TMI Blog2019 (5) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, I hold that the appellant could not prove by cogent and convincing evidence that they were not clandestinely removing the said goods therefore the duty on 1479 Nos of bags amounting to ₹ 1,73,625/- is confirmed. Penalty on Directors - HELD THAT:- Penalty under Rule 26 of the Central Excise Rules is imposable on 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 the Rules but there is no evidence in the present case that the Directors in their individual capacity were guilty of any omissions and commissions mentioned in the Rule - Essentially, in the present case unintended lapses were there and hence the imposition of personal penalty on the Directors is not justified. Appeal allowed in part. - E/22006, 22009, 22010/2018-SM - Final Order No.20431-20433/2019 - Dated:- 14-5-2019 - SHRI S.S GARG, JUDICIAL MEMBER Mr. Pradyumna G.H. Advocate For the Appellant Mrs. Kavita Podwal And Mr. K.Mura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation under the reasonable belief that the same were intended for clearance without payment of duty. After completion of the investigation, SCN dated 25.09.2017 was issued by the Assistant/Deputy Commissioner of Central Excise, GST, Bangalore as to why: (a) Central Excise Duty amounting to ₹ 3,38,399/- on the seized goods should not be demanded and recovered from them under Section 11A(4) of CEA; (b) Central Excise Duty amounting to ₹ 1,73,625/- on the excisable goods removed without payment of duty under the cover of delivery challans should not be demanded and recovered from them under Section 11A(4) of CEA; (c) Interest at appropriate rate as prescribed under Section 11AA of CEA should not be demanded on the amount mentioned (a) above; (d) Penalty should not be imposed on them under Section 11AC of CEA/Rule 25 of Central Excise Rules for non-payment of Central Excise Duty with wilful intent to evade payment of duty. 2.1. After considering the reply to the SCN filed by the appellant, the Assistant Commissioner of Central Tax, Bangalore vide order dated 12.03.2018 confirmed the demand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants had raised sales invoices after discharging applicable duty and these facts were explained in detail to the DGCEI Officers and in spite of the satisfactory explanation offered during the investigation the goods had been seized on the ground that the same had not been accounted with intent to clear without payment of duty. He further submitted that it is a undisputed fact that the goods in question viz. 1806 Nos of bags were lying in the registered factory premises only and the same were not seized outside the factory premises or during transit. He further submitted that although duty is directed on manufacturing activity, Rule 4 of Central Excise Rules, 2002 specifically provides that duty is payable only at the time of clearances of the goods from the factory. There is no admission of anybody including the Directors that the goods in question were not intended to be removed without payment of duty. Thus the non-accountal of the goods was only a technical breach. For this submission, he relied upon the ratio of the CESTAT decision rendered in the case of Commissioner of C.Ex v. Maghan Paper Nukks (P) Ltd [2008 (228) ELT 153] wherein it was held that in the absence of any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Rules, the Learned Counsel submitted that the requirement as envisaged under Rule 26 of the Central Excise Rules, 2002 for imposing the penalty on the Directors is not satisfied in the present case. Further, there is no evidence in the present case that the Directors in their individual capacity were guilty of any of the omissions and commissions mentioned in the Rule. For this submission, he placed reliance on the decision of CESTAT rendered in the case of Vimlachal Print Pack Pvt. Ltd. v. Commissioner of C.Ex., Ahmedabad-II [2017 (6) GSTL 496 (Tri. Ahmd.) wherein it was held that when no specific role of Director pointed out, there is no reason to impose penalty under Rule 26 of the Central Excise Rules, 1944. 5. On the other hand, Learned AR defended the impugned order and submitted that 1806 Nos of Bags were seized during the course of investigation on the ground that the same had not been accounted for in the statutory records with intent to clear without payment of duty. Now, the appellant has admitted their liability and has paid the same along with interest of ₹ 1,01,423/- during the pendency of this appeal clearly shows that the appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to confiscation under the Act or the Rules but there is no evidence in the present case that the Directors in their individual capacity were guilty of any omissions and commissions mentioned in the Rule. Essentially, in the present case unintended lapses were there and hence the imposition of personal penalty on the Directors is not justified. In this regard, I follow the decision in the case of Vimlachal Print Pack Pvt. Ltd (supra) wherein it was held that when specific role of the Director is not pointed out, there is no reason to impose penalty under Rule 26 of the Central Excise Rules, 1944. Therefore, I set aside the penalty imposed on the Directors to the extent of ₹ 50,000/- each. 7. In view of my discussion above, the demand of ₹ 3,38,399/- on the company along with penalty is set aside. Further, the demand of ₹ 1,73,625/- is confirmed and the same has been paid along with interest also. The appellant is required to pay the equal penalty of ₹ 1,73,625/- under Section 11AC of the Act. Further, the penalties on the Directors are dropped and all the three appeals are accordingly disposed of. (Order was pronounced in Ope ..... X X X X Extracts X X X X X X X X Extracts X X X X
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