Proportionality in penalty for employee involvement: limited document-signing role led to substantial reduction under excise rules.

An employee who merely signed documents in the course of his duties in relation to alleged misuse of the 100% EOU scheme and diversion of goods was found to have a limited role, without knowledge of the overall scheme misuse. On that factual basis, the Tribunal held that the penalty under Rule 209A of the Central Excise Rules, 1944 was harsh and disproportionate to his involvement, and reduced it from Rs. 1 lakh to Rs. 10,000. The impugned penalty order was modified accordingly, granting partial relief.

---

---

Issues: Whether the penalty imposed on an employee for signing documents in relation to misuse of the 100% EOU scheme and diversion of goods was liable to be sustained in full under Rule 209A of the Central Excise Rules, 1944.

Analysis: The appellant was found to be merely an employee acting in the course of duties entrusted by the company. The record showed that he had signed the relevant documents, but the Tribunal accepted that he could not be expected to understand the entire EOU framework or the overall alleged misuse of the scheme. In view of the facts and his limited role, the Tribunal held that the penalty of Rs. 1 lakh was excessive.

Conclusion: The penalty was reduced from Rs. 1 lakh to Rs. 10,000, granting partial relief to the appellant.

Final Conclusion: The appeal succeeded only to the extent of reduction of penalty, and the impugned penalty order was modified accordingly.

Ratio Decidendi: Where an employee's role is limited to signing documents in the course of employment, a penalty under Rule 209A of the Central Excise Rules, 1944 may be reduced if the original amount is found to be harsh and disproportionate to the employee's actual involvement.

---