2013 (4) TMI 411 - AT - Central Excise

Penalty on employee - Held that - Appellant though reporting directly to the management but was aware of the clandestine activities of the main unit and was also aware that the goods were clandestinely cleared on cash payments. Thus looking to the extent of involvement of the appellant it cannot be said that he was only a paid employee and getting instructions from his superiors on day to day small matters. However taking into consideration the fact that the main offender in this case has gone away with 25% of penalty payment under Section 11AC therefore it is felt that a penalty of Rs.25, 000/- will meet the ends of justice to be imposed upon the appellant under Rule 26 of the Central Excise Rules. Appeal of the appellant accordingly is allowed.

Summary

Issues: Penalty imposition on the appellant

Analysis:
The issue in this case revolves around the imposition of a penalty of Rs.1,00,000 on the appellant as per the Commissioner's (Appeals) order. The appellant, represented by their advocate, argued that as a paid employee of M/s. Joyo Plastics, Daman, they were not involved in policy decisions and, therefore, should not be penalized. The advocate cited legal precedents to support this argument, including cases such as R.K. Ispat Udyog Vs. CCE Raipur 2007, Hitesh Kumar Patel Vs. CCE Mumbai 2009, and Sudhir Genesets Ltd. Vs. CCE Vapi 2010. On the other hand, the A.R. for the respondent highlighted a statement given by the appellant, suggesting active involvement in the clandestine activities of M/s. Joyo Plastics.

Upon hearing both sides, the Tribunal observed that although the appellant reported directly to the management, they were aware of the clandestine activities of the main unit, including the unauthorized clearance of goods for cash payments. The Tribunal determined that the appellant's involvement went beyond being a mere paid employee receiving instructions on day-to-day matters. Considering the circumstances, the Tribunal decided that a penalty of Rs.25,000 would suffice in this case, taking into account that the main offender had already paid 25% of the penalty under Section 11AC. Consequently, the Tribunal allowed the appeal by reducing the penalty imposed on the appellant to Rs.25,000 under Rule 26 of the Central Excise Rules.

In conclusion, the Tribunal found that while the appellant may not have been directly responsible for policy decisions, their awareness and involvement in the clandestine activities warranted a penalty, albeit reduced from the initial amount, to ensure justice was served.