2017 (5) TMI 334 - AT - Central Excise

Penalty u/s 11AC on the company - appeal was earlier dismissed on the ground of non-supply of relevant documents namely, statements, Panchnama etc. relying which allegation of clandestine removal was made - Held that - the authorities below even though imposed penalty under Section 11AC of CEA, 1944, however, not extended the benefit of discharging 25% of the penalty imposed on fulfillment of the conditions laid down under the said provision. Penalty on director - Held that - With regard to penalty imposed on the Director Shri Neemit Punamiya and Shri Kanayalal M. Bhanushali, transporter, the ld. Commissioner (Appeals) has recorded a detailed finding about their involvement in the act of removal of goods without payment of duty. Penalty on employees - Held that - the said employees had acted as per direction of the Director of the Company who was managing day to day affairs. In these circumstances, the penalty imposed on the employees seems to be little harsh - penalty imposed on each of the employees namely, Shri Raghunath Malik and Shri Hemal Rameshbhai Desai is reduced from ₹ 1.50 lakh and ₹ 1.0 lakh to ₹ 50,000/-. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Restoration of appeals dismissed earlier due to non-supply of relevant documents; Discharge of penalty under Section 11AC of CEA, 1944; Reduction of penalty imposed on employees and directors involved in clandestine removal of goods.

Restoration of Appeals:
The judgment addresses the restoration of appeals that were dismissed earlier due to the non-supply of relevant documents, including statements and Panchnama, essential for analyzing allegations of clandestine removal. The appellant sought restoration, stating unavailability of the documents and proposed deciding the case based on findings in the impugned order. The Revenue had no objection, leading to the appeals being restored to their original numbers for disposal.

Discharge of Penalty under Section 11AC of CEA, 1944:
Regarding the penalty imposed under Section 11AC of the Central Excise Act, 1944, the appellant did not contest the duty and interest but sought the benefit of discharging 25% of the penalty, citing a judgment of the Gujarat High Court. The Revenue accepted the benefit should have been extended and did not oppose it. However, a disagreement arose over reducing the personal penalties on the director, employees, and transporter involved in the scheme of goods removal without duty payment. The tribunal, considering the roles of each party, reduced the penalties on the employees but upheld them for the director and transporter.

Reduction of Penalty on Employees and Directors:
The judgment delves into the penalties imposed on the director, transporter, and employees involved in the illicit removal of goods. While penalties on the director and transporter were upheld due to their significant roles, the penalties on the employees were deemed excessive considering their compliance with the director's instructions. Consequently, the penalties on the employees were reduced significantly. The appeals filed by the director and transporter were rejected, while the appeals by the company and employees were partly allowed with reduced penalties. The decision was based on the individual involvement and actions of each party in the unlawful activity.

In conclusion, the judgment by the Appellate Tribunal CESTAT Ahmedabad addressed issues related to the restoration of dismissed appeals, the discharge of penalties under Section 11AC of CEA, 1944, and the reduction of penalties on employees and directors involved in clandestine removal of goods. The decision considered the availability of relevant documents, legal precedents, individual roles, and responsibilities to determine the appropriate course of action for each party involved in the case.