Penalty for clandestine removal upheld against authorised signatory and accountant, but reduced after considering overall circumstances.

Penalty on an authorised signatory and accountant was sustained where the evidence showed active involvement in procurement and handling of raw materials, mixing operations, and awareness of clearances made with and without bills, rather than mere salaried employment. The finding of knowing participation in suppression of production and clandestine removal was therefore upheld as reasonable under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002. However, taking note of reductions already granted to co-noticees and the overall circumstances, the penalty was moderated.

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Issues: Whether penalty imposed on an authorised signatory and accountant was sustainable for participation in suppression of production and clandestine removal, and whether the quantum of penalty required reduction.

Analysis: The appellant's role was examined in the light of the admitted entries, the absence of corresponding raw-material records, and the finding that he was involved in procurement and handling of raw materials, mixing operations, and awareness of clearances made with and without bills. The appellant was not treated as a mere salaried accountant, since the evidence showed active involvement in the manufacturing and clearance chain and he was also the authorised signatory. On that basis, the finding of knowing participation in clandestine activities was upheld as reasonable. At the same time, the Tribunal noted that co-noticees had already received substantial reduction in penalty and considered the overall circumstances for moderation of the penalty.

Conclusion: Penalty under Rule 209A of the Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules, 2002 was upheld in principle, but reduced from Rs. 10 lakhs to Rs. 5 lakhs.

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