2024-VIL-532-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Sale of goods cleared without payment of appropriate central excise by the manufacturer – Levy of penalty under Rule 26 of Central Excise Rules, 2002 – Appellant case that penalty under Rule 26 of CER, 2002 can be imposed only on individuals and not on company form of organisation - whether the penalty under Rule 26 of the Central Excise Rules, 2002 can be imposed on the appellants as company - HELD – penalty under Rule 26 can be imposed in specified situations given therein. One such situation is, that a person who does any act in acquiring possession or who in any manner deals with, the excisable goods which he knows that these are liable to confiscation can be imposed with penalty. The second situation is in respect of person, who is liable to pay duty upon issue of excise invoices, but issues such invoice without delivery of goods or issues it wrongly to enable the recipient to claim undue benefit. Thus, these provisions make it essential that a person should have the knowledge of the fact that the subject goods are being liable to confiscation. As the acquisition of such knowledge is related to individual persons, it is apparent that such penalty under Rule 26 is applicable on individual persons and not on legal person - Further, the appellants are not the person, who are issuing excisable invoices for the CDs/DVDs. The only allegation on the appellants is that they did not verify the payment of excise duty in the invoice – as per the contract entered with manufacturer, the price is inclusive of all excise duty and other taxes. Inasmuch as the appellants have specifically indicated in contract that the price is inclusive of excise duty, there does not appear to be any ground for the appellants to believe that the DVDs or CDs have been supplied without payment of excise duty. Thus, on the above basis also, the imposition of penalty under Rule 26 is not sustainable - the impugned order to the extent it has imposed penalty under Rule 26 of Central Excise Rules, 2002, on the appellants is not legally sustainable and set aside - the appeal is allowed
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