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2015 (10) TMI 2350 - CESTAT NEW DELHI

2015 (10) TMI 2350 - CESTAT NEW DELHI - TMI - Imposition of penalty - Penalty on co-noticees - if the main noticee discharges the duty liability alongwith interest and 25% penalty, whether the proceedings would come to an end in regard to other co-notices also - Held that:- in Abir Steel Rolling Mills case [2013 (7) TMI 405 - CESTAT NEW DELHI], the Tribunal has taken the view that if the proceedings have been concluded against the main notice, as provided in these provisions then no further proc .....

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ainst other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the directors/employees of the manufacturer/assessee company. The Tribunal has discussed the category of persons that would fall into the group 'other persons'. Further the Board's Circular No. 831/08/06-EX dated 26.7.2006 has also been considered. I concur with the ratio laid in Abir Steel Rolling Mills case, which is squarely applicable to the instant case, .....

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her and disposed by this common order. Brief facts are as under: 2. The appellant, M/s.Babaji Udyog are engaged in the manufacture and packing of edible oils. M/s.SLH International another proprietary concern is engaged in the manufacture of PET jar and Bottles and PET perform. The appellant purchases pet jars from M/s.SLH International which is used in the packing of edible oils. In pursuant to survey conducted by the anti evasion branch of the Central Excise department, it was revealed that M/ .....

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alty of ₹ 1,50,000/- on M/s.Babaji Udyog, ₹ 1,00,000/- on Shri Santosh Aggarwal, and penalty of ₹ 1,50,000/- was imposed on Shri Inder Aggarwal. The learned Counsel submitted that the main notice in the proceedings viz. M/s.SLH International had already deposited duty demand alongwith interest and 25% penalty before issuance of the show cause notice and that therefore as per proviso to sub clause (2) of section 11A of Central Excise Act, 1944, the proceedings against the appell .....

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the learned DR vehemently argued that though the proceedings against the main noticee M/s.SLH International has been concluded, as they have deposited duty demand alongwith interest and 25% penalty, the proceedings against the co-notices cannot be said to be concluded. It is his case that the penalty upon the appellants have been imposed under Rule 26 which is an independent proceeding. To fortify his arguments, learned DR relied upon the decision in CCE, Raipur vs. Anand Agrawal-2013 (288) ELT .....

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nds concluded and that the proceedings against the appellant do not come to an end. 7. Sub-section (2) of Section 11A is reproduced below: (2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom noticee is served under sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined: Provided that if such perso .....

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nterest not being in excess of the amount partly due from such person." (emphasis supplied) 8. In Anand Aggarwal case (supra), the Tribunal has taken the view as under: 6. I also find that the proviso to Section 2 also refers to the other persons. As such it has to be seen as to who "other person" can be in respect of which the proceedings would get concluded on payment of duty interest and part penalty. The said proviso does not refer to all other persons, but the same qualifies .....

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s under sub-section 1 are not to be issued to other persons who may be employees of the manufacturing unit. As such analyzing the proviso to sub-section (2) of Section 11A, it becomes clear that the proceedings are deemed to be conclusive only in respect of such person who discharges his duty liability in terms of sub-section (1A) or to whom notices stands served under sub-section (1). 8. As is seen from the above, the invocation of penal provision of Rule 26 is dependent upon so many factors wh .....

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ings in respect of all noticees on payment of duty, interest and part penalty by main manufacturer. The said proviso, in my views, only concludes the proceedings in respect of the persons against whom notice under Section 11A is issued and who have deposited the duty in terms of provisions of sub-section (1A) of Section 11A. As such I agree with the Revenue that payment of short paid and non-paid duty by the main manufacturer would not result in conclusion of proceedings against all other person .....

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he co-noticees/persons who face the allegations of contravention of Central Excise Rules, which are linked with the allegation of deliberate/fraudulent short payment, non-payment or erroneous refund of duty against the person chargeable with duty facing the duty demand i.e. the person who are alleged to have knowingly dealt with the excisable goods, liable for confiscation in the manner mentioned in Rule 26(1) of the Central Excise Rules, 2002 and for this reason have been show caused for imposi .....

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chased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the Directors/employees of the manufacturer/assessee company. 6.3 The intention of sub-section (1A) read with sub-section (2) of Section 11A, as is evident from Board's Circular No. 831/08/06-EX, dated 26-7-2006, is to give opportunity to manufacturer/assessee to settle his tax dispute immediately after the receipt of issue of Show Cause and thereby avoiding the litigation. The interpretation of th .....

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