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TMI Blog2003 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... er disallowed the Modvat credit and imposed a penalty under Rule 173Q(1)(bb) of the Central Excise Rules, 1944 of Rs. 5,000/- on the respondent-company, under Rule 210 of the Central Excise Rules, 1944, a penalty of Rs. 1,000/- was imposed on Shri M. Rambabu and penalty proceedings initiated against Dr. A.J. Prasad, Shri Kondal Reddy and Shri M.S. Sastry were dropped. 3. Revenue, after examining the material has filed this appeal on the following grounds : (i) This being a case of forgery of documents, penalties imposed were low and the dropping of the proceedings against Dr. A.J. Prasad, Shri Kondal Reddy and Shri M.S. Sastry were not called for and they were liable for penalties on the following facts, as furnished against the name of each individual person as follows : "I. Dr. A.J. Prasad, Managing Director : (1) As per the statements of Shri R. Venkatram, Shri A.J. Prasad was instrumental in concealing the fraud which was obviously perpetrated by him. (2) Shri R. Venkatram had also stated that the fraud was known to Dr. A.J. Prasad in May/June, 1992 (six months before the officers visited the factory) when Shri R. Balasubrahmanyam, Group Manager called Shri Venkatram, Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record, it is found : (a) From the findings of the Commissioner in the impugned order, it is apparent that his findings to the effect - "I am inclined to agree with the Company's plea that the company was defrauded by means of forgery. It is significant to note that as per the records of the case, the officers of anti-evasion of the Collectorate have visited the factory on December 24, 2002 and recovered certain records. Immediately thereafter Sab Nife held a Board Meeting on January 7, 1993 and discussed the matter relating to the substantial misappropriation of funds of the Company through forgery as mentioned above. A copy of the minutes of the Meeting was presented during the course of personal hearing. This document indicates in clear, categorical and the most uncertain terms that no sooner the forgery surfaced through hush-hush talk of their employees, the Company had swung into action to identify the perpetrators of forgery, though it turned out to be a vain bid. The company's investigation started much before the entry of the Anti-evasion Officers into the fray. The Company's investigation revealed that a substantial sum had been advanced to a person in Madras. Subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l offence. His deposition that as an employee, he had to obey for his livelihood cannot be accepted. Even if it is accepted, his admission of committing forgery is enough to prove his criminal conduct in the whole affair. In my view, the Principal Actor in this play is Shri Rambabu, who actually committed forgery thereby instrumental in taking Modvat Credit by Sab Nife. The question comes whether he can be penalized under Rule 209A of the Central Excise Rules, 1944 read with Section 9AA of the Central Excises and Salt Act, 1944. In my view, Shri Ram Babu cannot be penalized either under Rule 209A or under Section 9AA of the Act. I proceed to set out the reason for such a view. Before doing so, Rule 209A ibid is reproduced below for proper appreciation. Rule 209A; (Not extracted) From a closer perusal of the said Rules, it is apparent that penal action is attracted on a person if he commits any one or more or all the under mentioned acts with reference to excisable goods which he knows or has reason to believe are liable to confiscation: (a) possession; (b) transportation (c) removal (d) deposital (e) custody (f) concealment (g) sale (h) purchase (i) dealing them in any o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference. Section 9AA (not extracted) My interpretation is that the said section empowers the court of law to punish the concerned persons who commit the specified offences. It does not empower the Adjudicating authority to impose the penalty on the persons concerned with the offence under the Act and Rules. According to me, no other interpretation is possible if this section is read in conjunction with Sections 9, 9A to 9F ibid. I am, therefore, convinced that the Department has invoked a wrong Section and a wrong Rule. The question is whether it is possible to impose penalty on Shri Rambabu under any other Rule under the Central Excise Rules, 1944. I do not find any other Rule except Rule 210 of the Central Excise Rules, 1944. Rule 210 (not extracted) It is clear that where no other penalty is imposed, recourse can be had to the said Rule. But the difficulty is that the Show Cause Notice does not involve this Rule. Shri Rambabu may argue that penalty under this Rule cannot be imposed on him under Rule 210 ibid. I have given my utmost consideration to his possible plea. This plea cannot be accepted for the reason that there is ample case law on this subject. The Courts have ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused there is no other evidence on record to point finger at him. The evidence sought to be adduced by the Department against Shri Reddy is based on surmises and inferences. In view thereof, I am of the opinion that sufficient evidence is not forthcoming to warrant imposition of penalty on Shri Reddy. There is no other course left for me than to drop the allegation levelled against him. Accordingly, I do so. As far as Shri Sastry is concerned, it is observed that he vehemently denied the accusation levelled against him by Shri Rambabu. He was Financial Controller of Sab Nife during the material time. On careful consideration of the evidence on record, I am convinced that enough evidence is not available to impose penalty on him. In this regard, I adopt the same reasoning as done in respect of Shri Reddy. Dr. A.J. Prasad, Managing Director : Dr. Prasad is Managing Director of Sab Nife and was in the same position during the relevant period. The gravament of the charge against him is that the subject offence was committed with the consent of Dr. Prasad and he enabled Sab Nife to claim Modvat credit by fraudulent means. The evidence on records does not support this charge. As ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat they would be liable for penalty under Rule 210 of the Central Excise Rules or the grounds as taken by Revenue in this appeal. 6. The learned consultant for the appellants brought to our notice that the said persons including the company have been prosecuted in the Court of Special Judge for Economic Offences, Hyderabad, and the learned judge had imposed a fine of Rs. 5,000/- each on these persons including the company. Aggrieved by this judgment, a criminal appeal was filed before the Hon'ble High Court of Andhra Pradesh by the Department for enhancement of the fine and the sentence of imprisonment. The Hon'ble High Court dismissed the appeal filed by the Department on technical grounds on 19-4-2001. On an appeal along with stay application for stay filed before the Supreme Court, against this dismissal by the Andhra Pradesh High Court vide its order dated 19-4-2001, the Supreme Court had on 12-2-2002 remanded the case to the High Court with directions to treat this as revision in the matter [2002 (142) E.L.T. 521 (S.C.)]. The High Court of Andhra Pradesh dismissed the matter finally vide its order on 12-11-2002. In this -iew of the matter, the Judicial Application of mind in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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