2024 (2) TMI 433 - AT - Central Excise

Levy of penalty u/r 26 of the Central Excise Rules, 2002 - clandestine removal - allegation based on certain printouts and private records seized from the premises of the company for the period 01.04.2006 to 07.06.2007 - No corroborative evidences - HELD THAT - It is a fact that investigation has been done after resigning of the Directors from the company. No corroborative evidence has been produced by Revenue showing that the appellants were actively involved in the clandestine removal of the goods and without specifically assigning the reasons that the appellants were involved in the clandestine removal of the goods, penalty cannot be imposed, as held by this Tribunal in the case of COMMISSIONER OF C. EX., MEERUT VERSUS RAKESH SINGHAL 2006 (6) TMI 407 - CESTAT, NEW DELHI . Thus, penalty under Rule 26 cannot be imposed on the appellants. Accordingly, the impugned order qua imposing Rs.10.00 Lakhs each on both the appellants is set aside - appeal allowed.

Summary

Issues: Appeal against penalties imposed for alleged clandestine removal of goods.

Summary:
The appellants, former Directors of M/s. Vijaya Sponge & Ispat Pvt. Ltd., appealed against penalties imposed for alleged clandestine removal of goods. An investigation was initiated based on printouts and private records seized from the company's premises. The demand of Rs.24,99,736/- was proposed against the company, with penalties of Rs.10.00 Lakhs each on both appellants. The appellants argued they had no involvement with the company post-2007 and were not aware of the activities in question. They contended that penalties were imposed without corroborative evidence or independent witnesses, citing relevant tribunal decisions. The department maintained that the appellants were directors during the period in question and failed to cooperate with the investigation.

The Tribunal found that the investigation took place after the appellants had resigned from the company. It noted the lack of evidence showing the appellants' active involvement in the alleged clandestine removal of goods. Referring to precedent, the Tribunal emphasized that penalties under Rule 26 cannot be imposed without specific reasons or evidence of intentional evasion. Consequently, the penalties of Rs.10.00 Lakhs each on both appellants were set aside. The appeals were allowed with any consequential relief.

*(Order pronounced in the open court on 08. 02. 2024.)*