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TMI Blog2011 (4) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... 2151110. Shri Rajeev Agarwal Appellant No. 3 is the Director of the M/s. Prabhat Rotopack Pvt. Ltd, Appellant No. 1. 3. On 8-11-2006, a team of Central Excise officers while conducting preventive checks at the factory premises of Appellant No. 1 verified the stock of finished goods and stock of raw material lying in the factory premises of Appellant No. 1. Shortage of 2114.93 Kg. of printed flexible packing material (roll form) valued at Rs. 3,38,389/- involving total duty of Rs. 55,225/- was detected. Further, the officers found that 1438.90 Kgs. of printed flexible packing material (pouch form) valued at Rs. 2,60,441/-, 2956 Kgs. polyethylene film valued at Rs. 2,06,920/- and 3666 Kgs. printing ink valued at Rs. 4,03,260/- were found in excess of recorded stock of these goods in their accounts. The excess goods were seized under reasonable belief that they were kept for clandestine manufacture of finished goods and removal without payment of duty. 4. During the course of investigation, the officers came to know that another unit in the name of M/s. J.B. Polymers (Appellant No. 3), a proprietorship firm in the name of Ms. Manju Agarwal, wife of Appellant No. 2 was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cenvat amounting to Rs. 3,26,783/- and education cess amounting to Rs. 6,536/- totalling to Rs. 3,33,319/- (Rupees Three Lacs Thirty Three Thousand Three Hundred and Nineteen only) is confirmed against M/s. Prabhat Rotopack Pvt. Ltd., Mathura. As the said amount has already been paid by the said M/s. Prabhat Rotopack Pvt. Ltd., Mathura, I appropriate the same to the credit of the Government account. (4) that a penalty of Rs. 3,33,319/- (Rupees Three Lacs Thirty Three Thousand Three Hundred and Nineteen only) is also imposed upon M/s. Prabhat Rotopack Pvt. Ltd., Mathura under Section 11AC of the Central Excise Act, 1944 read with rule 25(b) of the Rules ibid. (5) that a penalty of Rs. 3,33,319/- (Rupees Three Lacs Thirty Three Thousand Three Hundred and Nineteen only) is also imposed upon Shri Rajeev Kumar Agarwal, Director M/s. Prabhat Rotopack Pvt. Ltd., Mathura under Rule 26(1) of the Rules ibid. (6) that the demand of interest under Section 11AB of the Act ibid on duty of excise amounting to Rs. 2,39,292/- paid late on 9-11-2006, is confirmed against M/s. Prabhat Rotopack Pvt. Ltd., Mathura. (7) &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even before issue of Show Cause Notice, the penalty imposed on the main appellant itself is not sustainable and, therefore, penalty imposed on him as a Director of Appellant No. 1 is also not maintainable. There is also a submission that the penalty amount of Rs. 3,33,319/- imposed on him is very harsh since the duty amount was deposited by the main appellant even before issue of SCN. 8.2 In the Central Excise Act as per Section 9AA where an offence under this Act has been committed by a company, every person who at the time of the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. The section further provides that the provision of this section shall not apply 'if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. It is clear from the above section and there is a presumption that the Director was involved in the offence. Appellant No. 2 has not submitted any offence to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods were kept in the factory with the intention of clearing it without payment of duty. Since there is a statutory duty to account for manufactured goods lying in stock in the factory, the intention to evade duty become very obvious. He also argued that since the party has not paid penalty within 30 days of the order in original as required under Section 11AC concession of penalty only to the extent of 25% of duty evaded cannot be extended. The matter of redemption fine, the Departmental Representative submits that redemption fine imposed is only about 25% of the value of the seized goods which is very nominal and there is no reason to reduce the penalty. In the matter of penalty under Section 25(b), he argued that this is a separate penalty for non-maintenance of account properly and this penalty also has been properly imposed by the adjudicating authority and upheld by the Commissioner (Appeals). 10.4 Since instances of clandestine removal is admitted by the Appellant himself, there is a presumption that the unaccounted raw materials were stored with the intention of manufacturing final products and clearing it without payment of duty. So considering the case laws cited by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e option to pay applicable interest and 25% of the duty evaded. Since this was not done, following the decision of Delhi High Court in K.P. Pouches (P) Ltd. v. UOI - 2008 (228) E.L.T. 31 now I give the Appellant an opportunity to pay applicable interest on duty confirmed along with 25% of the duty evaded as penalty within 30 days of receipt of the order. If such payment is made it will be in full discharge of penalty on this count. If this is not done the full penalty will be payable. 16. In the case of penalty of Rs. 3,33,316/- imposed on Shri Rajiv Kumar Agarwal under rule 26 of the Central Excise Rules, I note that there is no legal requirement that the penalty should be equal to the duty evaded. After giving concession of paying 25% of duty evaded to the main appellant it is harsh to impose this amount of penalty on the Director of the company. So reduce this penalty to Rs. 70,000/-. 17. There has not been any contest regarding the interest payable and so the same is confirmed. 18. I find that the penalty imposed on J.B. Polymers is not based on sustainable charges and runs contrary to the totality of the case made out as already explained. So this penalty is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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