2015 (12) TMI 946 - HC - Central Excise

Imposition of penalty for abetment against the Chartered Accountant for giving wrong certificate - Applicability of rule 26 or rule 27 - evasion of duty - Held that - In the appeal filed by the trader, the finding recorded by the Tribunal in its order dated 12th August, 2011 is categorically to the effect that the respondent cannot be said to have acted in a manner so as to hold him an abetter in relation to the commission of any alleged offence as described under Rule 26. It has also been found that the allegation which is being made against the respondent appears to be basically that of money laundering and the same is not subject to any penalty under Rule 26. - The certificate appears to have been obtained at the time of the proceedings that were initiated for the purpose of imposition of penalty and taking action against the trader. This therefore could not be described as an act to attract penalty under Rule 26 and 27, even though this may give a separate cause of action on the ground of money laundering or providing incorrect evidence in order to extend any benefit to the trader or the assessee. The penalty under Rule 26 and 27 therefore would not be attracted in the said background and accordingly we do not find any substantial question of law so as to entertain this appeal. - Decided against Revenue.

Summary

Issues:
Applicability of Rule 26 and Rule 27 of the Central Excise Rules 2002 for imposing a penalty against the respondent for alleged abetment of evasion of excise duty.

Analysis:
The appeal challenged the Tribunal's order regarding the imposition of a penalty of Rs. 50 Lacs on the respondent for allegedly abetting the evasion of excise duty. The appellant argued that the respondent, as an auditor, issued a certificate regarding the source of recovered funds during proceedings, which led to the penalty. The Tribunal initially did not exonerate the respondent from the alleged abetment, but in a subsequent decision, it found that Rule 26 and 27 were not applicable as the respondent had no role in the clearance of goods without payment of excise duty. The appellant contended that the certificate issued by the respondent allowed the trader to explain the evasion of excise duty, making it an act of abetment under Rule 26(2)(ii).

Upon review, the Court found that the Tribunal's order stated that the respondent did not act as an abettor in any alleged offense under Rule 26. The allegation against the respondent seemed to be related to money laundering, which did not attract a penalty under Rule 26. The Court agreed with the Tribunal's reasoning that the issuance of the certificate by the respondent did not involve any direct dealing with excisable goods but was obtained during penalty proceedings. Therefore, the act did not fall under Rule 26 or 27, although it could raise separate issues like money laundering or providing incorrect evidence for the trader's benefit. The Court concluded that no substantial legal question existed to entertain the appeal.

Additionally, the Court noted that as the original liability was under remand by the Tribunal in the trader's appeal, the penalty could not have been imposed. The decision on the original liability was pending in a separate appeal before the Court, but it did not impact the current issue. Consequently, the appeal was dismissed with the observations provided.