2016 (12) TMI 1226 - AT - Central Excise

Tribunal upholds penalty and vehicle confiscation decisions in customs and excise case

The Tribunal dismissed the appeals, upholding penalty imposition and vehicle confiscation decisions made by the Commissioner (Appeals). The appellants ... Penalty under Rule 26 of the Central Excise Rules, 2002 - Confiscation of conveyance under Section 115(2) of the Customs Act, 1962 as made applicable to Central Excise - Power of the Commissioner to hear appeals under Section 35 and appellate procedure under Section 35A of the Central Excise Act - Clerical or incorrect reference in show-cause notice not vitiating valid exercise of powerPenalty under Rule 26 of the Central Excise Rules, 2002 - Liability of the appellants to penalty under Rule 26 of the Central Excise Rules, 2002 for transporting excisable goods without proper duty-paying documents. - HELD THAT: - The Tribunal found on the record, including statements of the Manager and Director, that the appellants were aware that the goods transported were not duty paid and lacked proper documents. Rule 26 penalises any person who acquires possession of, or is concerned in transporting or dealing with, excisable goods which he has reason to believe are liable to confiscation. Given the appellants' participation in transporting such goods and their awareness, the Tribunal upheld imposition of penalty under Rule 26. The Tribunal also accepted the principle that an incorrect reference to a rule in proceedings does not invalidate the order where the power has been properly exercised. [Paras 4]Penalty under Rule 26 sustained; appellants liable to penalty for knowingly transporting goods without proper duty documents.Confiscation of conveyance under Section 115(2) of the Customs Act, 1962 as made applicable to Central Excise - Whether the vehicles used to transport non-duty paid goods are liable to confiscation under Section 115(2) of the Customs Act, 1962 as applied to Central Excise by notification. - HELD THAT: - Section 115(2) of the Customs Act provides for confiscation of conveyances used in carriage of goods in respect of which duty has not been paid. The Tribunal found that the trucks in question were used to carry non-duty paid goods and that the statutory provision, made applicable to Central Excise by Notification No.68/63 dated 04/05/63, therefore justified confiscation. The Commissioner (Appeals) correctly applied the provision to order confiscation, and also offered release on redemption fine as permitted by the order. [Paras 4]Trucks liable to confiscation under Section 115(2) of the Customs Act as made applicable to Central Excise; confiscation upheld.Power of the Commissioner to hear appeals under Section 35 and appellate procedure under Section 35A of the Central Excise Act - Clerical or incorrect reference in show-cause notice not vitiating valid exercise of power - Validity of exercise of appellate jurisdiction by the Commissioner (Appeals) under Sections 35 and 35A of the Central Excise Act and whether procedural infirmity (reference to wrong rule in show-cause notice) vitiated the order. - HELD THAT: - Section 35 enables filing of appeals by the Revenue against subordinate officers' orders; Section 35A prescribes the appellate procedure. The Tribunal noted that the Revenue filed an appeal seeking imposition of penalty and confiscation, and that the Commissioner (Appeals) afforded the appellants an opportunity to represent before deciding. Having followed the appellate procedure, the Tribunal held that the Commissioner (Appeals) validly exercised jurisdiction. Further, relying on established principle (as applied by the Tribunal), a clerical or incorrect reference to a rule in the show-cause notice does not invalidate the order if the authority has otherwise properly exercised its power. [Paras 4, 5]Commissioner (Appeals) validly exercised appellate jurisdiction under Sections 35 and 35A; procedural reference error in the show-cause notice did not vitiate the orders.Final Conclusion: Appeals dismissed; imposition of penalty under Rule 26 and confiscation of the vehicles under Section 115(2) of the Customs Act (as applied to Central Excise) were upheld and the Commissioner (Appeals) validly exercised appellate jurisdiction. Issues:Appeal against order-in-appeal covering three separate incidents involving transportation of goods without proper duty documents, imposition of penalty, and confiscation of vehicles.Analysis:1. The appeals were filed against a common order-in-appeal regarding the transportation of goods without proper duty documents. The Revenue seized vehicles belonging to the appellants on different dates. Initially, no penalty was imposed as the appellants were not directly involved in production or dealing with excisable goods. However, the Commissioner (Appeals) later imposed penalties and confiscated the vehicles based on statements indicating the appellants' awareness of transporting goods without proper documentation.2. The appellant's counsel argued that the Commissioner lacked the power to adjudicate the matter again under Section 35A of the Central Excise Act. He contended that the penalty was imposed under Rule 26 of the Central Excise Rules, 2002, which was beyond the scope of the show-cause notice that invoked Rule 25.3. The learned Assistant Revenue relied on the statements of the appellant's Manager to establish the appellant's awareness of transporting goods without proper documents. Referring to a Supreme Court decision, it was argued that a mere error in mentioning the rule in the order did not invalidate it if the power was exercised correctly.4. The Tribunal observed that the appellants were repeat offenders, aware of transporting goods without proper documentation. Rule 26 empowers penalizing those involved in dealing with goods believed to be liable for confiscation. The Tribunal found the appellants liable for penalty under Rule 26 and confiscation of vehicles under Section 115(2) of the Customs Act, applied to Central Excise.5. Regarding the appeal process, the Tribunal noted that Section 35 allows the Revenue to appeal against subordinate officers' orders, while Section 35A outlines the appeal procedure. In this case, the appeal was filed for penalty imposition and vehicle confiscation. The Commissioner (Appeals) provided the appellants with an opportunity to present their case, indicating the proper exercise of power under Section 35A.6. Consequently, the Tribunal dismissed the appeals, upholding the penalty imposition and vehicle confiscation decisions made by the Commissioner (Appeals).This detailed analysis covers the issues of penalty imposition, vehicle confiscation, procedural aspects, and legal arguments presented in the judgment.