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of <h1>Tribunal Overturns Penalties for Garment Company & Individual in Central Excise Rules Case</h1> <h3>DHANLAXMI GARMENTS Versus COMMISSIONER OF C. EX., SURAT-I</h3> DHANLAXMI GARMENTS Versus COMMISSIONER OF C. EX., SURAT-I - [2009] (235) E.L.T. 523 (Tri. - Ahmd.) Issues:Imposition of penalty on M/s Dhanlaxmi Garments (P) Ltd. and Shri Sanjay Bhagwandas Goyal under Rule 209A and Rule 25 of Central Excise Rules, 2002.Analysis:The appeal challenged the penalty of Rs.10 lakhs imposed on M/s Dhanlaxmi Garments (P) Ltd., a 100% EOU, and Shri Sanjay Bhagwandas Goyal, Director of the company, under Rule 209A and Rule 25 of the Central Excise Rules, 2002. The case involved M/s Dhanlaxmi Garments issuing a CT-3 certificate to M/s Shivam Exports for duty-free processed fabrics. However, investigations revealed that M/s Shivam Exports sold the goods in the open market instead of sending them to M/s Dhanlaxmi Garments as intended.The appellant argued that Rule 25 is not applicable to them as it pertains only to producers, manufacturers, registered persons of re-warehousing, or registered dealers, whereas M/s Dhanlaxmi Garments was a purchaser of goods from M/s Shivam Exports. Additionally, it was contended that Rule 209A should not apply to Shri Goyal as M/s Dhanlaxmi Garments did not physically receive the goods cleared by M/s Shivam Exports, citing a Tribunal decision in a similar case.The Tribunal found merit in the appellant's arguments and ruled in their favor. It was established that Rule 25 did not apply to M/s Dhanlaxmi Garments as they were not the manufacturer of the goods in question. Moreover, the penalty under Rule 209A was deemed inapplicable to Shri Goyal since M/s Dhanlaxmi Garments had not physically handled the goods. Consequently, the Tribunal set aside the penalties imposed on the appellants and allowed their appeals with consequential relief.This judgment underscores the importance of correctly applying the relevant rules and ensuring that penalties are imposed in accordance with the law. The decision serves as a reminder that penalties should be based on concrete evidence and compliance with the legal provisions to avoid unjust consequences for the parties involved.
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