Penalty Overturned in Excise Duty Evasion Case; Remanded for Fair Reassessment Following Natural Justice Principles.

The Tribunal set aside the Rs. 5 Lakh penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002, for alleged abatement of excise duty evasion by M/s Illesh Exports. The case was remanded to the adjudicating authority for a fresh order, ensuring adherence to natural justice principles.

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Issues involved: Confirmation of excise duty demand against appellant for clandestine removal of imported scrap, imposition of penalty under Rule 26 of Central Excise Rules, 2002, appellant's challenge seeking dropping of penalty.

Confirmation of Excise Duty Demand:
The appeal was directed against an order confirming excise duty demand against the appellant for clandestine removal of imported scrap by M/s Illesh Exports. The appellant was a co-noticee along with M/s Illesh Exports, and a penalty of Rs. 5 Lakh was imposed under Rule 26(1) for abatement of evasion of excise duty by M/s Illesh Exports. The main noticee, M/s Illesh Exports, had an appeal abated by the Tribunal. The appellant sought dropping of the penalty.

Imposition of Penalty under Rule 26:
The appellant was imposed a penalty of Rs. 5 Lakh under Rule 26 of Central Excise Rules, 2002, based on the charge of abatement of evasion of excise duty by M/s Illesh Exports. The charge was primarily based on the appellant's statement dated 08.03.2006, where he admitted to purchasing brass scrap without invoices from M/s Illesh Exports. However, the appellant later clarified through an affidavit dated 07.02.2008 that the scrap was purchased from a trading firm, not M/s Illesh Exports. The adjudicating authority did not consider this clarification, leading to a violation of principles of natural justice. The Tribunal set aside the penalty and remanded the matter for a fresh order after compliance with natural justice principles.

Conclusion:
The Tribunal pronounced the order on 26.04.2024, setting aside the penalty of Rs. 5 Lakh imposed under Rule 26 and remanding the matter to the Adjudicating authority for a fresh order, ensuring compliance with principles of natural justice.

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