Sunil Steels, Smt. Chandra Devi Vs. Cce - Court Judgment

Excerpt:
1. these appeals are against an order of the commissioner of central excise (i) confirming against m/s sunil steels [appellant in appeal no- 2605] a demand of duty of rs. 2,75,092 (ii) imposing on them a penalty of like amount under section 11 ac of the central excise act as also a penalty of rs. 50,000 under rule 9(2) read with rules 52a, 198, 209, 209a and 226 of the central excise rules, 1944 and (iii) imposing penalties of rs. 10,000 each on smt. chandra devi nachrani (appellant in appeal no. 2606) and shri anil kumar nachrani (appellant in appeal no. 2607) under rules 209 and 209a of the central excise rules 1944.2. examined the records and heard both sides. it appears from the record of the case that the above demand of duty has been confirmed against m/s sunil steel (proprietorship of smt. chandra devi nachrani) in respect of excisable goods which were found to have been clandestinely removed. ld. counsel for the appellants submits that the appellants are not challenging the above demand of duty. their challenge is against the penalties only. ld. counsel submits that section 11ac of the central excise act was not in force during the period of clearance of the goods (1.3.94 to 2.8.94) and hence the imposition of penalty under that provision of law cannot be sustained.counsel further submits that the maximum penalty which could be imposed under rule 9(2) was rs. 2,000. he submits likewise in relation to rule 226 as well. ld. counsel further submits that rule 209 was not applicable to m/s sunil steels who were working under srp scheme. he also submits that rule 209a, which was applicable only to individuals, was not applicable to m/s sunil steels. referring to rule 198, he submits that there is no finding in the impugned order to justify imposition of penalty under this rule. ld. counsel, therefore, prays for interfering with the penalties imposed on m/s sunil steel by the commissioner. in the appeals filed by smt. chandra devi and shri anil kumar, ld. counsel submits that the penalty of rs. 10,000 is exorbitant. ld. dr submits that it was only in the context of imposing penalty under section 11ac that the commissioner chose to drop the proposal to impose penalty under rule 173q. he also seeks to justify the findings of the commissioner.3. having examined the submissions, i note that, in any case, the penalty imposed under section 11 ac cannot be sustained for the simple reason that section 11 ac was not on the statute book during the period of dispute. accordingly, the penalty of rs. 2,75,092 imposed under section 11ac by the commissioner is set aside. coming to the penalty of rs. 50,000 imposed on m/s sunil steel, i note that it is, purportedly, a composite penalty imposed under rule 9(2), rule 198, rule 209, rule 209a and rule 226. the maximum penalty which could have been imposed under rule 9(2) was rs. 2000 only, and so was the case of a penalty under rule 226. as rightly pointed out by ld. counsel, the necessary finding required for a penalty under rule 198 is not forthcoming in this case. m/s sunil steels is, admittedly, a proprietorship concern of smt. chandra devi nachrani who did deal with the excisable goods in one or the other manner laid down under rule 209a, warranting penalty under that provision of law. however, rule 209 was apparently inapplicable to the party. having regard to the totality of all these factors, i find that the penalty of rs. 50,000 is too exorbitant to match the offence found against m/s sunil steels. i reduce it to rs. 30,000.4. penalties of rs. 10,000 each have been imposed on smt. chandra devi and shri anil kumar under rules 209 and 209a. each of these penalties also appears to be a composite one imposed under both the rules. but the impugned order has not spelt out any specific ground for imposing penalties on these two appellants, apart from an observation that they contravened provisions of the central excise rules. it has also to be noted that smt. chandra devi nachrani, as proprietress of sunil steels, has already suffered a penalty of rs. 30,000. that penalty being practically in the individualistic nature, one under rule 209a will not be justifiable in her case. therefore, the penalty of rs. 10,000 imposed on smt chandra devi nachrani is set aside. as regards shri anil kumar who has been found by the commissioner to have dealt with the offending goods in one or the other manner laid down under rule 209a, the facts and circumstances appear to warrant a penalty on him but to a lesser extent than what was imposed by the commissioner. the penalty on shri anil kumar is reduced to rs. 5000 5. appeal no. 2606 is allowed and the other two appeals are disposed of in the aforesaid terms.

