COMMISSIONER OF CENTRAL EXCISE Vs. RANA SENGUPTA
LAWS(GJH)-2008-11-176
HIGH COURT OF GUJARAT
Decided on November 14,2008

COMMISSIONER OF CENTRAL EXCISE Appellant
VERSUS
Rana Sengupta Respondents

JUDGEMENT

- (1.) THE appellant -Revenue has proposed the following question: Whether the Tribunal, in the facts and circu mstances of the case, is justified in reducing the redemption fine after having upheld the confiscation and further whether on confiscation having been upheld on the ground of violation of Rule 173Q(1)(b) of the Central Excise Rules, 1944 is the Tribunal justified in setting aside the penalty under Rule 173Q? which admittedly does not arise out of the impugned order of the Tribunal in case of the respondent -assessee. Hence, the learned counsel for the appellant has re -framed the question in line with re -framed question in Tax Appeal No. 1040 of 2007 which was a case of another employee of the Company and arising out of the common order of the Tribunal. The said re -framed question reads as under: Whether in view of the admissions contained in the statement of the R espondent recorded under Section 14 of the Act, which is admissible in evidence, the Tribunal has committed substantial error of law in setting aside the personal penalty imposed under Rule 209 -A of the Central Excise Rules, 1944 though the Respondent had knowingly concerned himself in fraudulent acts in contravention of provisions of the rules and dealt with goods which are held liable to confiscation under Rule 173Q of the Rules?
(2.) IT is an accepted fact that the facts in relation to the respondent -assessee and Shri Keshavan Gokulan, Manufacturing Manager, who was the respondent -assessee in Tax Appeal No. 1040 of 2007 are common. Even the impugned order of Tribunal is a common order. In the case of Shri Keshavan Gokulan , vide judgment rendered on 17 -7 -2008 2009 236 ELT 461 , the following order has been made : The question, as proposed by the appellant, admittedly does not arise out of the impugned order of the Tribunal in case of the respondent -assessee. Hence, the learned counsel for the appellant has re -framed the question which reads as under : Whether in view of the admissions contained in the statement of the Respondent recorded under Section 14 of the Act, which is admissible in evidence, the Tribunal has committed substantial error of law in setting aside the personal penalty imposed under Rule 209A of the Central Excise Rules, 1944 though the Respondent had knowingly concerned himself in fraudulent acts in contravention of provisions of the rules and dealt with goods which are held liable to confiscation under Rule 173Q of the Rules? It appears that, against the Limited Company, wherein the assessee is serving as Manager, certain proceedings were taken and as a consequence, after drawing of a panchnama on 16/17 -12 -1998, statement of respondent -assessee was recorded on 17 -12 -1998 under Section 14 of the Central Excise Act, 1944 . After issuing a consolidated notice, the adjudicating authority made an Order -in -Original on 31st March, 2004, whereunder an order of confiscation came to be made against the Company under Rule 173Q(1) of the Central Excise Rules, 1944 (the Rules) and also granted an option to redeem the confiscated goods by paying redemption fine of Rs. 1,73,425/ -; demand of duty of Rs. 4,63,095/ - was also raised under Rule 9(2) of the Rules; there were further amounts demanded and penalty of Rs. 7,71,153/ - was imposed upon the Company under Rule 173Q(1) of the Rules. Confiscation of land, building, plant, machinery etc. was also ordered. A penalty of Rs. 50,000/ - came to be imposed upon respondent -assessee under Rule 209A of the Rules. Ultimately, the matter reached Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (the Tribunal) by way of appeals filed by the Company and its employees, including the present respondent. In relation to the personal penalties imposed on the officers of the Company, the Tribunal recorded the following finding : [10] As regards the personal penalties on the officers of the appellants, I find that these penalties are imposed under provisions of Rule 209A of the Central Excise Rules, 1944 . In order to invoke the provisions of Rule 209A, it is the requirement of the authorities to show and bring on record, that the officers had knowledge that the goods are liable for confiscation. In the absence of any such evidence, the provisions of Rule 209A cannot be invoked. It is seen from the records that the officers categorically stated that they are not very much aware that about the provisions to be followed and on being pointed out by the authorities reversed/ debited the amounts. This itself would show that the officers had no knowledge of the Central Excise law. In view of this, I find that penalties imposed on these two officers under the provisions of Rule 209A is unwarranted and is liable to be set aside and I do so. The learned counsel for the appellant has read extensively from the show cause notice issued to the Company and its employees and also