2019 (6) TMI 681 - HC - Central Excise

Penalty u/r 26 of CER on Company as well as on Director - principles of natural justice - HELD THAT - Perusal of order would reflect that no discussion has been made with regard to imposition of penalty at all. The matter requires re-examination on the question whether the appellant was liable to pay the penalty or not after determining the matter under the provision of Rule 26 of the CE Rules, 2002 - Appeal allowed by way of remand.

Summary

Issues:
Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal, Allahabad under Section 35-G of Central Excise Act, 1944. Confirmation of penalty on company and its director without complying with Rule 26 of CE Rules, 2002.

Analysis:

The High Court of Allahabad heard the appeal filed by M/s Kartikeya Enterprises against the order dated 14.3.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad. The appeal was admitted on specific questions listed in the memo of appeal. The appellant sought to press question no. (d) related to Rule 26 of the CE Rules, 2002, which deals with penalties for dealing with excisable goods liable for confiscation. The Court noted that the penalty had been confirmed on the company and its director without proper consideration of Rule 26. The Tribunal's order lacked discussion on the imposition of penalty, leading the High Court to conclude that a re-examination was necessary to determine the liability for penalty under the said rule.

Upon re-examination, the Court found that the matter required further scrutiny to establish whether the appellant was indeed liable to pay the penalty as per Rule 26 of the CE Rules, 2002. Consequently, the High Court remanded the case back to the Customs, Excise and Service Tax Appellate Tribunal for a fresh determination. The Tribunal was directed to assess the actual involvement of the party in accordance with the rule and impose a penalty only after due consideration and providing the appellant with a fair opportunity of hearing. The Tribunal was instructed to decide the matter within the next three months while ensuring compliance with the legal procedures.

In conclusion, the High Court disposed of the appeal with the observation that the matter required a re-examination to determine the liability for penalty under Rule 26 of the CE Rules, 2002. The Court emphasized the importance of following due process and providing a fair opportunity for the appellant to present their case before imposing any penalties.