2013 (9) TMI 1019 - HC - Central Excise

Clandestine removal - documents recovered broker of final product of assessee - Whether it is appropriate for the Tribunal to set aside personal penalty assailed by Shri Rameshwarlal Rathi without appreciating the provisions as contained in Sections 9D and 14 of the Central Excise Act and on the grounds that the Commissioner has not examined the individual role as it was proven beyond doubt that he has indulged himself in systematic evasion of Central Excise duty, rendering himself liable for penalty under Rule 26 of Central Excise Rules, 2002 - Held that - In order to impose penalty personally, it is settled position of law that the role of the individual has to be examined. In the instant case, the Tribunal found that the Commissioner has not examined the individual roles nor recorded a categorical finding justifying the penalty imposed. The learned Tribunal has correctly vacated the personal penalty assailed by the respondent, as the conditions for imposition of penalty are not simply satisfied - Decided against Revenue.

Summary

Issues:
1. Interpretation of provisions under Sections 9D and 14 of the Central Excise Act for setting aside personal penalty.
2. Examination of individual roles for imposition of penalty under Rule 26 of Central Excise Rules, 2002.

Analysis:

1. Interpretation of Provisions under Sections 9D and 14 of the Central Excise Act:
The appeal in this case was against a judgment by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, regarding the imposition of a personal penalty. The High Court noted that the Tribunal vacated a demand of Rs. 13,20,056 as the evidence, in the form of documents recovered from an individual, was not supported by reliable evidence. The High Court concurred with the Tribunal's decision, emphasizing the importance of reliable evidence and the need for verification through cross-examination. The Court highlighted that the demand was not supported by any reliance evidence, leading to the dismissal of the demand amount.

2. Examination of Individual Roles for Imposition of Penalty:
Regarding the imposition of penalties on individuals, the Tribunal found that the Commissioner had not examined the individual roles of the appellants and had not justified the penalties imposed. The Court reiterated that for the imposition of a personal penalty, it is essential to examine the individual's role. In this case, the Tribunal correctly vacated the personal penalties as the Commissioner had not examined the individual roles or provided a categorical finding justifying the penalties. The Court upheld the Tribunal's decision, stating that the conditions for imposing a penalty were not met, and there was no legal basis to interfere with the Tribunal's judgment and order.

In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision to vacate the demand amount and personal penalties. The Court emphasized the necessity of examining individual roles for penalty imposition and the importance of reliable evidence in such cases.