Tribunal overturns Central Excise duty demand & penalties, emphasizing Revenue's verification duty.

The Tribunal set aside the demand of Central Excise duty, interest, and penalty against M/s Shalu Synthetics, as well as the penalty imposed on the Director. The appellants were found to have fulfilled their obligations by clearing goods with valid certificates and lacked evidence linking them to any misconduct post-clearance. The Tribunal emphasized the Revenue's responsibility for physical verification and allowed the appeals, ruling in favor of the appellants on 20.06.2019.

---

---

Issues:
- Demand of Central Excise duty, interest, and penalty against M/s Shalu Synthetics
- Imposition of penalty against Shri Sanjay Mahajan, Director of M/s. Shalu Synthetics

Analysis:
1. Demand of Central Excise Duty, Interest, and Penalty:
- The appeal was filed against the demand of Central Excise duty, interest, and penalty by M/s Shalu Synthetics. The Revenue alleged that the goods supplied to a defunct EOU were diverted, leading to the imposition of duty amounting to Rs. 12,33,800. Additionally, a penalty of Rs. 10 lakhs was imposed on the Director of M/s Shalu Synthetics.
- The appellant argued that they complied with the procedure by clearing goods against valid CT-3 certificates and receiving re-warehousing certificates. They contended that the case lacked substantial evidence linking them to any wrongdoing after clearance of goods.
- The Tribunal noted that the appellants fulfilled their obligations by clearing goods under valid certificates and obtaining verified re-warehousing certificates. The lack of evidence connecting the appellants to any misconduct post-clearance led to the setting aside of the demand and penalty.

2. Imposition of Penalty on Director:
- The penalty imposed on the Director of M/s Shalu Synthetics was also contested. The appellant highlighted that the entire payment was received by cheque from the account of the EOU and that the transporter was not engaged by them. Moreover, crucial details such as the payer for transport and consignees were not investigated.
- The Tribunal emphasized that the responsibility of physical verification rested with the Revenue, not the appellant. Despite the absence of physical verification at the recipient's end, the appellants acted in good faith based on the received re-warehousing certificates. As a result, the penalty against the Director was set aside, and the appeals were allowed.

In conclusion, the Tribunal found that the appellants had fulfilled their legal obligations in the transaction and were not directly implicated in any wrongdoing related to the diversion of goods. The lack of concrete evidence linking them to misconduct post-clearance led to the setting aside of the demand of Central Excise duty, interest, and penalty, as well as the penalty imposed on the Director. The judgment was pronounced on 20.06.2019.

---