2013 (7) TMI 827 - AT - Central Excise

Tribunal dismisses Revenue's appeal, co-noticees absolved upon main noticee's compliance.

The Tribunal concluded that once the main noticee (M/s. Balaji Loha Pvt. Ltd.) paid the entire disputed duty along with interest and penalty within the ... Clandestine removal – The respondent paid the disputed amount of duty as mentioned in the show cause notice along with interest and 25% of the duty amount as penalty within 30 days of the show cause notice as per the provision of Section 11A(1A) - Penal proceedings against other noticees were dropped in view of Section 11A (1A) read with proviso to Section 11A(2) – Held that:- When the proceedings against the manufacturer/assessee stand concluded on payment of disputed amount of duty plus interest plus 25% of the duty as penalty, there would be no sense in continuing the proceedings for imposition of penalty under Rule 26 against other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the Directors/employees of the manufacturer/assessee company – As per Tribunal in case of Shitala Prasad Sharma Vs. Commissioner of Central Excise, Mumbai-I, reported in [2004 (12) TMI 195 - CESTAT, MUMBAI] relying upon Apex Court’s judgment in case of D. P. Kothari reported in [2001 (3) TMI 183 - CEGAT, COURT NO. II, NEW DELHI] has held that when the matter has been settled by the settlement commission against the main party and settlement commission has granted immunity to him from penalty, the co-occured cannot be penalized under Rules, 209A of Central Excise Rules, 1944 as he cannot face a penalty greater than the penalty on the main accused – Decided in favor of assessee. Issues Involved:1. Whether the proceedings against co-noticees can be concluded when the main noticee has paid the disputed duty along with interest and penalty under Section 11A(1A) of the Central Excise Act.2. Interpretation of the terms 'such person' and 'other persons' in the context of Section 11A(2) of the Central Excise Act.Issue-wise Detailed Analysis:1. Conclusion of Proceedings Against Co-noticees:The primary issue is whether the proceedings against co-noticees can be concluded when the main noticee (M/s. Balaji Loha Pvt. Ltd.) has paid the disputed duty along with interest and 25% of the duty amount as penalty within 30 days of the show cause notice, as per Section 11A(1A) of the Central Excise Act. The respondent, General Manager of M/s. Balaji Loha Pvt. Ltd., argued that the first proviso to sub-section 11A(2) applies, which states that if the person liable to pay the duty has paid the duty in full along with interest and 25% of the duty as penalty, the proceedings in respect of such person and other persons to whom notice is served under sub-section (1) shall be deemed conclusive. The Tribunal agreed with this interpretation, stating that the words 'other persons' in the first proviso to Section 11A(2) cover co-noticees who face allegations linked with the main noticee's duty evasion.2. Interpretation of 'Such Person' and 'Other Persons':The Tribunal examined the interpretation of the terms 'such person' and 'other persons' in the context of Section 11A(2). The Tribunal noted that the words 'such person' refer to the person chargeable with the duty, while 'other persons' must be given a different meaning. The Tribunal disagreed with the view that 'other persons' only include those from whom the duty not paid or short-paid is to be recovered. Instead, it held that 'other persons' include co-noticees who are alleged to have knowingly dealt with excisable goods liable for confiscation and have been show caused for imposition of penalty under Rule 26 of the Central Excise Rules. The Tribunal emphasized that adopting the Revenue's interpretation would render the words 'other persons' redundant, which is not permissible.The Tribunal further supported its interpretation by referencing Section 13 of the General Clauses Act, 1897, which states that words in singular shall include the plural and vice-versa. Therefore, the words 'such person' in the first proviso of Sub-Section (2) would include more than one person if the show cause notice has been issued to multiple persons for recovery of duty. The Tribunal also cited previous judgments, including the case of Shitala Prasad Sharma and S.K. Colombowala, which supported the view that co-noticees cannot be penalized if the main noticee has settled the duty dispute.Conclusion:The Tribunal concluded that once the main noticee (M/s. Balaji Loha Pvt. Ltd.) paid the entire disputed duty along with interest and 25% of the duty as penalty within the stipulated period, the proceedings against the co-noticees, including the General Manager, also stand concluded. The Revenue's appeal was dismissed, and the Tribunal held that there was no infirmity in the impugned order.