Cce, Raipur vs M/S.Shivalaya Ispat & Power Pvt. Ltd

[Arising out of Order-in-Appeal No.127/RPR-I/2008 dated 19.09.2008 passed by the Commissioner, Customs & Central Excise, Raipur]

For approval and signature:

HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

1. Whether Press reporters may be allowed to see the

order for publication as per Rule 27 of the CESTAT

(Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the

CESTAT (Procedure) Rules, 1982 for publication in

any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy

of the Order?

4. Whether Order is to be circulated to the Departmental

authorities?

__________________________________________________

CCE, Raipur Appellant

Vs.

Shri Iqbal Rajak Hingora, Director of

M/s.Shivalaya Ispat & Power Pvt. Ltd.  Respondent

Present for the Appellant : Shri P.K. Mishra, D.R.

Present for the Respondent: Shri Manish Saharan, Advocate

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 27.05.2015

Final ORDER NO. 54129/2015

PER: S.K. MOHANTY

Setting aside the penalty imposed on the appellant under Rule 26 of the Central Excise Rules, 2002 by the Commissioner (Appeals), Raipur is the subject matter of present dispute before this Tribunal.

2. The brief facts of the case are that show cause proceedings were initiated on M/s. Shivalaya Ispat & Power Pvt. Ltd. and its Director (the respondent herein), seeking recovery of short paid central excise duty and also for imposition of penalty. The matter was adjudicated and the proposal made in the show cause notice was confirmed. Being aggrieved by the adjudication order, both the company as well as the respondent herein preferred appeal before the Commissioner (Appeals). The appeal against the respondent was disposed of vide the impugned order, in modifying the adjudication order to the effect of setting aside the penalty imposed on the respondent.

3. The ld. DR appearing for the Revenue submits that there is element of mensrea, in as much as, the respondent in the capacity of Director of the company is the beneficiary of the wrong doings of the company and, as such, he is liable to pay penalty.

4. Per contra, the ld. Advocate appearing for the respondent submits that once the proceedings against the company have been concluded, separate penal proceedings against the Director cannot be continued, as Rule 26 of the Central Excise Rules, 2002 is not an independent provision and the said provision has to be read with Section 11A of the Central Excise Act, 1944.

5. I have heard the ld. Counsels for both the sides.

6. It is admitted fact on record that the proceedings initiated against the company were set at rest upon payment of appropriate duty and interest. Since no proceedings are pending against the company, the respondent Director should be relieved from the penal consequences provided under Rule 26 ibid, since proceedings initiated under Section 11A ibid has been concluded against the company.

7. I find that the judgement of Hon'ble Punjab & Haryana High Court in the case of CCE, Chandigarh-I vs. Vikas Garg, reported in 2014 (306) ELT 94 (P&H) squarely applies to the facts of the present case. The relevant paragraph of the judgment is extracted herein below:-

6.?We do not find any merit in the said argument. Once the proceedings against the firm stand concluded, penalty proceedings against partners of the firm cannot continue as Rule 26 of the Rules is not an independent provision but has to be read with Section 11A of the Act. The firm has satisfied the due of the Revenue, therefore, the imposition of penalty under Rule 26 of the Rules are not justified.

8. In view of the settled position of law, I do not find any infirmity in the impugned order, and as such, the appeal filed by the Revenue is dismissed.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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