2017 (6) TMI 1019 - AT - Central Excise

Penalty u/r 26b of CER, 2002 - job-work - Held that - the penalty u/r 26 of the CER, 2002 can be imposed on a person who deals with the excisable goods liable for confiscation. We find from the impugned show cause notice that there was no proposal for confiscation of any goods. Therefore, it is clear that there were no goods, which were liable for confiscation. It is also clear that when the goods were not liable for confiscation, the appellant has not dealt with any goods which were liable for confiscation. Therefore. the appellant was not liable for imposition of penalty under Rule 26 of the Central Excise Rules 2002 - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Original No. 30/COMMR/NOIDA/2010-11 dated 25/03/2011
- Demand of Central Excise Duty, interest, and penalties on M/s Harig Crankshafts Ltd. (HCL) and the appellant
- Imposition of penalty under Rule 26 of the Central Excise Rules, 2002

Analysis:
The appeal before the Appellate Tribunal CESTAT ALLAHABAD was filed against the Order-in-Original issued by the Commissioner of Central Excise, Noida. The show cause notice dated 07.08.2009 proposed a significant demand of Central Excise Duty and interest on M/s Harig Crankshafts Ltd. (HCL) and penalties under various sections of the Central Excise Act, 1944. The Order-in-Original confirmed a partial demand against M/s HCL and imposed penalties on them. Additionally, a penalty under Rule 26 of the Central Excise Rules, 2002 was imposed on the appellant. The appeal challenged these decisions.

During the hearing, the appellant's counsel argued against the imposition of penalty under Rule 26 of the Central Excise Rules, 2002. The Tribunal considered the contentions of both parties and analyzed the provisions of the Act. It was noted that for the penalty under Rule 26 to be applicable, the goods in question must be liable for confiscation. However, the show cause notice did not propose confiscation of any goods, indicating that there were no goods subject to confiscation. As a result, since there were no goods liable for confiscation, the appellant could not be penalized under Rule 26 of the Central Excise Rules, 2002.

Consequently, the Tribunal modified the Order-in-Original to set aside the penalty imposed on the appellant. The appeal was allowed in favor of the appellant, indicating that the appellant was not liable for the penalty under Rule 26. The judgment clarified the specific conditions under which penalties could be imposed, emphasizing the necessity for goods to be liable for confiscation for such penalties to be applicable.