2022 (4) TMI 771 - AT - Central Excise

Levy of penalty u/r 26 of CER - separate penalties on partnership firm and the partners of the firm - Clandestine removal - non-issuance of invoices - payments received in cash - HELD THAT - Both the adjudicating authority has considered the entire records and evidences as is against the appellant and imposed the penalty. There is confessional statement of Appellant, the entire clandestine activity was also supported by the transactions recorded in records which were recovered from appellant. Further the Manufacturer, M/s Shree Ram Ispat also not disputed the demand of central excise duty involving the role of appellant in this matter. The penalty provisions were correctly invoked to impose penalty on him. There are no reason to set aside such a reasoned orders for the imposition of penalty. However, the appellant being an individual considering the overall facts of this case, the penalty imposed on the appellant is reduced to ₹ 50,000/-. Penalty on Partner - HELD THAT - The Ld. Adjudicating authority in impugned order-in-appeal described the role of Appellant and had observed that the Appellant was engaged in clandestine removals of the goods as partner of M/s Shree Ram Ispat and facts of this case very clearly establish that he was the key person and was responsible for clandestine removal of the goods manufactured by M/s Shree Ram Ispat. He, as a partner, was looking after day-to-day affairs of M/s Shree Ram Ispat and had concerned himself in various irregular activities related to excisable goods including manufacture, storage, removal etc of such goods - the Adjudicating authority had given the detailed finding on the role of the partner. However, considering the overall facts of this case penalty imposed on the Appellant is reduced to ₹ 50,000/-. Appeal allowed in part.

Summary

Issues:
1. Penalty imposition under Rule 26 on two appellants based on findings in the same Order-in-Appeal.
2. Appeal challenging the penalty and findings in the Order-in-Appeal regarding clandestine removal of excisable goods.

Analysis:
1. The judgment deals with appeals filed by two individuals against whom penalties were imposed under Rule 26 for Rs. One lakh each by the adjudicating authority. The penalties were based on findings in the same Order-in-Appeal. The case involved coordinated searches by Central Excise officers at various locations, leading to the recovery of incriminating documents related to the manufacture and clearance of excisable goods against cash transactions. Statements of the appellants revealed their involvement in removal of goods without payment of Central Excise Duty. The Order-in-Original confirmed the demand of duty, interest, and penalties, which were upheld by the Commissioner (A), resulting in the present appeals.

2. In the detailed analysis, the Chartered Accountant representing the appellants argued against the penalties, citing legal precedents where separate penalties on partners of penalized firms were questioned. The arguments also highlighted successful appeals in similar cases, seeking to set aside the penalties imposed. On the other hand, the Revenue representative supported the penalties imposed, emphasizing the involvement of the appellants in dealing with excisable goods without proper documentation. The Revenue cited legal decisions to justify the penalties and distinguished previous cases where third-party evidence was contested.

3. The Member (Judicial) analyzed the submissions and evidence presented by both sides. In the case of one appellant, the penalty was upheld considering confessional statements, recovered records, and the lack of dispute from the manufacturer. The penalty amount was reduced for this individual. Regarding the other appellant, who was a partner in the manufacturing firm, the role in clandestine removal of goods was established, leading to a reduction in the penalty amount as well. Ultimately, both appeals were partly allowed, with penalties reduced to Rs. 50,000 each, based on the overall facts and roles of the appellants in the clandestine activities.

4. The judgment was pronounced on 12.04.2022 by the Member (Judicial) of the Appellate Tribunal CESTAT Ahmedabad, providing a detailed analysis of the issues and the reasoning behind the decision to partly allow the appeals and reduce the penalties imposed on the appellants.