CESTAT upholds Penalty of Chairman/MD on Failure to ensure Proper Accounting of Finished Goods [Read Order]

The Ahmedabad Bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has upheld the penalty of the Chairman/Managing Director since he failed to ensure proper accounting of finished goods.

The appellant, Shri R P Parekh Chairman & Managing Director of M/S Kaneria Granito Ltd., filed an appeal before CESTAT against the confirmation of imposition of a penalty of 5 lakhs rupees by the Commissioner (Appeals). The respondents alleged that the appellant has failed to account for the manufactured goods properly and on the visit of the officers, the excess goods were found which was lying unaccounted hence goods were confiscated and a redemption fine and penalty were imposed.

The Tribunal observed that the allegation made by the department that the goods were kept for clandestine removal without payment of duty is not supported by any evidence, no statement is recorded to that effect. The Tribunal further observed that the only lapse on the part of the Chairman and MD of the company is that, he fails to ensure the proper accounting of the finished goods is being done or not, for which a token penalty can be imposed.

The Tribunal further observed that even though the goods were found unaccounted for which the company has been imposed with redemption fine and penalty, a huge personal penalty cannot be imposed on the Chairman and MD of the company who is not looking after the accounts of the goods manufactured.

The single bench presided by Mr. Ramesh Nair, Member (Judicial), has held that “I reduce the penalty from Rs. 5 Lacs to Rs.1 Lac. The impugned order stands modified to the above extent. The appeal is partly allowed in the above terms”.

Mr. R P Parekh appeared for the respondent.

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