2015 (10) TMI 1334 - AT - Central Excise

Tribunal overturns penalty, citing lack of appellant's knowledge of manufacturer's illegal activities.

Shri Kaluram Ramdayal Heda Versus Commissioner of Central Excise & S.T., Rajkot

The Tribunal allowed the appeal, finding that the penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002 was not justified. It ... Imposition of penalty - clandestine manufacture and clearance of the goods - Held that:- Appellant Shri Kaluram Ramdayal Heda supplied raw materials on bills and without bills to the manufacturer M/s. J.M. Copper. It is observed from the statement of Shri Kaluram Ramdayal Heda dated 09.06.2009, reproduced in Para 7 of the show cause notice dated 21.8.2009 that appellant has sold the copper wire rods to the manufacturer without bills. However, it is not coming out anywhere from his statement or statement dated 27.3.2009 of Shri Vikram Jagdishbhai Khunt, power of attorney holder of the manufacturer M/s. J.M. Copper that appellant was aware that the raw materials supplied will be used in the clandestine manufacture and clearance of the goods. Secondly, the appellant, at no stage has dealt with the goods clandestinely manufactured and cleared by the manufacturer. - it is evident that for imposition on a person he should have acquired possession of or in any way concerned in transporting, removing, depositing etc. of any excisable goods which he knows or has reason to believe, are liable to confiscation under the Central Excise Act or Central Excise Rules. There is no evidence on record that appellant had knowledge that raw materials supplied by him will be used in the clandestine manufacture and clearance of the finished goods made out of raw material supplied. The case law of Ashok Joshi vs. Commissioner Central Excise, Jaipur (2003 (6) TMI 304 - CESTAT, NEW DELHI) clearly apply to the facts of the present case. - Decided in favour of assessee. Issues:Appeal against imposition of penalty under Rule 26 of the Central Excise Rules, 2002.Analysis:The appellant challenged the penalty imposed under Rule 26 of the Central Excise Rules, 2002, for supplying raw materials to a manufacturer involved in clandestine activities. The appellant argued that the penalty cannot be imposed for the manufacturer's illegal activities. The advocate cited relevant case laws to support the appellant's case.The Revenue contended that the penalty can be imposed under Rule 26 even if the person did not directly deal with the excisable goods but supplied raw materials used in clandestine activities. Both sides presented their arguments before the Tribunal.After examining the case records, it was found that the appellant supplied raw materials to the manufacturer, M/s. J.M. Copper, both on bills and without bills. However, there was no evidence to suggest that the appellant was aware of the clandestine activities of the manufacturer. The appellant did not deal with the goods manufactured clandestinely. The Tribunal referred to Rule 26 of the Central Excise Rules, 2002, which specifies the conditions for imposing penalties on individuals involved in dealing with excisable goods liable for confiscation.The Tribunal noted that the appellant did not have knowledge of the illegal activities related to the raw materials supplied. Citing the case law of Ashok Joshi vs. Commissioner Central Excise, Jaipur, the Tribunal concluded that the penalty imposed on the appellant was not justified. Therefore, the appeal was allowed, and the appellant was granted consequential relief.In the operative part of the order, the Tribunal pronounced the decision to allow the appeal filed by the appellant, with any necessary consequential relief.