2000 (6) TMI 233 - AT - Central Excise

Summary

Issues:
1. Allegation of the transaction not being genuine under Section 4(1)(a).
2. Imposition of penalty under Rule 209A of the Central Excise Rules, 1944.
3. Reduction of penalty by the appellate authority.
4. Whether the appellant was a commission agent.
5. Whether the appellants dealt with undervalued goods consciously.

Analysis:

1. The show cause notice alleged that the transaction between M/s Ram Ply Board Industries and the appellant was not genuine under Section 4(1)(a). The adjudicating authority imposed a penalty on the appellant invoking Rule 209A of the Central Excise Rules, 1944. The penalty was confirmed along with the duty short levied. M/s Ram Ply Board Industries settled the dispute under the Kar Vivad Samadhan Scheme, challenging the penalty imposed on the appellant.

2. The appellate authority reduced the penalty imposed on the appellant to Rs. 1,50,000. However, the appellant challenged the conclusion reached by the appellate authority regarding the penalty amount. The Commissioner posed three issues for consideration, including whether the appellant was a commission agent or not and whether they consciously dealt with undervalued goods.

3. The Commissioner found that the appellants were not working as commission agents, which contradicted the imposition of the penalty under Rule 209A. Without a finding on the third issue of consciously dealing with undervalued goods, the Commissioner could not have sustained the penalty under Rule 209A. Therefore, the penalty imposed on the appellant was vacated based on this ground.

4. The settlement of the dispute by M/s Ram Ply Board Industries under the Kar Vivad Samadhan Scheme could not be used against the appellant. Any admission of guilt by M/s Ram Ply Board Industries did not make the present appellant liable for any offense under the excise law. The appellant was not held responsible for the actions of M/s Ram Ply Board Industries.

5. Consequently, the appeal was allowed, and the amount deposited by the appellant for entertaining the appeal under Section 35F was to be refunded. The judgment highlighted the importance of making specific findings before imposing penalties and clarified that settlements by other parties should not automatically implicate all involved parties.