabs. The appellant was alleged to be involved in clearing polished granite slabs without paying Central Excise duty, contravening various provisions of the Central Excise Rules, 1944.

The lower authority had penalized not only the appellant but also other individuals and the company involved in the clearance of polished granite slabs without duty payment. The lower authority found mens rea established for the individuals involved and held the company liable for contraventions of specific Central Excise Rules, leading to penalties under Rule 209A of the Central Excise Rules, 1944.

The appellant's representative contended that the charge against the appellant did not establish his direct involvement in the sale or clearance of polished granite slabs without duty payment. It was argued that the appellant's position in the company's head office, away from the factory, did not implicate him in the alleged activities. Reference was made to a Bombay High Court decision emphasizing that individuals not directly involved in factory operations cannot be penalized under Rule 209A.

The Department's representative argued that the appellant, as a senior officer, should have been aware of the removals to the Domestic Tariff Area (DTA) and had signed entries related to the slabs, indicating guilty intent. However, the Tribunal noted that the appellant's statement did not establish his direct involvement in the activities specified under Rule 209A, nor was there evidence of his knowledge or reason to believe that the goods were liable to confiscation. As no attribution linked the appellant to the activities under Rule 209A, the Tribunal granted the benefit of doubt and set aside the penalty, ultimately allowing the appeal.