Penalty under Rule 26 upheld for clandestine removal of wire rods without duty-paid invoices

The Calcutta HC dismissed an appeal challenging penalty imposed under Rule 26 of Central Excise Rules, 2002 for clandestine removal of wire rods. The appellant purchased goods without duty-paid invoices from another company, as evidenced by computerized ledgers and voluntary statements. The HC found the case factually distinguishable from a similar Tribunal decision cited by appellant. The proprietor's statement was deemed admissible as retraction came after three years and nine months. The court held no substantial question of law arose, affirming the penalty imposed by lower authorities.

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Issues Involved:
A. Imposability of penalty under Rule 26 of the Central Excise Rules, 2002 without confiscable goods.
B. Requirement of specific findings about prior knowledge or reasons to believe regarding confiscable goods for imposing penalty under Rule 26.
F. Failure of the Tribunal to follow its own previous order in a similar case.
G. Requirement of judicial discipline in following previous orders of the Tribunal.

Detailed Analysis:

Issue A: Imposability of Penalty under Rule 26 without Confiscable Goods

The appellant argued that penalty under Rule 26 of the Central Excise Rules, 2002 cannot be imposed without holding any excisable goods as confiscable. The Court noted that the appellant was involved in the clandestine removal of wire rods manufactured by SPRML, which were transported and sold without Central Excise invoices. The adjudicating authority, appellate authority, and Tribunal all found that the appellant knowingly participated in these activities, thus making the goods liable to confiscation under the Act and Rules. Therefore, the imposition of penalty was justified.

Issue B: Requirement of Specific Findings about Prior Knowledge or Reasons to Believe

The appellant contended that there should be specific findings about their prior knowledge or reasons to believe that the goods were confiscable. The Court observed that the appellant's proprietor admitted in a voluntary statement that they received goods from SPRML without invoices and made payments in cash. This admission, along with corroborative evidence from computerized ledgers and statements from brokers and transporters, established the appellant's knowledge and involvement. The Tribunal held that the penalty was not solely based on the co-accused's statement but also on the appellant's own admissions and other records.

Issue F: Tribunal's Failure to Follow Previous Order

The appellant claimed that the Tribunal failed to follow its own order in the case of M/s. Jai Balaji Industries Limited, where similar allegations were dismissed. The Court noted that the facts of the appellant's case were different, primarily due to the voluntary admission by the appellant's proprietor, which was not present in the Jai Balaji case. The Tribunal's decision in the appellant's case was based on substantial evidence, including computerized records and voluntary statements, which distinguished it from the Jai Balaji case.

Issue G: Judicial Discipline in Following Previous Orders

The appellant argued that judicial discipline required the Tribunal to follow its previous order in the Jai Balaji case. The Court held that the Tribunal's decision was factually distinguishable due to the appellant's voluntary admission and corroborative evidence. The Tribunal had appropriately considered the facts and evidence specific to the appellant's case, and therefore, there was no breach of judicial discipline.

Conclusion:

The Court concluded that the matter was entirely factual and no substantial questions of law arose for consideration. The appeal was dismissed, affirming the decisions of the adjudicating authority, appellate authority, and Tribunal. The Court emphasized that the appellant's voluntary admission and corroborative evidence justified the imposition of penalty under Rule 26 of the Central Excise Rules, 2002.

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