Director's Penalty Appeal Granted: Lack of Awareness and Reversal Rendered Penalty Unjust

The Tribunal allowed the appeal by the Director, setting aside the order imposing a personal penalty on him for inadvertent Cenvat credit taken by the company. The Director's lack of awareness of the violation, coupled with the reversal of the amount upon discovery, rendered the penalty unjust under Rule 26 of the Central Excise Rules, 2002. Consequently, the Final Order was rectified to reflect this decision, and both miscellaneous applications by the appellant were granted.

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Issues: Rectification of mistake in the Final Order, Personal penalty imposed on Director

The judgment involves the rectification of a mistake in the Final Order passed by the Appellate Tribunal CESTAT NEW DELHI. The Tribunal disposed of two appeals filed by a company and its Director, but no findings were recorded regarding the personal penalty imposed on the Director. The applicant argued that the Director had no role in the inadvertent Cenvat credit taken by the company and that the penalty should not be imposed on him. The Tribunal considered Rule 26 of the Central Excise Rules, 2002, which requires awareness of the violation for penalty imposition. Since the Director was not aware of the wrongful Cenvat credit and the amount was reversed upon discovery, the penalty was deemed unjust. Consequently, the appeal by the Director was allowed, and the impugned order was set aside to that extent. The Final Order was amended to reflect this decision, and both miscellaneous applications filed by the appellant were allowed.

In the judgment, the Tribunal addressed the issue of rectifying a mistake in the Final Order and the imposition of a personal penalty on the Director of the company. The Tribunal found an error in the order as no observations were made regarding the penalty imposed on the Director. The applicant contended that the Director had no involvement in the inadvertent Cenvat credit taken by the company and that the penalty was unjust. The Tribunal considered the provisions of Rule 26 of the Central Excise Rules, 2002, which require awareness of the violation for penalty imposition. Since the Director was unaware of the wrongful credit and the amount was reversed upon discovery, the penalty was deemed unwarranted. As a result, the appeal by the Director was allowed, and the impugned order was set aside to that extent. The Final Order was amended accordingly, and both miscellaneous applications filed by the appellant were allowed.

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