Judgment:
1. These appeals are against an order of the Commissioner of Central Excise (i) confirming against M/s Sunil Steels [appellant in Appeal No- 2605] a demand of duty of Rs. 2,75,092 (ii) imposing on them a penalty of like amount under Section 11 AC of the Central Excise Act as also a penalty of Rs. 50,000 under Rule 9(2) read with Rules 52A, 198, 209, 209A and 226 of the Central Excise Rules, 1944 and (iii) imposing penalties of Rs. 10,000 each on Smt. Chandra Devi Nachrani (appellant in Appeal No. 2606) and Shri Anil Kumar Nachrani (appellant in Appeal No. 2607) under Rules 209 and 209A of the Central Excise Rules 1944.

2. Examined the records and heard both sides. It appears from the record of the case that the above demand of duty has been confirmed against M/s Sunil Steel (proprietorship of Smt. Chandra Devi Nachrani) in respect of excisable goods which were found to have been clandestinely removed. Ld. counsel for the appellants submits that the appellants are not challenging the above demand of duty. Their challenge is against the penalties only. Ld. counsel submits that Section 11AC of the Central Excise Act was not in force during the period of clearance of the goods (1.3.94 to 2.8.94) and hence the imposition of penalty under that provision of law cannot be sustained.

Counsel further submits that the maximum penalty which could be imposed under Rule 9(2) was Rs. 2,000. He submits likewise in relation to Rule 226 as well. Ld. counsel further submits that Rule 209 was not applicable to M/s Sunil Steels who were working under SRP Scheme. He also submits that Rule 209A, which was applicable only to individuals, was not applicable to M/s Sunil Steels. Referring to Rule 198, he submits that there is no finding in the impugned order to justify imposition of penalty under this rule. Ld. counsel, therefore, prays for interfering with the penalties imposed on M/s Sunil Steel by the Commissioner. In the appeals filed by Smt. Chandra Devi and Shri Anil Kumar, Ld. counsel submits that the penalty of Rs. 10,000 is exorbitant. Ld. DR submits that it was only in the context of imposing penalty under Section 11AC that the Commissioner chose to drop the proposal to impose penalty under Rule 173Q. He also seeks to justify the findings of the Commissioner.

3. Having examined the submissions, I note that, in any case, the penalty imposed under Section 11 AC cannot be sustained for the simple reason that Section 11 AC was not on the statute book during the period of dispute. Accordingly, the penalty of Rs. 2,75,092 imposed under Section 11AC by the Commissioner is set aside. Coming to the penalty of Rs. 50,000 imposed on M/s Sunil Steel, I note that it is, purportedly, a composite penalty imposed under Rule 9(2), Rule 198, Rule 209, Rule 209A and Rule 226. The maximum penalty which could have been imposed under Rule 9(2) was Rs. 2000 only, and so was the case of a penalty under Rule 226. As rightly pointed out by Ld. counsel, the necessary finding required for a penalty under Rule 198 is not forthcoming in this case. M/s Sunil Steels is, admittedly, a proprietorship concern of Smt. Chandra Devi Nachrani who did deal with the excisable goods in one or the other manner laid down under Rule 209A, warranting penalty under that provision of law. However, Rule 209 was apparently inapplicable to the party. Having regard to the totality of all these factors, I find that the penalty of Rs. 50,000 is too exorbitant to match the offence found against M/s Sunil Steels. I reduce it to Rs. 30,000.

4. Penalties of Rs. 10,000 each have been imposed on Smt. Chandra Devi and Shri Anil Kumar under Rules 209 and 209A. Each of these penalties also appears to be a composite one imposed under both the rules. But the impugned order has not spelt out any specific ground for imposing penalties on these two appellants, apart from an observation that they contravened provisions of the Central Excise Rules. It has also to be noted that Smt. Chandra Devi Nachrani, as proprietress of Sunil Steels, has already suffered a penalty of Rs. 30,000. That penalty being practically in the individualistic nature, one under Rule 209A will not be justifiable in her case. Therefore, the penalty of Rs. 10,000 imposed on Smt Chandra Devi Nachrani is set aside. As regards Shri Anil Kumar who has been found by the Commissioner to have dealt with the offending goods in one or the other manner laid down under Rule 209A, the facts and circumstances appear to warrant a penalty on him but to a lesser extent than what was imposed by the Commissioner. The penalty on Shri Anil Kumar is reduced to Rs. 5000 5. Appeal No. 2606 is allowed and the other two appeals are disposed of in the aforesaid terms.