Penalty on Director for Goods Removal Set Aside; Individual Culpability Emphasized

The Commissioner (Appeals) set aside the penalty imposed on the Director of a manufacturing unit for clandestine removal of goods, citing lack of evidence linking the Director to the offense. The Tribunal upheld this decision, emphasizing the necessity of establishing individual culpability before penalizing directors or officers of companies. The appeal by the Revenue against the penalty's setting aside was rejected.

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Issues involved: Appeal against setting aside penalty imposed on Director of a manufacturing unit for clandestine removal of goods.

Details of the judgment:

Issue 1: Imposition of penalty on the Director
The original adjudicating authority imposed a penalty of &8377; 10,000 on the Director of the manufacturing unit under Rule 26 of the Central Excise Rules, 2002, without discussing any evidence of his involvement in the clandestine removal. The Commissioner (Appeals) set aside the penalty on the Director, citing a Tribunal decision and reasoning that once the penalty is imposed on the company, there is no justification for imposing a separate penalty on the Director.

Issue 2: Justification for setting aside penalty
The Tribunal found that the penalty on the Director was imposed mechanically without attributing any role to him in the clandestine clearance of goods. Since there was no evidence of his involvement, the setting aside of the penalty by the Commissioner (Appeals) was deemed justified. The appeal filed by the Revenue against the setting aside of the penalty on the Director was rejected.

This judgment highlights the importance of establishing individual culpability in cases of contravention, especially when imposing penalties on directors or officers of companies.

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