2017 (1) TMI 800 - AT - Central Excise

Penalty - Rule 26 of CER, 2002 - Clandestine manufacture - Held that - no case of suppression of facts, or contravention of provisions of Central Excise Rules have been framed, nor any finding recorded, to that effect - Appeal allowed - decided in favor of the assessee.

Summary

Issues:
- Penalty imposed under Rule 26 of Central Excise Rules, 2002 on the appellants

Analysis:
The appeal was filed by M/s Surendra Kumar Jain & Virendra Kumar Jain against the Order-in-Original passed by the Commissioner of Central Excise & Customs (Appeals), Lucknow. The central issue revolved around the penalty imposed on the appellants under Rule 26 of Central Excise Rules, 2002. The allegation against the appellants was that they were involved in the evasion of Central Excise duty through clandestine manufacture and clearance of excisable products. The counsel for the appellants argued that the appellants did not contravene the provisions of the Central Excise Act and Rules, and hence, the penalty was unjustified.

Upon hearing both parties, the Tribunal examined the case in detail. It was pointed out that the appellants were accused of engaging in a criminal conspiracy involving fictitious entries in the books of accounts to evade excise duty. However, the Tribunal referred to a previous order where it was held that the penalty under Rule 26 of Central Excise Rules, 2002 was not applicable in cases of money laundering, as in this instance. The Tribunal found no evidence of suppression of facts or contravention of Central Excise Rules by the appellants. Consequently, the penalty imposed under Rule 26 of Central Excise Rules, 2002 was set aside for both appellants.

In conclusion, the Tribunal allowed the appeal filed by the appellants and set aside the penalty imposed on them under Rule 26 of Central Excise Rules, 2002. The decision was based on the lack of evidence supporting the allegations of contravention of excise rules, leading to the reversal of the penalty. The judgment highlighted the importance of establishing clear violations before imposing penalties under the relevant rules.