2024 (12) TMI 1237 - AT - Central Excise

Partnership firms cannot face penalties under Rule 209A as only persons are liable, not firms

Taher & Company Versus Commissioner of C.E. & S.T. -Daman And Satish Traders Versus Commissioner of C.E. & S.T. -Daman

CESTAT Ahmedabad held that penalty under Rule 209A cannot be imposed on a partnership firm, following SC precedent in Commissioner v Woodmen Industries ... Levy of penalty u/r 209A can be imposed on partnership firm - HELD THAT:- Reliance placed in the case of Commissioner v Woodmen Industries [2004 (7) TMI 637 - SC ORDER] where it was held that 'The Tribunal further relying on an earlier order in the case of Aditya Steel Industries [1996 (2) TMI 232 - CEGAT, MADRAS] held that penalty under Rule 26 of Central Excise Rules, 2002 was imposable only on a person and not on a firm.' Thus, penalty under 209A which is pari materia of Rule 26, penalty cannot be imposed on partnership firm. As regard the penalty on the partner, it is found that it is settled by the Hon’ble Gujarat High Court in the case of Jay Prakash Motwani [2009 (1) TMI 501 - GUJARAT HIGH COURT] that in case of partnership firm penalty on the partner cannot be imposed. Accordingly, penalties on both the appellants are not sustainable only on the above finding. The penalties are set aside - appeal allowed. Issues:1. Imposition of penalty under Rule 209A of the Central Excise Rules 1944 on the Appellants for alleged cash payments over and above the price mentioned in Excise Invoices of a 100% EOU.2. Evidence of cash payments by the Appellants to the 100% EOU.3. Relevance of price charged by 100% EOU for goods cleared in DTA to valuation of goods.4. Applicability of Chapter VA of the Central Excise Rules 2002 to goods cleared by 100% EOU.5. Imposition of penalty under Rule 209A on a partnership firm.6. Validity of the Order-in-original due to lack of findings on Appellants' submissions.Analysis:Issue 1:The primary issue was whether the penalty under Rule 209A on the Appellants for cash payments over the mentioned price in Excise Invoices of a 100% EOU was legally sustainable. The Appellants argued that there was no evidence to support the alleged cash payments, relying on various judgments to support their case.Issue 2:The question of whether there was concrete evidence of the Appellants making cash payments over and above the invoiced price to the 100% EOU was crucial. The Appellants contended that the statements relied upon were inadmissible unless meeting the requirements of Section 9D of the Central Excise Act, 1944.Issue 3:Regarding the relevance of the price charged by the 100% EOU for goods cleared in DTA to the valuation of goods, the Appellants argued that the duty payable was determined by reference to the import price of like goods under the Customs Act 1962, not the price charged by the 100% EOU.Issue 4:The Appellants also raised the issue of whether goods cleared by a 100% EOU were governed by Chapter VA of the Central Excise Rules 2002, making the provisions of Confiscation under Rule 173Q inapplicable and thus challenging the imposition of penalty under Rule 209A.Issue 5:An important aspect was the imposition of penalty under Rule 209A on a partnership firm. The Appellants argued that such a penalty could not be imposed on a partnership firm, citing relevant judgments to support their position.Issue 6:The Appellants contended that the Order-in-original was non-speaking as it did not address most of their submissions, which they argued warranted setting aside the order. The Tribunal focused on the issue of whether penalty under Rule 209A could be imposed on a partnership firm, finding in favor of the Appellants based on established legal principles and precedents.In conclusion, the Tribunal set aside the penalties imposed on the Appellants, highlighting the legal principles governing penalties on partnership firms and partners. The judgment emphasized the importance of concrete evidence and adherence to legal requirements in imposing penalties under Rule 209A.