2004 (4) TMI 664 - AT - Central Excise

Tribunal Confirms Duty Demand & Penalties on Manufacturer; Rejects Appeals for Lack of Grounds & Denies Leniency Pleas.

The Tribunal upheld the duty demand of Rs. 7,58,000/- and confirmed the penalties imposed on the manufacturing company and its managing director under ... Surreptitious removal - equivalent penalty under Rule 173Q(2) of the Central Excise Rules, 1944 - personal penalty under Rule 209A of the Central Excise Rules, 1944 - audi alteram partem / right to be heard - mitigation and leniency in imposition of penaltySurreptitious removal - Duty demand for alleged surreptitious removal was correctly confirmed against the appellant company. - HELD THAT: - The Tribunal found no material on record to rebut the allegation of surreptitious removal as set out in the show cause notice. On that basis the adjudicating authority's confirmation of the duty demand was held to be correct; the duty has also been paid by the company. [Paras 3]The duty demand is sustained against the appellant company.Equivalent penalty under Rule 173Q(2) of the Central Excise Rules, 1944 - Imposition of an equivalent penalty on the company under Rule 173Q(2) was upheld. - HELD THAT: - Although the appellants relied on a finding that Section 11AC was not attracted because the removal pre-dated its introduction, the Tribunal observed that the penalty was imposed under Rule 173Q(2) and that the quantum of penalty fell within the parameters of that rule. Consequently the penalty on the company was sustained. [Paras 4]The equivalent penalty imposed on the company under Rule 173Q(2) is upheld.Personal penalty under Rule 209A of the Central Excise Rules, 1944 - Personal penalty imposed on the managing director under Rule 209A was upheld. - HELD THAT: - The Tribunal found that imposition of a personal penalty on the managing director is supported by Rule 209A of the Central Excise Rules, 1944, and there was no basis shown to interfere with that finding. [Paras 4]The personal penalty on the managing director under Rule 209A is sustained.Audi alteram partem / right to be heard - Appellants' grievance of not being heard was rejected because they admitted not attending the personal hearing and gave no explanation. - HELD THAT: - The appellants conceded that they did not attend the personal hearing fixed by the lower authorities and failed to explain their non-attendance. The Tribunal held that absent any justification for missing the hearing, they could not claim an entitlement to further hearing as a matter of right. [Paras 5]The complaint of denial of hearing is negatived.Mitigation and leniency in imposition of penalty - Prayer for leniency based on small-scale status and one-person management was rejected. - HELD THAT: - The Tribunal noted the submission that the unit was a small-scale, single-person managed unit, but observed that the case involved clear evasion of duty. It held that leniency is appropriate only where there is evidence of bona fide error, lack of knowledge, or similar circumstances; no such grounds were urged or visible in the record. Consequently no interference with the penalties was warranted. [Paras 6]The plea for leniency is rejected and penalties are to remain undisturbed.Final Conclusion: Appeals dismissed; duty demand confirmed and penalties on the company under Rule 173Q(2) and on the managing director under Rule 209A upheld; no interference warranted on grounds of non-hearing or plea for leniency. Issues:1. Confirmation of duty demand against the manufacturing company.2. Imposition of penalties on the company and its managing director.3. Lack of opportunity for personal hearing.4. Plea for leniency based on the size of the unit and one-man show argument.Confirmation of Duty Demand:The appeals were against the order confirming duty demand of Rs. 7,58,000/- and penalties imposed by the adjudicating authority. The Tribunal found no material to dispute the liability to duty, upholding the duty confirmation against the appellant company, which had already been paid. The Tribunal noted the absence of evidence to disprove the alleged surreptitious removal as stated in the show cause notice.Imposition of Penalties:Regarding the imposition of penalties, the Tribunal addressed the plea that Section 11AC was not applicable due to the timing of the removal. The penalties were imposed under Rule 173Q(2) of the Central Excise Rules, 1944, and Rule 209A for the company and managing director, respectively. The Tribunal found the penalties justified within the legal parameters, dismissing the argument against the imposition of equivalent penalty.Lack of Opportunity for Personal Hearing:The appellants raised a grievance about not being heard, despite admitting to missing the personal hearing scheduled by the lower authorities. The Tribunal emphasized that without providing reasons for not attending the hearing, the appellants could not demand further opportunities for a hearing. The failure to attend the hearing impacted their ability to argue for leniency or contest the charges effectively.Plea for Leniency Based on Unit Size:The appellants sought leniency based on the unit being small-scale and operated by the managing director alone. However, the Tribunal rejected this plea, highlighting that the evasion of duty was clear-cut, irrespective of the unit's size. The Tribunal emphasized that the law does not differentiate between small and large units in cases of duty evasion. The absence of grounds such as accounting errors due to lack of legal knowledge or a genuine belief warranted no interference in the lower authorities' orders. Consequently, the appeals were rejected, affirming the penalties and duty demand.