Ashok Jindal, Member (J)
1. The appellants are in appeal against the impugned order imposing penalties on both the appellants alleging that they were in the activity of clandestine removal of the goods.
2. The facts of the case are that both the appellants were Directors of M/s. Vijaya Sponge & Ispat Pvt.Ltd. and they left the company in August 2007. An investigation was initiated against the said company alleging clandestine removal of the goods on the basis of certain print-outs and private records seized from the premises of the said company for the period 01.04.2006 to 07.06.2007. On the basis of that allegation, a demand of Rs.24,99,736/- was proposed against the company and also proposed to impose penalties on the appellants. Appellants did not join the investigation at initial stage. Later on, after issuance of the show cause notice, the matter was adjudicated and demand of duty along with interest was confirmed against the said company and penalties of Rs.10.00 Lakhs each on both the appellants were imposed. The appellants are before me, against imposition of penalty under Rule 26 of the Central Excise Rules, 2002.
3. The Ld.Counsel for the appellants submits that the appellants were no more Directors and have no concern with M/s. Vijaya Sponge & Ispat Pvt.Ltd.. During the course of investigation and they were not knowing any documents pertaining to the activity of the said company. Moreover, the appellants are located in Jamshedpur, whereas the factory is located in Purulia, West Bengal. Further, the appellants are not looking after the day to day activity of the factory at Purulia. It is his submission that the penalties have been imposed on the appellants merely on the basis of the investigation conducted at later stage, when the appellants have no concern with the said company, therefore, without any corroboration or independent witness penalty cannot be imposed on them. They relied on the decision of the Tribunal in the case of Jaswinder Singh Vs. Collector of Customs, New Delhi [1996 (83) E.L.T. 175 (Tribunal)]. He further submitted that penalty has been imposed on the appellants on the ground that they were Directors of the company, but without finding any role of the appellants in alleged clandestine removal of the goods, the penalty under Rule 26 is not imposable as held by this Tribunal in the case of Commissioner of C.Ex., Chandigarh vs. Gurmeet Singh [2014 (314) E.L.T. 689 (Tri.-Del.)]. He also relied on the decision of this Tribunal in the case of Commissioner of C.Ex., Meerut vs. Rakesh Singhal [2007 (208) E.L.T. 432 (Tri.-Del.)].
4. On the other hand, the Ld.Authorized Representative for the department opposed the contentions of the appellants and submitted that during the impugned period for which allegation has been made of clandestine removal, the appellants were the Directors of the said company and looked after day to day activity of the company. Moreover, the appellants despite various summons issued to them did not join the investigation. Therefore, at this stage they cannot take immunity from imposing the penalty.
5. Heard the parties, considered the submissions.
6. In this case, it has been alleged that one M/s. Vijay Sponge & Ispat Pvt.Ltd. in which the appellants were Directors during the impugned period for which the charge of clandestine removal has been made out. It is a fact that investigation has been done after resigning of the Directors from the company. No corroborative evidence has been produced by Revenue showing that the appellants were actively involved in the clandestine removal of the goods and without specifically assigning the reasons that the appellants were involved in the clandestine removal of the goods, penalty cannot be imposed, as held by this Tribunal in the case of Rakesh Singhal (supra), wherein this Tribunal in Para 6 has held as under:-
“6. In this case the revenue is asking for penalty on the present respondent who was the Director of the firm where the goods were found short. The adjudicating authority held that the present respondent was aware of every activity of the firm and everything was in his knowledge. There is no finding nor any allegation in the SCN regarding particular commission on the part of the respondent which show that there was intention to evade payment of duty. Rule 26 provides where any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any manner deals with any excisable goods which he knows or has reason to believe are liable for confiscation is liable to penalty. The Tribunal in the case of J. Mitra & Co. Ltd. v. CCE, New Delhi reported in 2002 (140) E.L.T. 524 set aside the penalty on the Director which was imposed on the ground that the Director being overall incharge of the firm is liable for penalty. The Tribunal held that in absence of any evidence on record to show that the Director did anything with mens rea against the revenue or he had personal entertained belief that the goods were liable for confiscation under Central Excise Law, therefore, penalty on Director is not sustainable. In the present case also there is no such evidence. In these circumstances, I find no infirmity in the impugned order, the appeal is dismissed.”
7. In view of the above observations, I hold that penalty under Rule 26 cannot be imposed on the appellants. Accordingly, the impugned order qua imposing Rs.10.00 Lakhs each on both the appellants is set aside.
8. In the result, the appeals are allowed with consequential relief, if any.
