TaxTMI 
TaxTMI 
2022 (8) TMI 1152
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.... penalty under Section 11AC read with Rule 25. The appeal of M/s Musk Tobacco has been dismissed by this Tribunal by Final Order No. 50600-50608/2014 dated 14.02.2014 for not making pre-deposit. Thus, the issue reached finality insofar as the confirmation of demand of duty and imposition of penalty on M/s Musk Tobacco is concerned. These appeals were also dismissed along by the Final order dated 14.02.2014 but were later restored on 27.08.2018 by Final Order No. 60330 - 60333 of 2018. In these appeals, we are dealing with only the penalties imposed on the above five appellants under Rule 26 of the Central Excise Rules is concerned. 3. Brief facts of the case are that search was conducted by the Officers of Directorate General of Central Excise Intelligence (DGCEI) on 26.09.2007 at the premises of Musk Tobacco (India) Pvt. Ltd., (MUSK). The officers also searched residence of Shankar Pal Pradhan and Raghuwar Dayal (since deceased) and resumed some records; both were employed in "Gupta Agricultural Farm‟, which belongs to Raj Kumar Gupta (since deceased). Besides these, the Officers also searched residence of Sh. Inderjeet Yadav, an employee of R. K. Cigarettes and resumed r....
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....t. Bushra Gupta - appellant (ii) Smt. Megha Gupta - appellant (iii) Sh. Kalanand Sharma Out of them, Sh. Kalanand Sharma was the Executive Director and was looking after the working of M/s Musk Tobacco on day to day basis. Further, Mrs. Bushra Gupta, and Mrs. Megha Gupta were non-functional Directors and did not have any assigned role and /or concern relating to the day to day activity of M/s Musk Tobacco. 8. M/s Musk Tobacco obtained Central Excise Registration Certificate dated 11.12.2006 bearing Registration No. AADCM8618CXM001, for manufacture of Cigarettes. M/s Musk Tobacco was working under the provisions of Rule 6 of Central Excise Rules, 2002 (as the manufacturing of cigarettes is under physical control of the Central Excise Department, and as per para 2.2 of Chapter-4 of CBEC‟s Supplementary Instructions in respect of Cigarettes, all the operations of cigarette manufacturing units are under physical control of the officers of Central Excise, including receipt of inputs, manufacturing and removal of goods from the factory premises under the strength of invoice, which is duly counter-signed by the Inspector or the Superintendent of Central Excis....
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....rom the extract of the statement quoted in the show cause notice, it is evident that the questioning have been in general, wherein he stated that he is not involved with the business activities of M/s Musk Tobacco and only answers to telephone calls received at the residence at New Delhi. On being asked as to how many cigarette companies are run by the family and where these are situated, he replied that the family has one factory at Manpur Nagari, P.O. Neoli at Etah District, which is yet to come in full operation. In answer to specific question, if he was involved in the day-to-day activities of M/s Musk Tobacco, he stated that he was not involved in day-to-day activities of M/s Musk Tobacco. He had also stated that he cannot comment on the day-to-day working of the company. It is further evident from the show cause notice that there is no proposal for imposing penalty on this appellant. Hence, the penalty imposed under Rule 26 on this appellant, in a mechanical manner is without application of mind. Accordingly, it is prayed that penalty under Rule 26 is fit to be set aside. 10.3. Sh. Rahul Chauhan (Director) - This appellant was one of the Directors in M/s Musk Tobacco. In t....
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....r dealing in excisable goods knowingly, having reason to belief that such goods are liable to confiscation under any of the provisions of Central Excise Act or Rules. Accordingly, it is urged that the penalty imposed on this appellant is also fit to be set aside. 11. It is further urged that, Revenue have also stated in the show cause notice that since Raj Kumar Gupta (deceased) is the owner of the factory premises, given on rent to M/s Musk Tobacco and also Sh. Ajay Kumar Saxena, Director (since deceased). However, the statement are exculpatory and nothing is coming out in his statement against these appellants. Revenue also recorded statement of some other persons, which do not implicate these appellants in any manner. 12. It is further urged that the whole case of revenue has been made on the basis of some third party records and statements. Neither the third party records have any evidentiary value nor the statements recorded during investigation, as the Adjudicating Authority have not examined any of the witness of revenue in the adjudication proceedings. Thus, in terms of Section 9D of the Act, these evidences are not reliable piece of evidence. It is further urged that....
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....o pay duty have been concluded under clause (a) or clause (d) of sub-section (1) of section 11AC of the Act in respect of duty, interest and penalty, all proceedings in respect of penalty against other persons, if any, in the said proceedings shall also be deemed to be concluded. (2) Any person, who issues- (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii)..... ...... ...... ....." 17. The case of the Revenue is that investigations revealed that M/s Musk Tobacco has manufactured and clandestinely removed cigarettes without paying duty. Accordingly, duty was demanded and penalty was imposed under Section 11AC on M/s Musk Tobacco. The appeal of M/s Musk Tobacco has been dismissed by this Tribunal and has attained finality. We have to now deal with only the penalties imposed on the five appellants herein. Now, we deal with the findings on record and the pleadings before us with respect to each and examine whether a penalty under Rule 26 on each of them can be sustained. 18. Rahul Chauhan - So far as this appellant is concerned, it is alleged that he along with Sh. A. K. Saxena (since dec....
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....inst these two lady appellants. Admittedly, these appellants have resigned from the Directorship Smt. Bushra Gupta on 25.01.2007 and Smt. Megha Gupta on 21.10.2005. Thus, we find that these two Directors have resigned before commencement of production of cigarettes in June, 2007, which is not disputed. Thus, we hold that these two appellants had no role in transporting, removing, depositing, keeping, concealing, storing etc., as required for imposition of penalty under Rule 26 of the Central Excise Rules. Accordingly, we allow the appeals and set aside the penalty imposed. 20. Sh. Vidyut Gupta - So far as this appellant is concerned, it is alleged that he along with his father Sh. Raj Kumar Gupta has played an active role in setting up of factory/ procurement of machine, monitoring of payment, monitoring of raw material supply etc., It is also alleged that he along with Sh. R. K. Gupta have provided infrastructure, all the machinery etc., to M/s Musk Tobacco for manufacturing of cigarette, and were the persons behind functioning of M/s Musk Tobacco. - Majority of shares in M/s Musk Tobacco are held by Sh. Raj Kumar Gupta and his family. As they hold the majority shares the entir....