invited attention to the findings recorded by the adjudicating authority. It was submitted that, in case of the Company, Tax Appeal No. 1041 of 2007 has been admitted on the following questions : [a] Whether the Tribunal, in the facts and circumstances of the case, is justified in reducing the redemption fine after having upheld the confiscation? [b] Whether on confiscation having been upheld on the ground of violation of Rule 173Q(1)(b) of the Central Excise Rules, 1944, is the Tribunal justified in setting aside the penalty under Rule 173Q? On the basis of question No. 2 in case of the Company, it was urged that the penalty deleted in hands of the Company on a technical plea has not been accepted and the appeal is pending. That, once the issue as to whether confiscation of goods was correctly made in hands of the Company is an issue which is open, the penalty, deleted in hands of respondent -assessee, as a consequence, is required to be raised as a substantial issue of law. Lastly, it was submitted that, on reading of the panchnama and the statement of respondent -assessee, it became apparent that the requirement of Rule 209A of the Rules regarding knowledge was fulfilled considering the fact that the goods were not only liable to confiscation, but confiscation has been upheld by the Tribunal. In response to the show cause notice, one of the principal conten - tions raised, and as re -produced by the adjudicating authority, reads as under : [5] They submitted that the lapses were purely clerical mistakes committed by their newly appointed staff and devoid of any intention or design, to remove goods clandestinely without payment of duty or make overdrawn from the PLA account or take irregular modvat credit or take credit towards excess duty paid. On being pointed out, they have suo motu reversed the 10% modvat credit amounting to Rs. 2,09,313/ - towards inputs sent to the processor for job -work, reversed the credit of Rs. 98,745/ - taken towards excess duty paid and have also paid up the interest amounting to Rs. 1,26,488/ - on the overdrawn PLA account. [6] The lapses can at best be treated as inadvertent errors and procedural infractions, which need to be excused and condoned. The impugned order of Tribunal is a consolidated order in relation to the appeals of the Company and the employees, wherein it has been held: Insofar as the demand of Rs. 4,63,095/ - is concerned, that the said demand under Rule 9(2) is not sustainable because the goods were found lying in the factory premises and excise duty is payable on manufactured goods only when they are removed from the factory premises; The redemption fine has been reduced to a sum of Rs. 75,000/ -; In relation to confiscation of land, building, plant and machinery, the same has been set aside, by holding that. As regards confiscation of the land, building, plant and machinery, etc., it is seen that the provisions of Rule 173Q(2)(a) of Central Excise Rules, 1944 would apply generally to the habitual offenders who have total disregard to the law. It is on record that in this case that the appellants non -accountal of goods and other interactions are not with any intention to evade payment of duty, and hence, the appellants cannot be clubbed in the category of habitual offenders . Penalty in case of the Company under Rule 173Q of the Rules has been set aside on the basis of an Apex Court decision referred to by the Tribunal. The findings of the Tribunal in relation to deletion of penalty in hands of the respondent -assessee have to be appreciated in the aforesaid context; notwithstanding with the fact that the reduction of redemption fine and deletion of penalty under Rule 173Q of the Rules in hands of the Company are under challenge. The explanation tendered by respondent -assessee has not been met with by the adjudicating authority. As against that, the Tribunal has recorded that the requirement of Rule 209A of the Rules to show and bring on record that the officer had knowledge, is absent, and there is a categorical finding that the officers were not aware about the provisions to be followed, had no knowledge of Central Excise law, and upon being pointed out, had reversed the entry/debited the amounts. Thus, it is apparent that, on the same set of facts and evidence, the Tribunal has, after appreciating the same, arrived at a conclusion that the requirement of Rule 209A of the Rules is not shown to have been satisfied. In the circumstances, even if a different view is possible on the same set of facts and evidence, that by itself would not be sufficient to reverse the finding of the Tribunal that the respondent -assessee was not liable to be penalized under Rule 209A of the Rules. Accordingly, in absence of any question of law, as proposed or otherwise, much less a substantial question of law, the appeal is dismissed. Notice discharged.
(3.) HENCE , for the very same reasons, in absence of any question of law, as proposed or otherwise, much less a substantial question of law, the appeal is dismissed.;


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