2012 (10) TMI 4 - AT - Central Excise

Penalty Held that - Appellants had acknowledged while purchasing the goods through suppliers was not prescribed in the aforesaid Notification No. 75/87. Therefore, it appears that the appellants were concerned in acquiring possession of and keeping, concealing, purchasing of the aforesaid goods which they knew and had reasons to believe, were liable for confiscation - penalty upheld Penalty under Rule 209A of the Central Excise Rules penalty on manager Held that - Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty - Where regular orders for purchase of the goods were made by the senior officers, appellants should have fully conversant with the provisions of the Central Excise law. Therefore, penalty imposed against them is sustainable

Summary

Issues:
1. Imposition of penalties on the appellant company and Sr. Manager.
2. Interpretation of Rule 209A of the Central Excise Rules, 1944.
3. Knowledge and involvement of the appellant company in purchasing goods liable for confiscation.
4. Applicability of penalty in cases of technical breaches without mens rea.
5. Validity of penalties imposed by the lower adjudicating authority.

Analysis:
1. The judgment revolves around the imposition of penalties on the appellant company and its Sr. Manager based on a case involving the supply of parts of Refrigerator and Air-conditioner by Sapna group of companies. The penalties were imposed under Rule 209A of the Central Excise Rules, 1944, amounting to Rs. 1 lakh on the company and Rs. 25,000 on the Sr. Manager.

2. Rule 209A states that any person involved in dealing with excisable goods that are known or believed to be liable for confiscation shall be liable to a penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater. The rule emphasizes the liability of individuals concerned in purchasing goods that fall under the purview of confiscation.

3. The case highlighted the knowledge and involvement of the appellant company in purchasing goods exceeding the exemption limit, rendering them liable for confiscation. The Sr. Manager's awareness of the provisions and limits under the Central Excise Tariff Act, along with the company's correspondence with a fictitious supplier, indicated their complicity in the transaction.

4. The appellant argued that in the absence of mens rea or guilty mind, penalties should not be imposed, citing a case law precedent. However, the court differentiated technical breaches from cases involving clandestine removal, emphasizing that awareness of Central Excise laws should be expected from responsible officers making purchase orders.

5. Ultimately, the court upheld the penalties imposed by the lower adjudicating authority, deeming them reasonable and justifiable given the circumstances of the case. The judgment dismissed the appeals, affirming the validity of the penalties and the decision of the lower authority.

This comprehensive analysis delves into the key issues addressed in the judgment, including the legal interpretation of Rule 209A, the knowledge and involvement of the appellant in the transaction, the application of penalties in cases of technical breaches, and the validation of penalties imposed by the lower authority.