2014 (6) TMI 790 - AT - Central Excise

Waiver of pre deposit - Duty demand - Penalty - Held that - Merely because the person liable to pay duty has discharged the duty liability, the proceedings against others will also get concluded especially when the proceedings are not under section 11A. Such an interpretation would amount to re-writing of the provisions of sub-section (2) of Section 11A. proceedings have been initiated against the appellant for imposition of penalty under the Central Excise Rules, 2002 for his involvement in aiding/abetting the main-appellant which resulted in evasion of duty. This position is also admitted by the appellant. Therefore, we are of the view that the appellant has not made out any case for complete waiver of the penalty imposed. - Conditional stay granted.

Summary

Issues:
1. Imposition of penalty on the appellant upheld by the lower appellate authority.
2. Whether conclusion of proceedings against the main appellant affects proceedings against co-appellants.
3. Interpretation of Section 11A(2) of the Central Excise Act, 1944 regarding duty payment and penalty imposition.

Analysis:

1. The appeal and stay petition in this case were against an Order-in-Appeal dated 28/01/2014 that upheld the penalty of Rs.25,000 on the appellant, who was the Proprietor of a company. The appellant challenged this penalty before the Appellate Tribunal CESTAT MUMBAI.

2. The appellant argued that since proceedings against the main appellant had been concluded with payment of duty, interest, and 25% of the penalty, the proceedings against the co-appellants should also be considered concluded. The appellant cited a tribunal decision in support of this argument. However, the Revenue contended that there was no legal provision stating that conclusion of proceedings against the main appellant automatically concludes proceedings against co-appellants.

3. The Tribunal examined Section 11A(2) of the Central Excise Act, 1944, which deals with duty payment and penalty imposition. The Tribunal clarified that Section 11A(2) applies to the person who has paid the duty liable to be paid by them. The Tribunal rejected the appellant's argument that proceedings against co-appellants should be concluded based on the conclusion of proceedings against the main appellant. The Tribunal noted that the proceedings were initiated against the appellant for aiding/abetting the main-appellant in duty evasion, a fact admitted by the appellant. Therefore, the Tribunal found no grounds for complete waiver of the penalty imposed.

4. The appellant offered to pre-deposit Rs.10,000, which the Tribunal found satisfactory. The Tribunal directed the appellant to make the pre-deposit within four weeks and report compliance by a specified date. Upon compliance, the pre-deposit of the balance penalty amount would be waived, and recovery stayed during the appeal process.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's reasoning behind its decision.