2015 (6) TMI 735 - AT - Central Excise

Evasion of duty - clandestine removal of goods - Imposition of penalty - Held that - Role of Shri V K Gupta as described in para 4.301 and 4.302 of the impugned order is not covered by the activities enumerated in rule 209A of Central Excise Rule 1944/ Rule 26 of the Central Excise Rule 2001/02 for which penalty is attracted and similarly the Role of Shri VK Gupta is also not covered by the activities enumerated in section 112(b) of the Customs Act 1962 which would attract penalty. Shri VK Gupta has not acquired possession of or has not dealt with any excisable goods which he knew or had reason to belief were liable for confiscation and similarly he has not acquired possession of or has sold or was involved in dealing with any imported goods which he knew or had reason to belief were liable for confiscation. In view of this we hold that the provisions of Rule 209A of Central Excise Rules 1944/ Rule 26 of the Central Excise Rule 2001/2002 are not attracted, and hence, penalty imposed on him is not sustainable. For the same reason, penalty imposed on him under section 112(b) of the Customs Act, 1962 is also not sustainable. Penalty on other appellants is also set aside - Decided in favour of assessee.

Summary

Issues: Allegation of duty evasion by clandestine removal, Penalty imposition under various sections and rules, Role of employees in the evasion activities.

Analysis:
1. Allegation of Duty Evasion: The case involves M/s Margra Industries Ltd., accused of clearing polished marble slabs without duty payment. The Commissioner confirmed a duty demand of Rs. 92,09,991 against the company, along with penalties under different sections and rules. The appeals were filed against this order.

2. Penalty Imposition: The main argument presented was that the penalties imposed on the employees were not sustainable as they were merely following instructions from the management and were not directly involved in the illegal activities. The defense highlighted that the employees did not fall under the activities specified in the relevant rules and sections for penalty imposition.

3. Role of Employees: The judgment analyzed the roles of different employees, such as Shri VK Gupta, Shri Pramod Nigam, Shri Manoj Gupta, and Shri Abbas Ali. It was observed that the activities they were accused of did not align with the provisions of Rule 209A of Central Excise Rules 1944, Rule 26 of the Central Excise Rule 2001/2002, or section 112(b) of the Customs Act 1962, which were necessary for penalty imposition.

4. Legal Interpretation: The Tribunal scrutinized the specific actions of each employee and concluded that their involvement did not meet the criteria for penalty under the mentioned rules and sections. The judgment referred to a previous case to support the decision, emphasizing that penalties could not be imposed on employees who were merely following instructions from the management.

5. Decision: Ultimately, the Tribunal set aside the impugned order regarding the imposition of penalties on the appellants, considering their roles and the lack of direct involvement in the evasion activities. The appeals were allowed, highlighting that the penalties under section 112(b) of the Customs Act 1962 and Rule 209A of Central Excise Rule 1944 were not applicable in this case.