Tribunal Overturns Rs. 10 Lakh Penalty Due to Lack of Evidence on Goods Confiscation or Invoice Issues.

The Tribunal set aside the Rs. 10,00,000 penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002, as the penalty was not justified due to the absence of goods confiscation or invoice-related issues in the second SCN. The appeal was allowed, granting consequential relief to the appellant.

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Issues involved: Appeal against penalty imposed under Rule 26 of the Central Excise Rules, 2002.

Summary:
1. The appellant contested the Order in Appeal dated 16.11.2017, upholding the order passed by the Additional Commissioner, which imposed a penalty of Rs. 10,00,000 under Rule 26. The case involved clandestine manufacture of Pan Masala, leading to the issuance of two Show Cause Notices (SCNs) proposing penalties and confiscation of goods and machinery.

2. The Additional Commissioner, through a common order dated 18.4.2017, confirmed duty demand and imposed penalties, including the Rs. 10,00,000 penalty on the appellant under Rule 26. The main noticee did not appeal, leaving the penalty as the only issue before the Tribunal.

3. The Tribunal examined Rule 26, which allows penalties for dealing with goods liable for confiscation or issuing invoices without delivering goods for CENVAT credit. The penalty in question was imposed solely under the second SCN for duty recovery, not for confiscation or invoice-related offenses.

4. Since the penalty under Rule 26 was not justified in the absence of goods confiscation or invoice issues in the second SCN, the Tribunal set aside the penalty, allowing the appeal and providing consequential relief to the appellant.

[Order pronounced on 13/02/2024]

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