2024 (11) TMI 344 - AT - Central Excise

Imposition of penalty under Rule-26 of the Central Excise Rules, 2022 on the Appellant who was Director of sales and marketing of co-noticee Company - Non-responsive attitude of the Respondent Department - Interpretation of the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - HELD THAT - Even after noting in his order that Appellant looked after Sales and Marketing activities of goods produced by the Appellant company, he is fastened with penal liability for manufacture of the goods by the Appellant Company and since excise duty is on the manufacture and its sales and marketing are post occurrence activities, in which Appellant was apparently engaged, there can not be a personal liability on the Appellant when learned Commissioner himself has noted that Appellant was part of the team entrusted with the task of determining the pricing of various products and regarding his duty concerning payment/nonpayment of appropriate excise duty, nothing is available in the entire case records to implicate him as a person equally responsible for evading payment of tax. Therefore, it is a fit case where Appellant is in a win win situation for the reasons that the order of penalty imposed on him has already been set aside by CESTAT and no further proceedings like re-adjudication or Appeal was initiated against him and thereby the order passed by the CESTAT in 2015 has become final, apart from the fact that even without an application from the Appellant under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 , penalty recoverable from him should be treated as NIL in view of operation of section 124(1)(b) of the Amended Finance Act, 2019 and that the charge labelled against Appellant imposing penalty as a punishment is as such, unsustainable in both law and facts. There exists no re-adjudication scope - Appeal allowed.

Summary

Issues:
Imposition of penalty under Rule-26 of the Central Excise Rules, 2022 on the Appellant challenged. Non-responsive attitude of the Respondent Department questioned. Interpretation of the "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019" for co-noticees. Legality of penalty imposed on the Director of Sales and Marketing.

Analysis:
The appeal challenges the imposition of a penalty under Rule-26 of the Central Excise Rules, 2022 on the Appellant, who was the Director of sales and marketing of a company. The company was directed to show cause for payment of additional excise duty, interest, and penalty. The Appellant and the company challenged the order before the Tribunal, which set it aside on the ground of limitation. The Appellant Company availed the "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019" and received relief, but the present Appellant did not receive any order on their application under the scheme, leading to a challenge of the penalty imposition.

The Tribunal noted the non-responsive attitude of the Respondent Department and highlighted the failure to list all appeals arising from common orders for hearing together, as per the CESTAT manual. The Tribunal emphasized that the order setting aside the Commissioner's decision rendered the appeal technically pending but infructuous, as the matter went back to the stage of the show-cause notice issuance, which remained undetermined.

Regarding the "Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019," the Appellant argued that penalties and late fees should be covered under the scheme, as per the Amended Finance Act. The Department objected, stating that co-noticees cannot avail the scheme until the main noticee settles the duty demand. The Appellant cited CBIC instructions and argued for the issuance of a discharge certificate directly for co-noticees once the main noticee pays the tax dues.

The Tribunal analyzed the penalty imposition on the Director of Sales and Marketing, finding no personal liability on the Appellant for evading tax payment. The Tribunal concluded that the penalty imposed on the Appellant was unsustainable in both law and facts. The appeal was allowed, affirming the earlier order setting aside the Commissioner's decision, with no scope for re-adjudication.

In conclusion, the Tribunal disposed of the appeal in favor of the Appellant, emphasizing the inapplicability of the penalty and affirming the setting aside of the Commissioner's order.