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2022 (3) TMI 272 - AT - Central ExciseRecovery of Excise duty alongwith interest and penalty - benefit of SSI exemption in view of the Notification No.08/2003 dated 01.03.2003 or as amended - clearance of goods with the brand name of others - settlement of case under SVLDRS-2019 - penalty on Director, managing director and general manager u/r 26 of the Central Excise Rules, 2002 - HELD THAT - The declaration made by the Company for settlement of its case under the SVLDRS-2019 cannot be termed as admission of the case of revenue by the appellants. In the impugned order, it can be said to be the findings recorded by the Commissioner, against the appellants who are present here. The findings recorded are very general in nature without assigning any role to the appellants herein specifically. Also the issue was in relation to the ownership of the brand name which in any case belonged to the sister concern of Company at Goa, and is purely an interpretational issue without any mens rea. Even impugned order does not records any finding to that effect. As the issue of Company has been settled in terms of SVLDRS-2019, any observations in respect of the case of the Company is refrained. In the case of SHRI RAMESH DESHPANDE AND SHRI DEBDUTTA CHATTERJEE VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR 2021 (7) TMI 1307 - CESTAT MUMBAI where on similar facts, it was held that Since the impugned order fails to establish the ingredient of mens rea on the part of the Appellants who were otherwise performing their duties as employee of the company, the penalties cannot be imposed on the appellants in these two appeals. There are no merits in the impugned order imposing penalties on the appellants who were performing their duties within the company - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Entitlement to SSI exemption under Notification No. 08/2003. 2. Allegations of clandestine manufacture and clearance of excisable goods. 3. Imposition of duty, interest, and penalties under various sections of the Central Excise Act, 1944, and Central Excise Rules, 2002. 4. Individual liability of directors and general manager under Rule 26 of the Central Excise Rules, 2002. 5. Settlement under SVLDRS-2019 and its implications on penalties. Detailed Analysis: 1. Entitlement to SSI Exemption: The investigation concluded that M/s. Pyro Mumbai was not entitled to the benefit of SSI exemption under Notification No. 08/2003 dated 01.03.2003. The notification's paragraph 4 specifies that the exemption does not apply to goods bearing the brand name or trade name of another person. Since M/s. Pyro Mumbai used a brand name belonging to another entity, they were ineligible for the exemption and were required to discharge duty liability from the start of their manufacturing activities. 2. Allegations of Clandestine Manufacture and Clearance: The investigation revealed that M/s. Pyro Mumbai had been manufacturing and clearing excisable goods without obtaining the necessary Central Excise registration, determining the correct value of goods, paying appropriate central excise duty, preparing invoices, maintaining stock accounts, and filing returns. These actions were deemed as deliberate attempts to evade central excise duty, invoking the extended period of limitation under the proviso to section 11A of the Central Excise Act, 1944. 3. Imposition of Duty, Interest, and Penalties: The Commissioner confirmed a duty demand of ?51,35,195 under Section 11A of the Central Excise Act, 1944, along with interest under Section 11AB. A penalty of ?51,35,195 was imposed on M/s. Pyro Electric And Allied Instruments Pvt. Ltd. under Section 11AC, read with Rule 25 of the Central Excise Rules, 2002. Additionally, penalties of ?10,00,000 each were imposed on the managing director, two directors, and the general manager under Rule 26 of the Central Excise Rules, 2002 for aiding and abetting the evasion. 4. Individual Liability of Directors and General Manager: The penalties on the directors and general manager were based on their roles in aiding and abetting the evasion of central excise duty. However, the findings were general without assigning specific roles to the appellants. The Tribunal noted that the issue was related to the ownership of the brand name, which belonged to the sister concern in Goa, and was an interpretational issue without any mens rea. The Tribunal cited previous judgments emphasizing the necessity of proving mens rea for imposing penalties under Rule 26. 5. Settlement under SVLDRS-2019: The case against the company was settled under SVLDRS-2019, and Form IV was issued. The Tribunal noted that the directors could have also availed the benefits under SVLDRS-2019, as clarified in the CBIC FAQs. The declaration under SVLDRS-2019 by the company does not constitute an admission of the revenue's case by the appellants. The Tribunal referenced similar cases where penalties were set aside due to the lack of mens rea and the settlement of the main company's case under SVLDRS-2019. Conclusion: The Tribunal found no merits in the impugned order imposing penalties on the appellants, who were performing their duties within the company. The appeals were allowed, and the penalties were set aside.
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