Sharad Haribhai Naik Vs Commissioner of Central Excise (CESTAT Ahmedabad)
The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) heard appeals challenging Order-in-Original dated 11.04.2017, whereby the Commissioner, Central Excise, Customs & Service Tax, Audit-III, Vapi imposed a penalty of ₹1 lakh on the authorised signatory and liaisoning officer of M/s. Rathi Re-rollers (India) Limited and a penalty of ₹50 lakh on the company’s director under Rule 26 of the Central Excise Rules, 2002.
The company was engaged in the manufacture of MS Bars and was registered under the Central Excise law while availing CENVAT credit. Based on intelligence alleging large-scale evasion of central excise duty through clandestine clearance of finished goods, the department conducted searches at various premises and carried out investigations. According to the department, the company had clandestinely manufactured and cleared MS Bars, scrap and mill scales without issuing Central Excise invoices or paying duty, resulting in alleged evasion of ₹4,24,42,283. The Commissioner concluded that the director and the authorised signatory had admitted their involvement in the activities and imposed penalties under Rule 26.
Before the Tribunal, the appellants contended that the adjudicating authority had relied solely upon statements recorded during investigation without granting an opportunity to cross-examine the witnesses, contrary to Section 9D of the Central Excise Act, 1944. They submitted that there was no other evidence supporting the allegations against them. It was further argued that the Commissioner had imposed penalties under Rule 26 without specifying the particular clause of the Rule allegedly violated, although Rule 26 contains different categories of offences.
