2011 (3) TMI 117 - AT - Central Excise

Tribunal Upholds Penalty for Clandestine Goods Removal

The Tribunal upheld the penalty of Rs.75,000 imposed on the appellant under Rule 26 of Central Excise Rules, 2002 for his active involvement in ... Penalty under Rule 26 of Central Excise Rules, 2002 - authorized signatory's liability for clandestine removal of goods - reliability of voluntary statement as evidence - corroboration by proprietor's statementPenalty under Rule 26 of Central Excise Rules, 2002 - authorized signatory's liability for clandestine removal of goods - reliability of voluntary statement as evidence - corroboration by proprietor's statement - Validity of the penalty imposed under Rule 26 against the appellant, an authorised signatory, for clandestine removal of finished goods - HELD THAT: - The Tribunal examined the statement recorded from the appellant during the search which admitted preparation of unaccounted production (kaccha) slips, non-entries in the Daily Stock Account Register and cash sale of finished goods without invoices. That voluntary statement was not retracted and was corroborated by the proprietor's statement and physical stock shortage noted during investigation. On this basis the Tribunal found that the appellant actively participated in clandestine removal of goods rather than acting merely as a passive employee following instructions. Given the appellant's own admissions, corroboration by the owner and the physical shortfall, the adjudicatory finding that the appellant was liable to penalty under Rule 26 was sustained. The appellant's contention of mere employment drawing salary and acting under instructions was rejected as inconsistent with his recorded admissions.The penalty confirmed under Rule 26 against the appellant is upheld and the appeal is rejected.Final Conclusion: The Tribunal affirmed the penalty imposed under Rule 26 of the Central Excise Rules, 2002 on the authorised signatory, holding his voluntary, un-retracted statement and corroborative evidence sufficient to establish active involvement in clandestine removal of goods; the appeal is dismissed. Issues:Penalty confirmation under Rule 26 of Central Excise Rules, 2002 against the appellant.Analysis:The appellant filed an appeal against the confirmed penalty of Rs.75,000 under Rule 26 of Central Excise Rules, 2002. The case involved a shortage of finished goods found during a search at M/s.Kishore Tobacco Company, where the appellant was an authorized signatory. The appellant was accused of clandestine removal of goods based on recovered kaccha slips and statements. The show cause notices led to the penalty imposition, initially set at Rs.1 lakh and later reduced to Rs.75,000 by the Commissioner (Appeals). The appellant argued being a mere employee following instructions, denying mastermind involvement and requesting a further reduction in the penalty to Rs.2,000. The respondent contended that the appellant's statement and physical stock taking confirmed his active role in clandestine activities, supported by the owner's statement. The Commissioner (Appeals) acknowledged the appellant's involvement but reduced the penalty amount. The Tribunal, after reviewing the statements and evidence, concluded that the appellant's active engagement in clandestine removal was established, upholding the penalty. The appeal was dismissed, affirming the impugned order.This case hinged on whether the appellant, as an authorized signatory, was directly involved in the clandestine removal of goods, as alleged. The appellant's statement, recorded during the investigation, detailed his responsibilities at M/s.Kishore Tobacco Company, including handling excise matters and preparing production slips. The statement indicated the appellant's knowledge of unaccounted goods sold for cash without proper documentation, corroborated by the owner's statement. The Tribunal found the appellant's involvement in preparing kaccha slips and clearing goods against cash without recording them in the Daily Stock Account Register, supporting the penalty imposition. The Tribunal emphasized that the appellant's role as an authorized signatory did not absolve him of active participation in the illicit activities, leading to the rejection of the appeal and upholding of the penalty.In conclusion, the Tribunal's decision underscored the appellant's direct involvement in clandestine activities despite being an authorized signatory, as evidenced by the statements and corroborating evidence. The Tribunal deemed the penalty imposition valid under Rule 26 of Central Excise Rules, 2002, based on the established facts of the case. The judgment highlighted the importance of individual accountability in regulatory compliance, irrespective of the official position held within a company.