2011 (2) TMI 890 - AT - Central Excise

Penalty - Under Rule 26 of Central Excise Rules 2002 - lower authorities, imposing the penalty has not given any option to the appellant to pay the entire amount of duty along with 25% of the penalty within a period of thirty days of the communication of the order in which case the penalties shall stand reduced to 25% - The Hon ble High Court of Gujarat in the case of Exotic Associates Vs. CCE 2009-TMI - 76674 - Gujarat high court has held that where such no options stand extended by the lower authorities the same can be extended by he higher appellate forum - While upholding the order of the lower authorities confirming duty and imposing 100% penalty give an option to the appellant to pay all the dues along with 25% of the penalty within a period of thirty days from the communication of the present order in which case the penalty shall stand reduced to 25%. As regards the appeals of Shri Mukesh Kumar Ramnivas Gupta and Shri Sunilbhai Raja Ram Patil find that both the said appellants in their statements recorded during the course of investigation have admitted having cleared the goods without payment of duty and having received the same without payment of duty - As such the findings of the lower authorities that they have knowingly involved themselves in the purchase and sale of the goods which they knew were liable for confiscation have to be upheld - Consequently the imposition of penalties upon them in terms of the provisions of Rule 209A are upheld - However keeping in view that fact that M/s. Micro Polyester (P) Ltd. immediately deposited the duty and have already been penalized reduce the penalties on Shri Mukesh Kumar Ramnivas Gupta and Shri Sunilbhai Raja Ram Patil - But for the modification in the quantum of penalties their appeals are otherwise rejected.

Summary

Issues:
Confirmation of duty and penalty against M/s. Micro Polyester (P) Ltd., imposition of penalty on individuals, extension of option to pay lesser penalty, involvement in clandestine removal, reduction of penalties.

Confirmation of Duty and Penalty against M/s. Micro Polyester (P) Ltd.:
The judgment addresses the confirmation of duty amounting to Rs.7,63,606 against M/s. Micro Polyester (P) Ltd., along with the imposition of an identical penalty. The duty confirmation was based on the detection of a shortage of POY during a visit by central excise officers to the factory premises. The Executive Director of M/s. Micro Polyester admitted to the illicit clearance of goods without duty payment. Further investigations revealed that goods were sold to M/s. Akta Trading Company without central excise invoices and duty payment. The Tribunal upheld the duty confirmation due to the admissions of clandestine removals by both the seller and the buyer, without any challenge to these admissions.

Imposition of Penalty on Individuals:
Penalties were imposed on Shri Mukesh Kumar Ramnivas Gupta and Shri Sunilbhai Raja Ram Patil for their involvement in the purchase and sale of goods without duty payment. Both individuals admitted to clearing and receiving goods without duty payment during the investigation. The lower authorities' findings were upheld, leading to the imposition of penalties under Rule 209A. However, considering that M/s. Micro Polyester had paid the duty and been penalized, the penalties on the individuals were reduced from Rs.1.40 lakhs and Rs.60,000 to Rs.75,000 and Rs.30,000, respectively.

Extension of Option to Pay Lesser Penalty:
The appellants requested the Tribunal to decide the appeal on merits, highlighting that the duty amount was paid before the show cause notice issuance, and no option to pay a lesser penalty was provided by the adjudicating authority. The Tribunal extended the option to the appellant to pay all dues along with 25% of the penalty within thirty days from the communication of the order, reducing the penalty to 25%.

Involvement in Clandestine Removal:
The judgment detailed the involvement of M/s. Micro Polyester in clandestine removal based on the shortage of POY found during the officers' visit. The Executive Director admitted to selling goods against cash payments to M/s. Akta Trading Company, corroborated by the partner of the trading company admitting to receiving the goods without duty payment. The confirmation of duty and penalty against M/s. Micro Polyester was upheld due to these admissions.

Reduction of Penalties:
While the penalties on the individuals were reduced, the confirmation of duty and imposition of penalties on M/s. Micro Polyester were upheld. The Tribunal emphasized the need to uphold penalties in cases of involvement in the purchase and sale of goods without duty payment. The judgment concluded by disposing of all three appeals in the manner described, with modifications in the quantum of penalties for the individuals but rejection of their appeals otherwise.