Commissioner of C. Ex. vs Vision Mattel Aids Pvt. Ltd.

Barin Ghosh, C.J.—Delay Condonation Application No. 3407 of 2009: No counter affidavit has been filed to the application for condonation of delay. We have considered the averments made in the application made therefor. Being satisfied, we allow the application for condonation of delay in preferring the review application.

When the appeal was preferred, following two questions of law were framed:

(1) Whether the mandatory penalty imposed in terms of Section 11AC of the Central Excise Act, 1944, can be reduced by the Hon''ble Tribunal?

(2) Whether the Tribunal is justified in setting aside the confiscation/RF and penalty on the Director under Rule 209A and reducing the penalty imposed under Rule 173Q given the facts that the party was maintaining two sets of records and invoices with intent to evade payment of duty and suppress the facts?

While the appeal was decided, the same was decided taking into account the decision of a Division Bench of this Court rendered in Central Excise Appeal No. 1 of 2005 (Commissioner of Central Excise, Meerut-I v. Deshrekshak Aushadhalaya Ltd., Haridwar). That decision was rendered in relation to question No. 1. Accordingly, in the review application, it has been stated that question No. 2 has not been decided.

We, accordingly, considered the review application and being satisfied that question No. 2 was not decided, recall the order under review.

Central Excise Appeal No. 03 of 2006

At the request of the learned Counsel for the Appellant, we have heard the appeal on merits. We find that question No. 1 is undisputedly covered by the judgment of the Division Bench rendered in the case of Central Excise Appeal No. 1 of 2005 (Commissioner of Central Excise, Meerut-I v. Deshrekshak Aushadhalaya Ltd., Haridwar). We, accordingly, conclude question No. 1 by following the said judgment of the Division Bench of this Court.

In relation to question No. 2, Tribunal has recorded two factual findings, namely, that the goods, which were confiscated, were defective and not marketable goods and, accordingly, a prayer was made for destruction thereof in accordance with excise law. The other finding is that there is no substantial evidence to prove that the Director, Appellant No. 2 before the Tribunal, was involved in evasion of duty by the company. These two factual findings were not disputed in the appeal. We are, therefore, ad idem with the Tribunal that when non-marketable defective goods were lying and a prayer was made for destruction thereof, there was no need of entering such goods in the statutory records, in as much as goods are recorded in the statutory record when they are finished goods and would be cleared soon for marketing purpose. At the same time, when there is no evidence to prove that the Director, Appellant No. 2 before the Tribunal, was involved in evasion of duty by the company, Rule 209A of the Rules made it absolutely clear that no penalty could be imposed upon the Director.

That being the situation, we answer question No. 2, upholding the view expressed by the Tribunal against the Appellant. The appeal is, accordingly, disposed of.