2015 (5) TMI 199 - AT - Central Excise

Clandestine removal of goods - Confiscation of goods - Imposition of penalty - Held that - Appellant paid the entire amount of duty along with interest and penalty of 25% of the duty so determined within 30 days of communication of the adjudication order. So, the balance amount of penalty as imposed is liable to be waived. Regarding the confiscation of the goods, it is seen from the adjudication order that the goods are not available and therefore, the confiscation of the goods is not sustainable. The appellant referred to the decision of the Tribunal in the case of CCE Surat-II Vs Kay Bee Tax Spin Ltd - 2014 (11) TMI 150 - CESTAT AHMEDABAD . So, the confiscation and and imposition of redemption fine are not sustainable. Regarding imposition of penalty on the Authorised Signatory-cum-Partner of the Appellant No.1, the learned Authorised Representative raised serious objection. He submits that it is settled by various decisions of the Tribunal that penalty is imposable on the partner even when penalty is imposed on partnership firm. In this context, he drew attention of the Bench to the relevant decision as referred in the adjudication order. In the facts and circumstances of the case, I find that the penalty was imposed on the partnership under Section 11AC of the Central Excise Act 1944 and therefore the penalty imposed on the partner under Rule 209A of erstwhile rules is not justified. Appeals filed by the appellants against the impugned order is modified to the extent that penalty under Section 11AC imposed on the appellant No.1 would be 25% of the duty as per Clause (c) of Section 11AC (1) of Central Excise Act 1944 and confiscation and redemption fine are set aside. The penalty on appellant No.2 is set aside - Decided partly in favour of assessees.

Summary

Issues:
- Central Excise duty demand on clandestinely cleared goods
- Imposition of penalty and interest
- Confiscation of goods
- Penalty on partner under Rule 209A of Central Excise Rules 1944

Central Excise Duty Demand:
The appellants were involved in manufacturing Polyester Texturised Yarn and were found with a shortage of finished goods during a visit by Central Excise officers. A show cause notice was issued proposing a demand of Central Excise duty on the clandestinely cleared yarn. The adjudicating authority confirmed the duty demand, interest, and imposed penalties along with confiscation of goods. The Commissioner (Appeals) rejected the appeal.

Imposition of Penalty and Interest:
The appellant contended that they had paid the entire duty amount, interest, and 25% penalty within 30 days of receiving the adjudication order. As per Section 11AC of the Central Excise Act 1944, the penalty amount is 25% of the determined duty. The appellants argued for a waiver of the balance penalty amount. The Tribunal found merit in the appellant's argument and modified the penalty accordingly.

Confiscation of Goods:
The appellants argued that since the goods were not physically available, the confiscation of goods was not sustainable. They referred to a Tribunal decision supporting their stance. The Tribunal agreed that confiscation and imposition of redemption fine were not justified in the absence of physical goods.

Penalty on Partner under Rule 209A:
The learned Authorised Representative raised objections to the penalty imposed on the partner-cum-authorised signatory of the appellant. The Tribunal noted that penalty was already imposed on the partnership firm under Section 11AC of the Central Excise Act 1944, making the additional penalty on the partner under Rule 209A unjustified. Citing a decision of the Hon'ble Gujarat High Court, the Tribunal set aside the penalty on the partner, aligning with the legal precedent.

In conclusion, the Tribunal partially allowed the appeals by modifying the penalty on the appellants, setting aside the confiscation and redemption fine, and nullifying the penalty on the partner. The judgment provides a detailed analysis of the issues involved, considering legal provisions and precedents to deliver a fair decision.