2017 (3) TMI 1443 - AT - Central Excise

Clandestine manufacture and removal of goods - various scooter parts - the sole case of Revenue is that M/s.Vira Scooters were engaged in the manufacture of scooter parts and clearance 9/3rd value of the goods or double quantity shown in the invoices - confiscation - redemption fine - penalty - Held that - It is an admitted fact that M/s.Vira Scooters was proprietorship firm owned by one Shri Vijay Jain who has expired on 2.11.2011. In that circumstance, the proceedings against M/s.Vira Scooter cannot be continued in view of the decision of the Hon ble Apex Court in the case of Shabina Abrahma 2015 (7) TMI 1036 - SUPREME COURT - the proceedings against M/s.Vira Scooters abates. Penalties on all the co-noticees - Held that - the allegation of clandestine manufacture and removal of the goods by M/s.Vira Scooters cannot be proved in the absence of Shri Vijay Jain of M/s.Vira Scooters, who has expired on 2.11.2011. Therefore, the benefit of doubt goes in favor of the co-noticees - penalties on co-noticees set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Abatement of proceedings against M/s. Vira Scooters due to the demise of the proprietor.
- Imposition of penalties on co-noticees without establishing involvement of M/s. Vira Scooters in clandestine activities.

Abatement of Proceedings Against M/s. Vira Scooters:
The case involved M/s. Vira Scooters engaged in clandestine manufacture and removal of goods without duty payment. Following searches and investigations, show cause notices were issued for duty recovery, confiscation of seized goods, and penalties on co-noticees. However, the proprietor of M/s. Vira Scooters had passed away, leading to a contention that proceedings against the firm should abate. The Tribunal cited the decision in the case of Shabina Abraham and observed that proceedings against a firm cease upon the demise of the proprietor. The Tribunal emphasized the importance of respecting legal precedents and ruled in favor of abatement, disposing of the appeal filed by the Revenue and upholding the abatement of proceedings against M/s. Vira Scooters.

Imposition of Penalties on Co-Noticees:
The issue of imposing penalties on co-noticees without establishing M/s. Vira Scooters' involvement in clandestine activities was also addressed. The Tribunal noted that the allegations against M/s. Vira Scooters could not be proven due to the demise of the proprietor. Consequently, the Tribunal ruled in favor of the co-noticees, stating that the benefit of doubt favored them in the absence of conclusive evidence against M/s. Vira Scooters. As a result, the penalties imposed on the co-noticees were deemed not imposable. The appeals were disposed of based on this assessment, highlighting the importance of establishing firm involvement in illegal activities before penalizing associated parties.

In conclusion, the judgment focused on the abatement of proceedings against M/s. Vira Scooters due to the proprietor's demise and the necessity of establishing firm involvement in clandestine activities before penalizing co-noticees. The Tribunal emphasized adherence to legal precedents and the need for conclusive evidence to support penalties, ensuring fair and just outcomes in the adjudication process.