Transporter Penalty Upheld under Rule 26 for Duty Non-Payment. Excessive Penalty Reduced on Lack of Proof.

The Tribunal upheld the penalty imposed on the transporter under Rule 26 of the Central Excise Rules, 2002, due to the lack of documents proving duty payment for the seized goods. However, the excessive penalty of Rs. 10,00,000 was reduced to Rs. 5,00,000, aligning it more closely with the duty liability amount.

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Issues:
1. Imposition of penalty under Rule 26 of Central Excise Rules, 2002 on the transporter for goods found in possession.
2. Lack of documents indicating payment of appropriate duty for the goods seized.
3. Excessive penalty imposed on the transporter.

Issue 1: Imposition of penalty under Rule 26 of Central Excise Rules, 2002:
The appellant, a transporter, contested the show cause notice claiming they were not liable to pay duty or be penalized under Rule 26 as they were not the manufacturers of the goods found in their possession. The appellant argued that no investigation was conducted to identify the manufacturers of the goods supposedly cleared without duty payment. The consultant for the appellant cited several decisions to support setting aside the penalty imposed under Rule 26. However, the Departmental Representative contended that in the absence of documents proving duty payment, the penalty was correctly imposed.

Issue 2: Lack of documents indicating payment of appropriate duty:
Upon investigation, it was found that fully manufactured fans were discovered in the appellant's premises without any accompanying invoices or way bills covering the material. Despite being given an opportunity, the appellant failed to produce any documents indicating the payment of central excise duty on the seized goods. The appellant could not substantiate their claim that the goods were manufactured and delivered for dispatch. As per Rule 26, a penalty can be imposed on any person concerned with goods liable for confiscation, and in this case, the appellant was found to be in possession of such goods without duty payment.

Issue 3: Excessive penalty imposed on the transporter:
The Tribunal acknowledged that while the duty liability on the seized goods was approximately Rs. 17,11,090, the penalty imposed on the appellant was excessively high at Rs. 10,00,000. Considering this discrepancy, the Tribunal modified the impugned order by reducing the penalty on the appellant to Rs. 5,00,000, which was deemed more proportionate to the duty liability. The impugned order was thus partially upheld with the penalty amount adjusted accordingly.

In conclusion, the Tribunal upheld the penalty imposed on the transporter under Rule 26 of the Central Excise Rules, 2002, due to the lack of documents proving duty payment for the seized goods. However, the excessive penalty of Rs. 10,00,000 was reduced to Rs. 5,00,000, aligning it more closely with the duty liability amount.

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