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<h1>Court sets aside penalties on company executives, rejects challenge to certain rules. No costs awarded.</h1> The Court partially allowed the petition, setting aside the penalties imposed on the company's Managing Director and General Manager under Rule 173Q(2) of ... Penalty on Managing Director and General Manager Issues:Challenge to penalty imposed by Collector of Customs and Central Excise on Managing Director and General Manager of a company under Rule 173Q(1) of Central Excise Rules, 1944. Alternative prayer to declare Rules 221 and 225 of Central Excise Rules, 1944 ultra vires the Central Excises and Salt Act, 1944.Analysis:1. The petitioners, a company engaged in manufacturing forgings and forged products, challenged the penalty imposed on their Managing Director and General Manager by the Collector of Customs and Central Excise under Rule 173Q(1) of the Central Excise Rules, 1944. The petitioners also sought to declare Rules 221 and 225 of the same rules ultra vires the Central Excises and Salt Act, 1944.2. The company's activities were carried out under an L-4 Licence, and they classified their forgings under Tariff Heading 72.08 after the new Tariff Act came into force. The petitioners also sought to avail Modvat credit on steel used for manufacturing forgings for railway tyres. However, a show-cause notice claimed that the forgings for tyres fell under a different chapter heading, leading to a penalty being imposed on the company and its officials.3. The petition was heard extensively, with the petitioner's counsel and the Assistant Solicitor General presenting detailed arguments. An affidavit filed by the company's Assistant Manager (Excise) highlighted that the Customs, Excise and Gold (Control) Appellate Tribunal, as well as the Supreme Court, had ruled in favor of the company in related appeals, setting aside the Collector's order and penalties.4. As the Tribunal and the Supreme Court had already allowed the company's appeals, the Court found that the penalties imposed on the Managing Director and General Manager could not be sustained. The Assistant Solicitor General agreed that the penalties should be set aside based on the previous rulings, leading the Court to partially allow the petition.5. The Court set aside the penalties imposed on the petitioner's officials under Rule 173Q(2) of the Central Excise Rules, 1944, while rejecting the prayer to declare Rules 221 and 225 ultra vires the Central Excises and Salt Act, 1944. The relief claimed in the petition was granted partially, with costs not awarded to either party.
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