2015 (5) TMI 243 - HC - Central Excise

Exemption of the Central Excise - Notification No. 50/2003-C.E. dated 10.6.2003 - Penalty under Rule 26 of the Central Excise Rules, 2002 - Held that - Petitioners are not guilty of issuing any excise duty invoice without delivery of the goods nor such invoice was used to take ineligible benefit under the Act or the Rules nor both the petitioners were found guilty in transporting, removing or depositing any excisable goods, which were liable to be confiscated. On the other hand, both the petitioners, raised the legal claim pursuant to the Notification No. 50/2003 C.E. dated 10.6.2003. Therefore, taking the legal ground, which subsequently found not to be available to the unit would not permit the invocation of Rule 26 of 2002 Rules. - Personal penalty imposed against both the petitioners is beyond the scope of Rule 26 - Decided in favour of assessee.

Summary

Issues:
1. Imposition of excise duty against M/s Kashipur Sugar Mills Ltd.
2. Personal penalties imposed on Mr. S.K. Bhatnagar and Mr. R.K. Agarwal under Rule 26 of the Central Excise Rules, 2002.

Imposition of Excise Duty:
The case involved M/s Kashipur Sugar Mills Ltd. seeking exemption from Central Excise duty based on an increase in manufacturing capacity as per Notification No. 50/2003-C.E. The Commissioner, Central Excise, in the impugned order, ruled that routine maintenance and renovation do not constitute an enhancement of manufacturing capacity, leading to the imposition of excise duty on the company. This decision was challenged through writ petitions by the aggrieved parties, Mr. S.K. Bhatnagar and Mr. R.K. Agarwal.

Personal Penalties under Rule 26:
The Commissioner, Central Excise, not only imposed excise duty on M/s Kashipur Sugar Mills Ltd. but also levied personal penalties on Mr. S.K. Bhatnagar and Mr. R.K. Agarwal under Rule 26 of the Central Excise Rules, 2002. Rule 26 outlines penalties for specific offenses related to excisable goods. However, upon examination, it was found that the petitioners were not involved in any activities warranting penalties under Rule 26. They had not issued excise duty invoices without delivering goods or abetted in such actions, nor had they been engaged in transporting, removing, or depositing excisable goods liable for confiscation. The petitioners had legitimately claimed benefits under Notification No. 50/2003 C.E. dated 10.6.2003, which did not justify invoking Rule 26 against them.

The court held that the personal penalties imposed on Mr. S.K. Bhatnagar and Mr. R.K. Agarwal were beyond the scope of Rule 26. Consequently, the petitions were allowed, and the orders imposing personal penalties on the petitioners were quashed.

This detailed analysis of the judgment addresses the issues of excise duty imposition and the personal penalties under Rule 26, providing a comprehensive overview of the legal proceedings and the court's decision.