2017 (11) TMI 142 - AT - Central Excise

Valuation - correctness of value adopted - penalty - Held that - there is no discussion regarding the background or reason for imposition of penalty. Apparently the impugned order restricted the scope of decision with reference to the direction issued by the Tribunal on valuation issue. However, when the liberty is given to the Commissioner for imposition of penalty after a due findings, a clear reason based finding should have been recorded by the original authority before imposing penalties under Rule 209A - In view of complete absence of any reasoning for imposition of penalty on these appellants, penalties under Rule 209A of the CER 1944 set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Recalculation and confirmation of duty demand.
2. Imposition of penalties under Rule 209A of the Central Excise Rules 1944.

Analysis:
Issue 1: The judgment pertains to three appeals against a common impugned order by the Commissioner of Central Excise, Bangalore, following directions from the Tribunal in a previous order. The case involved M/s. Sipani Automobiles Ltd. and the recalculated duty demand confirmed in the impugned order amounted to ?32,15,158. The appeals were filed by two officials of M/s. Sipani Automobiles Ltd. and M/s. Dolphine Motors (India) Ltd., the distributor. The penalties imposed on the appellants were under Rule 209A of the Central Excise Rules 1944. The main issue revolved around the valuation of motor cars concerning Section 4 and Valuation Rules, with no allegations of clandestine removal or fraudulent activities for duty evasion.

Issue 2: The appellant's counsel argued that the main party did not file an appeal due to the unavailability of records, as they were taken over by the Revenue, and the company had ceased operations for several years. The counsel requested the setting aside of penalties on the appellants, emphasizing the valuation issue. The Assistant Commissioner defended the impugned order, highlighting the substantial short payment of duty confirmed in the order, and the clearance of goods without proper accounting, leading to confiscation. The Assistant Commissioner contended that the penalties against the officials should not be fully set aside due to their awareness of valuation and cenvat credit matters.

Final Decision: The Tribunal noted the absence of discussion in the impugned order regarding the basis for imposing penalties under Rule 209A. While the order limited the decision to the valuation issue, the lack of reasoning for the penalties led to their setting aside for the three appellants. The Tribunal allowed the appeals, emphasizing the necessity for clear and reasoned findings before imposing penalties under Rule 209A.