2012 (5) TMI 474 - HC - Central Excise

High Court partially sets aside penalties under Rule 173Q, upholds penalty under Rule 209A

The High Court partially allowed the petition, setting aside the fine and penalties imposed under Rule 173Q of the Central Excise Rules, 1944, due to the ... Penalty – petitioners shifted around 70,000 plastic crates to the plot of M/s. Navneet Publications on emergency basis - officers of the Central Excise Department visited the said neighbouring premises and later on, the petitioners’ premises and seized the said 70,000 plastic crates shifted thereto - Tribunal has found that the action of the petitioners in removing the goods from the place of manufacture and storing them in the adjacent premises, was not suggestive of intention to evade duty - Held that:- penalty under Rule 209A, any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or the rules, shall be liable to a penalty, merely because confiscation under Rule 173Q is set aside as the ingredients of Section 11AC of the Act and Rules 57-I(4) and 57U(6) of the Rules are not satisfied does not mean that penalty under Section 209A cannot be levied if upon the evidence on record a case is made out for levy of such penalty, petition partly succeeds and is, accordingly, allowed, penalty of Rs. 2 lakhs on the petitioner No. 2 under Rule 209A of the Rules is sustained Issues Involved:1. Legality of the confiscation of goods and imposition of penalties under Rule 173Q of the Central Excise Rules, 1944.2. Imposition of penalty under Rule 209A of the Central Excise Rules, 1944.3. Maintainability of the petition in light of the availability of an alternative remedy.Detailed Analysis:1. Legality of the Confiscation of Goods and Imposition of Penalties under Rule 173Q:The petitioners challenged the Tribunal's order confirming the fine and penalties imposed under Rule 173Q of the Central Excise Rules, 1944. The petitioners argued that there was no intention to evade duty when they moved goods to adjacent premises due to an emergency situation. The Tribunal had found that the action of the petitioners was not suggestive of intent to evade duty, which is a prerequisite for invoking Rule 173Q, as it is subject to the provisions of Section 11AC of the Central Excise Act, 1944, and sub-rules (4) and (6) of Rules 57-I and 57-U, respectively. These provisions require fraud, collusion, willful misstatement, or suppression of facts with intent to evade duty. Since the Tribunal did not find any such intention, the confiscation and penalties under Rule 173Q were deemed unjustified. The High Court concluded that the requirements for invoking Rule 173Q were not met and thus set aside the fine and penalties imposed under this rule.2. Imposition of Penalty under Rule 209A:The penalty under Rule 209A was contested by the petitioners, arguing that without the goods being liable to confiscation, the penalty could not be imposed. However, Rule 209A does not require the same conditions as Rule 173Q. It penalizes any person involved in dealing with excisable goods knowing they are liable to confiscation. The Tribunal found that the petitioner No. 2 had admitted to the offense and upheld the penalty. The High Court agreed with the Tribunal's assessment and sustained the penalty of Rs. 2 lakhs under Rule 209A.3. Maintainability of the Petition:The respondents argued that the petition should be dismissed due to the availability of an alternative remedy under the Central Excise Act. However, the High Court noted that the objection was not raised at the time of admission and the petition involved a significant legal question regarding Rule 173Q. The Court decided to address the petition on its merits rather than dismiss it on procedural grounds.Conclusion:The High Court allowed the petition in part, setting aside the Tribunal's order to the extent it upheld the fine of Rs. 5 lakhs and penalties of Rs. 3 lakhs under Rule 173Q. However, the penalty of Rs. 2 lakhs on petitioner No. 2 under Rule 209A was sustained. The Court emphasized that the confiscation and penalties under Rule 173Q were not justified due to the lack of intent to evade duty, while the penalty under Rule 209A was upheld based on the petitioner's admission and the Tribunal's findings.