2023 (6) TMI 694 - AT - Central Excise

Appellate Tribunal reduces penalty for DGM Finance in duty evasion case

Rajesh Mangal Versus C.C.E. & S.T. -Ahmedabad-III

The Appellate Tribunal CESTAT AHMEDABAD reduced the penalty imposed on the appellant, a DGM Finance at M/s. Electrotherm (India) Ltd, from Rs. 10 lacs to ... Levy of penalty of Rs. 10 lacs u/r 26 of CER, on appellant being DGM-Finance of the company - clandestine removal - case of Revenue is that appellant is recording sales of the goods in the books of accounts therefore, he is very well aware of the overall affairs of the company - HELD THAT:- There is a force in the counsel’s submission that from the record it appears that the major work related to removal of goods is looked after by one Shri S.G. Pathak and the appellant’s personal statement was not recorded. The statements which he has given to the investigating officer is on behalf of the Director accordingly, such statement can be used against the Director only and not anyone else. However, the appellant being worked as DGM Finance ultimately all the transactions are finally booked in the books of accounts and for which the appellant is responsible as he was aware with the transaction made without payment of duty. As regard the duty, the same has been admitted by the company therefore the evasion of duty is not under dispute - As regard the judgment cited by both the sides, as regard the penalty under Rule 26 each case has to be dealt with in its fact therefore, without relying to any judgment considering the involvement of the appellant, the appellant deserves for leniency therefore, penalty reduced from Rs. 10 lacs to Rs. 1 lac. The impugned order in respect of the present appellant is modified to the above extent. The appeal is partly allowed Issues involved:The issue involved in this case is the imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on the present appellant in relation to a case against M/s. Electrotherm (India) Ltd for excise duty demand.Summary:Issue 1: Imposition of penalty under Rule 26The appellant, working as DGM Finance with M/s. Electrotherm (India) Ltd, was imposed with a penalty of Rs. 10 lacs under Rule 26 of Central Excise Rules, 2002. The appellant contended that he had no role in the non-payment of duty by the company as the removal of goods was handled by another individual, Shri S.G. Pathak. The appellant argued that he had not given any statement in his personal capacity, only on behalf of the Director. The appellant challenged the penalty imposition citing lack of specific sub-rule or clause invocation. After considering the submissions, the Tribunal found that while the appellant was not directly involved in the evasion of duty, as DGM Finance, he was responsible for all transactions recorded in the books of accounts. The Tribunal reduced the penalty from Rs. 10 lacs to Rs. 1 lac, showing leniency towards the appellant.Issue 2: Adjudication and argumentsThe appellant's counsel submitted that the main case of M/s. Electrotherm (India) Ltd had been settled under SVLDRS-2019, with duties paid as required. The appellant had no direct involvement in the evasion of duty and should not be penalized under Rule 26. The revenue's representative argued that as DGM-Finance, the appellant was responsible for all transactions, including recording sales in the books of accounts, making him aware of the company's affairs. Both sides presented judgments supporting their arguments.ConclusionThe Tribunal acknowledged the appellant's limited role in the evasion of duty but held him accountable due to his position as DGM Finance. Considering the facts of the case, the Tribunal reduced the penalty imposed on the appellant from Rs. 10 lacs to Rs. 1 lac, showing leniency. The impugned order was modified accordingly, and the appeal was partly allowed.This summary highlights the key arguments, findings, and the ultimate decision of the Appellate Tribunal CESTAT AHMEDABAD regarding the imposition of penalty under Rule 26 in the case involving M/s. Electrotherm (India) Ltd.