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M/s Diamond Roadways, Shri Mahendra K. Agarwal, Shri Manish R Agarwal, Shri Ramavtar K. Agarwal Versus Commissioner of Central Excise, Nashik

2016 (11) TMI 990 - CESTAT MUMBAI

Levy of penalty in the absence of confiscation - Invocation of Rule 26 and not sub-rule 2 of Rule 26 - Held that: - the issue regarding sub-rule (2) of Rule 26 raised by the learned Counsel is irrelevant as Rule 26 has been invoked and not sub-rule 2 of Rule 26. As regards non-imposition of penalty in case where there is no proposal for confiscation of goods, the Hon'ble Supreme Court in the case of Sanjay Vimalbhai Deora [2015 (1) TMI 537 - SUPREME COURT] has upheld the decision of Hon'ble High .....

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l Excise Rules, 2002 has been served to all the appellants. - The penalties are reduced from ₹ 1 lakh to ₹ 75,000/- on Shri Mahendra K Agrawal, Manish R Agrawal & M/s Diamond Roadways and from ₹ 25,000/- to ₹ 20,000/- on Shri Ramavtar K Agrawal - appeal disposed off - decided against appellant. - E/108, 110, 111 & 112/10 - A/86925-86928/16/SMB - Dated:- 31-3-2016 - Shri Raju, Member (Technical) None for M/s Diamond Roadways Shri Nimesh Mehta, Advocate for Appellant Sh .....

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id order. A penalty of ₹ 1 lakh each was imposed on Shri Mahendra K Agarwal, MD; Manish Rr Agarwal - broker and M/s Diamond Roadways and ₹ 25,000/- on Shri Ramavtar Agarwal. All these penalties were imposed under Rule 26 of Central Excise Rules, 2002. 2. Nobody appeared for M/s Diamond Roadways. 3. Learned Counsel for the appellant namely, Shri Mahendra K Agarwal, Manish R Agarwal and Ramavtar Agarwal argued that the main appellants had paid the duties and 25% of penalty and therefor .....

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his assertion, he relied on the decision of the Tribunal in case of Air Carrying Corporation P. Ltd. - 2008 (229) ELT 80 (Tri-Mum). He further argued that Rule 26(2) of the Central Excise Rules was introduced w.e.f. 1.3.2007 and the said rule cannot be invoked for offences committed before 2007. For this assertion, he relied on the decision of the Hon'ble High Court of Punjab & Haryana in case of Mini Steel Traders - 2014 (309) ELT 404 (P&H). 4. Learned AR for the Revenue relies on t .....

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ited the decision of Tribunal in case of one of appellant namely, Diamond Roadways, wherein the penalty under Rule 26 has been upheld in similar circumstances. 5. I have gone through the rival submissions. I find that the issue regarding sub-rule (2) of Rule 26 raised by the learned Counsel is irrelevant as Rule 26 has been invoked and not sub-rule 2 of Rule 26. As regards non-imposition of penalty in case where there is no proposal for confiscation of goods, the Hon'ble Supreme Court in the .....

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under sub-section (1) of Section 11A. In this case, notice under Rule 26 of the Central Excise Rules, 2002 has been served to all the appellants. In this regard, Tribunal in case of Anand Agrawal - 2013 (288) ELT 90 (Tri-Del) has observed as follows: - 4. Sub-section (1) of Section 11 provides for issuance of show cause notice demanding short-paid or non-paid duty within the period of either one year from the relevant date or five years where there is mis-statement or suppression of facts. Sub- .....

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and penalty of 25%, proceedings in respect of such person and other persons to whom notices are serving under sub-section 1, served under Section 11 shall be deemed to be conclusive as to the matter stated therein. A combined reading of sub-section (1A), sub-section (2) and proviso to sub-section (2) of Section 11 makes it very clear that the said provisions are applicable in respect of persons to whom notice stands issued under sub-section (1) of Section 11A. Notice under sub-section 1 of Sect .....

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hort-payment or non-payment of duty does not arise. 5. Further when we analyze proviso to sub-section (2) of Section 11A, the same refers to conclusion of proceedings in respect of such person. Such person refer to the persons to whom notice has been served under sub-section (1) of Section 11 and who have paid the duty along with interest and 25% of penalty within a period of 30 days of receipt of the notice. Accordingly, it has to be concluded that the proceedings do not come to an end in respe .....

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r sub-section (1). As such the reference to other persons in the said proviso is not to all other persons to whom notices are served for imposition of penalty under law but are restricted to other persons to whom notices are served under sub-section (1) of Section 11A. As already observed, notices under sub-section (1) of Section 11A are served only to those persons who are required to pay duty and have either not paid duty or short-paid. Notices under sub-section 1 are not to be issued to other .....

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or better appreciation, the said rule is re-produced below:- RULE 26. Penalty for certain offences - (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or *[(two thousand rupees], w .....

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in certain circumstances cannot be said to be a part of the proviso to sub-section (2) of Section 11A so as to conclude the proceedings 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 paym .....

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