2016 (10) TMI 26 - HC - Central Excise

Demand - failure to pay duty - Held that - since the Respondents have not disputed the liability to pay Duty, there was no necessity for the Tribunal to examine the correctness of the adjudication in that regard. Imposition of penalty - Rule 209A of the Rules - there was no evidence brought forth to link Shri N.Ramachandran, for the alleged violations - Held that - Rule 209A of the Rules, has specifically required that any person, who deals with any Excisable goods which he knows or has reason to believe are liable to confiscation under the Act or Rules made thereunder, shall be liable to a penalty not exceeding three times the value of such goods or ₹ 5,000/- whichever is greater, if he is in any way concerned in transporting, removing or depositing, keeping, concealing, selling or purchasing or in any other manner deals with such goods. Therefore, it is essential that there must be evidence brought on record linking the role of the individual to any of these offending acts in which event alone the penalty contemplated by Rule 209A of the Rules, can be imposed. Since there was no material to link Shri N.Ramachandran, with any such acts enumerated under Rule 209A of the Rules, the penalty imposed against him under Rule 209A of the Rules, is liable to be set at naught and that was the reason why the Tribunal has rightly set aside that portion of the Order in Original passed by the adjudicating Authority. Imposition of penalty - Rule 173Q of the Rules - Tribunal has reduced the penalty from ₹ 1,00,000/- to ₹ 50,000/- - Held that - the discretion has not been exercised on sound lines and hence the Tribunal has reduced the penalty from ₹ 1,00,000/- to that of ₹ 50,000/-, though the Tribunal ought to have given the necessary reasons for it to substitute the quantum of penalty. But however, we cannot ignore the fact that the Order-in- Original does not speak of the liability of the goods for confiscation itself, at the first place. It is therefore, obvious that instead of remitting the matter to the Adjudicating Authority for consider afresh, even with regard to the penalty that is liable to be imposed under Rule 173Q of the Rules and furthermore with a view to shorten the litigation between the parties, the Tribunal has reduced the penalty from ₹ 1,00,000/- to ₹ 50,000/- and the Respondent/Manufacturer has not called in question that part of the order of the Tribunal and he has accepted it. Therefore, we see no reason to interfere with the order passed by the Tribunal. - Decided against the Revenue

Summary

Issues:
1. Tribunal's decision on remand and reasoning.
2. Acceptance of pleas without recording reasons.
3. Reduction of penalty without reason.
4. Imposition of personal penalty without reason.

Analysis:
1. The Civil Miscellaneous Appeal was filed against the orders of the Customs, Excise and Service Tax Appellate Tribunal. The substantial questions of law included the Tribunal's decision on remand and reasoning, acceptance of pleas without recording reasons, reduction of penalty without reason, and imposition of personal penalty without reason.

2. The controversy revolved around the manufacturer of Excisable goods facing a demand and penalties under the Central Excise Act and Rules. The Tribunal set aside part of the order due to relevant provisions not being available at the time of the alleged failure to pay duty. The penalty imposed on an individual was also set aside due to lack of evidence linking them to the violations.

3. Rule 209A of the Rules required evidence linking an individual to specific offending acts for imposing penalties. As there was no such evidence against the individual, the penalty was rightfully set aside by the Tribunal. The Tribunal's decision was based on the lack of material linking the individual to the violations specified under the rule.

4. The remaining issue was the imposition of a penalty under Rule 173Q of the Rules. The Rule allows for penalties not exceeding three times the value of the goods or a specified amount, with an element of discretion for the Adjudicating Authority. The Tribunal reduced the penalty but failed to provide reasons for the reduction, although the original order did not establish the liability of goods for confiscation.

5. Despite the lack of detailed reasoning for the penalty reduction, the Court found no reason to interfere with the Tribunal's decision. The appeal was dismissed, confirming the Tribunal's order to reduce the penalty. The decision aimed to expedite the resolution and avoid prolonging the litigation between the parties.