2017 (10) TMI 1329 - AT - Central Excise

Penalty u/r 209-A of the Central Excise Rules 1944 - Undervaluation of inputs - irregular availment of CENVAT/MODVAT credit - case of appellant is that neither the Show Cause Notice nor the Adjudication Order has anyway established that the present appellants were responsible for any activity which lead to the allegations in the said Show Cause Notice against M/s Rathi Ispat Ltd. - Held that - There is no issue framed by the Original Authority in respect of admissibility of the present appellants for imposition of personal penalty under said Rule 209-A of the Central Excise Rules 1944 - there are also no finding given on the facts of omission or commission by the present appellants in the present Adjudication Order which made them liable for imposition of penalty - Without any findings the Original Authority has jumped to the conclusion in Para 10 of the said impugned Order-in-Original 31/03/2007 that the present appellants have willingly schemed and indulged in the fraudulent act of under valuation of the S.S. Billets mis-declaration of S.S. Billets as Other Alloy Steel Billets and misrepresentation of the facts about receipt of Modvat inputs. There is absence of any finding by the Original Authority about the role played by the present appellants in respect of the allegations made against M/s Rathi Ispat Ltd. - In absence of any finding imposition of personal penalty on the present appellants is not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of personal penalty on the appellants under Rule 209-A of the Central Excise Rules, 1944 based on allegations of undervaluation of S.S. Billets, mis-declaration of Stainless Steel, and Modvat credit misuse.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved four appeals arising from a common Order-in-Original passed by the Commissioner of Central Excise, Ghaziabad. The case revolved around allegations of undervaluation of S.S. Billets, mis-declaration of Stainless Steel, and misuse of Modvat credit by M/s Rathi Ispat Ltd. The Show Cause Notice issued proposed personal penalties on the appellants under Rule 209-A of the Central Excise Rules, 1944. The Tribunal remanded the matter back to the Original Authority for adjudication, leading to the impugned Order-in-Original dated 31/03/2007 imposing significant penalties on the appellants.

The appellants challenged the imposition of penalties, arguing that there was no evidence linking them to the alleged activities mentioned in the Show Cause Notice. They contended that the main noticee, M/s Rathi Ispat Ltd., was not before the Tribunal, and no proof established their responsibility for the alleged activities. The Revenue, on the other hand, asserted that the level of evasion alleged in the Show Cause Notice required the active involvement of the company's Directors.

Upon reviewing the contentions, the Tribunal found that the Adjudicating Authority had framed issues related to undervaluation, mis-declaration, and Modvat credit issues but failed to address the admissibility of personal penalties on the appellants under Rule 209-A. The Tribunal noted the absence of findings regarding the appellants' role in the alleged activities against M/s Rathi Ispat Ltd. As a result, the Tribunal concluded that the imposition of personal penalties on the appellants was not sustainable due to the lack of findings establishing their liability. Consequently, the Tribunal set aside the penalties imposed on the appellants and modified the impugned Order-in-Original accordingly.

In conclusion, the Tribunal allowed all the appeals, granting the appellants consequential relief as per the law. The judgment highlighted the importance of establishing a clear link between the alleged activities and individual liability when imposing personal penalties under the Central Excise Rules.