2014 (11) TMI 620 - HC - Central Excise

Imposition of penalty - Rule 26 of Central Excise Rules, 2002 - Clandestine removal of goods - Held that - Extensive role attributed to the present appellant as a Director to M/s. SAPL to M/s. Deora Wires (DWNMPL) as also an authorised signatory of SHEL, not only he had knowledge at every stage, while removing, keeping, selling, concealing the excisable goods and it would not have been possible without his active role and connivance with other buyers. The Commissioner (Appeals) has rightly levied penalty for his having contravened the statutory provision and the rules and the Tribunal was justified in confirming the same. Although, the discussion with regard to the confirmation of penalty is very brief that itself cannot deter us from upholding such findings of the Tribunal inasmuch as the Tribunal, while concurring with the reasonings of the Commissioner (Appeals) in imposing the penalty need not have elaborated his role and the provision of Rule 26. It also need not have any specific terms holding the person liable for penalty with both the adjudicating authorities below have discussed elaborately the role of appellant and the order of the Tribunal also attributes such clandestine removal and confirmation of demand of duty to the Director of SAPL against the company also the penalty has been confirmed in way of confirmation of demand on duty. - Decided against assessee.

Summary

Issues:
1. Imposition of penalty under Rule 96 of Central Excise Rules, 2002
2. Upholding penalty under Rule 26 of Central Excise Rules, 2002
3. Interpretation of Rule 26 regarding penalty imposition

Analysis:
1. The appellant challenged the penalty imposed under Rule 96 of the Central Excise Rules, 2002. The counsel argued that there was a lack of discussion in the Tribunal's judgment regarding the nature of the alleged investment, making the order non-speaking and thus should be quashed. The counsel contended that there was no basis to show the appellant's knowledge of the alleged activities, and since the show cause notice did not propose confiscation of goods, the penalty under Rule 26 was incorrect.

2. The Tribunal confirmed the penalty under Rule 26 on the appellant after extensive examination of the case. The rule states that penalty can be imposed if excisable goods are liable for confiscation under the Act or rules. The Tribunal noted the clandestine removal of goods based on seized records and statements. It also rejected the Chartered Engineer's report on production capacity, finding discrepancies in the production figures. The Tribunal individually examined the quantity of goods removed clandestinely for each buyer, reducing the total duty demand significantly.

3. The appellant, as a director of multiple firms involved, was found to have an extensive role in the activities related to the excisable goods. The Commissioner rightly imposed the penalty for contravening statutory provisions, which was confirmed by the Tribunal. The Tribunal's brief discussion on the confirmation of penalty was deemed sufficient, considering the detailed analysis by the lower authorities. The Tribunal's decision was based on the evidence presented by the Revenue, and there was no error or perversity in its findings. The penalty was reduced in line with the reduction in duty demand, showing a reasonable approach by the Tribunal.

In conclusion, the appeal challenging the penalty imposition under Rule 26 was rejected by the High Court, affirming the Tribunal's decision based on the factual matrix and evidence presented during the proceedings.