Tribunal overturns penalty on Manager Accounts in excise duty evasion case.

The tribunal set aside the penalty imposed on the appellant, the Manager Accounts of M/s. Rivaa Exports Ltd., under Rule 26(1) of the Central Excise Rules, 2002, for alleged abetment in the evasion of duty by M/s. MGM Metalizers Ltd. The tribunal found that the liability for excise duty rested with M/s. MGM Metalizers Ltd., not M/s. Rivaa Exports Ltd. or the appellant, due to compliance with necessary procedures for job work supply. Absence of mala fide intent and payment of Service Tax by M/s. MGM Metalizers Ltd. led to the tribunal concluding that the appellant's penalty was unwarranted, allowing the appeal.

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Issues:
1. Imposition of penalty under Rule 26(1) of Central Excise Rules, 2002 on the appellant.
2. Allegation of abetment in evasion of duty by the appellant.
3. Compliance with Notification 214/86-CE by M/s. Rivaa Exports Ltd.
4. Liability for payment of Excise Duty on M/s. MGM Metalizers Ltd.

Analysis:
1. The appellant, who is the Manager Accounts of M/s. Rivaa Exports Ltd., was penalized under Rule 26(1) of the Central Excise Rules, 2002, due to the non-payment of excise duty by M/s. MGM Metalizers Ltd. for metalizing polyester PET films supplied by M/s. Rivaa Exports Ltd. The adjudicating authority imposed a penalty of Rs. 10 Lakhs on the appellant for alleged abetment in the clearance of goods clandestinely. The appellant challenged this penalty through an appeal.

2. The appellant's counsel argued that the liability to pay excise duty lies with M/s. MGM Metalizers Ltd., not with M/s. Rivaa Exports Ltd. or the appellant. It was highlighted that the issue of whether metalizing films amounts to manufacture has been under litigation, with precedents suggesting that metalizing may not constitute manufacture. The counsel emphasized that M/s. MGM Metalizers Ltd. paid Service Tax following a Supreme Court judgment, indicating their bona fide intent. Therefore, the penalty imposed on the appellant was deemed incorrect and illegal.

3. The revenue representative contended that the appellant abetted in the evasion of duty by M/s. MGM Metalizers Ltd., justifying the penalty. However, the tribunal found that M/s. Rivaa Exports Ltd. had complied with the necessary procedures for supplying goods for job work under a challan. Since M/s. Rivaa Exports Ltd. was not a manufacturer registered under Central Excise, the responsibility to discharge excise duty, if applicable, rested with M/s. MGM Metalizers Ltd. The tribunal cited a previous ruling that affirmed this principle, absolving M/s. Rivaa Exports Ltd. and its employee from liability for duty non-payment by M/s. MGM Metalizers Ltd.

4. Considering the absence of mala fide intent and the payment of Service Tax by M/s. MGM Metalizers Ltd., the tribunal concluded that the charge of abetment against the appellant lacked a basis. The tribunal noted that the department was aware of M/s. MGM Metalizers Ltd.'s tax payments, indicating no intention of duty evasion. Consequently, the penalty imposed on the appellant was deemed unwarranted, leading to the tribunal setting it aside and allowing the appeal with any consequential relief as per the law.

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