No Suppression of Facts as Goods were Cleared by Appropriate Invoice: CESTAT quashes Penalty on Director of Company [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed penalty on the Director of the company on the ground that there was no suppression of facts as goods were cleared by appropriate invoice.

The appeal is filed by Azaz Lokhandwala who is director of Schurter Electronis (India) Pvt Ltd, challenging the imposition of penalty of Rs 1 Lakh under Rule 26 of Central Excise Rules, 2002. As regard the case of demand of duty against the company M/s Schurter Electronis (India) Pvt. Ltd the same was settled under Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 and the appeal stand dismissed as deemed withdrawn by the Tribunal.

The penalty against the director was imposed on the ground that he was aware of all the facts regarding payment of duty without obtaining authorization from the development commissioner and it was also known that such DTA entitlement requires authorization as the said authorization was obtained by them for the earlier period therefore knowingly, he was involved in short payment of duty in respect of DTA clearance without permission.

Saurabh Dixit, Counsel, who appeared on behalf of the appellant at the outset submits that the short payment of duty is due to inadvertence on the part of the company which is procedure lapse. Therefore, for this reason personal penalty cannot be imposed for any procedure lapse on the part of the appellant he further submits that in show cause notice the goods penalty was proposed under Rule 25(1)(d), whereas, in the adjudication order penalty was confirmed under Rule 26 for this reason also penalty is not sustainable.

A.K. Samota, Learned Superintendent (AR) who appeared on behalf of the revenue reiterated the findings of the impugned order.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We find that in the present case there is a procedural lapse on the part of the company the goods were cleared on payment of duty. The only lapse is that the appellant could not obtain the permission for the quantity cleared in DTA. There is no suppression of facts in the entire case as the goods were cleared by on the appropriate invoice and on payment of duty therefore even though if there is a short payment of duty for which the penalty cannot be imposed on the director of the company. For this reason, we are of the opinion that penalty of Rs. 1 Lakh imposed to the director of the company is not sustainable.”

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