Karimbhai Nanjibhai Shah Vs C.C.E. (CESTAT Ahmedabad)
Introduction: The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Ahmedabad upheld a penalty imposed on Karimbhai Nanjibhai Shah for his role in facilitating the clearance of ‘Chhakkdo Rickshaw’ without payment of excise duty. The case emerged from the evasion of Central Excise Duties by certain manufacturers engaged in suppressing production and making clandestine clearances.
Detailed Analysis: The intelligent agency of the department detected the evasion and issued show cause notices to M/s Shree Rajshakti Automobiles, Ahmedabad, and others involved. Karimbhai Nanjibhai Shah, the appellant, was made liable for a penalty under Rule 26 of the Central Excise Rules, 2002. The matter was adjudicated through an Order-In-Original dated 03.10.2012, confirming Central Excise Duty of Rs. 2,48,83,940/- against M/s Shree Rajshakti Automobiles, along with penalties. A penalty of Rs. 1,00,000/- was imposed on Karimbhai Nanjibhai Shah.
During the proceedings, the main noticee, M/s Shree Rajshakti Automobiles, settled the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme (SVLDRS).
Karimbhai Nanjibhai Shah challenged the penalty, arguing that Rule 26 was wrongly invoked. He contended that his role was limited to providing his Automotive Research Association of India (ARAI-Pune) registration for the registration of vehicles with the RTO, as the manufacturers lacked the required ARAI registration. He further argued that he was not engaged in activities covered by Rule 26, such as transportation, sale, or purchase of excisable goods.
The appellant cited case laws in his favor, including the rulings in APPLE SPONGE AND POWER LTD. VS. COMMISSIONER OF SERVICE TAX and HOMAG INDIA PVT. LTD. VS. COMMR, OF C. EX., S.T. & BANGALORE-II.
However, the CESTAT Ahmedabad, after hearing both sides, found that Karimbhai Nanjibhai Shah was aware of the evasion scheme and facilitated the registration of ‘Chhakkdo Rickshaw,’ which was cleared without payment of Central Excise Duty. The tribunal concluded that he had dealt with non-duty paid goods in “any other manner,” falling under the purview of Rule 26. The case laws cited by the appellant were deemed irrelevant to the present matter.
Conclusion: In light of the evidence and the provisions of Rule 26, CESTAT Ahmedabad upheld the penalty on Karimbhai Nanjibhai Shah, dismissing the appeal. The decision reinforces the accountability of individuals involved in facilitating the evasion of excise duties, even if they are not directly engaged in transportation or sale of the goods. It emphasizes the importance of preventing any form of facilitation in such cases.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the matter are that the intelligent agency of the department detected that certain manufacturers of “Chhakkdo Rickshaw” were evading payment of Central Excise Duties by suppressing their production and making clandestine clearances. After detailed investigations, a show cause notices was issued to M/s Shree. Rajshakti Automobiles, Ahmedabad where under the present appellant was also made liable for penalty under Rule 26 of the Central Excise Rules, 2002 for certain omissions and commissions will laid to evasion of Central Excise duty. The matter got adjudicated by impugned Order-In-Original dated 03.10.2012 where under Central Excise Duty amounting to Rs. 2,48,83,940/- was confirmed against M/s Shree. Rajshakti Automobiles, Ahmedabad and apart from imposition of penalty and penalties to another persons, a penalty of Rs. 1,00,000/- has also been imposed on the present appellant under Rule 26 of the Central Excise Rules, 2002. The appellant is before me against the above mentioned penalty of Rs. 1,00,000/-.
2. I have heard both the sides. The Learned Advocate appearing for the appellant has stated that main noticee in the matter M/s Shree. Rajshakti Automobiles, Ahmedabad have already settled the dispute under SVLDRS Scheme. It has also been mentioned that Rule 26 of the Central Excise Rules, 2002 has wrongly been invoked by the adjudicating authority for imposition of penalty against the appellant. It has been contended that only role of the appellant was to provide his registration of ARAI-Pune for getting the vehicle registered with RTO, as the manufacture of the vehicles were not having the required registration under Automotive Research Association of India (ARAI-Pune) (which is mandatory as per Rule 126 of Central Motor Vehicles Rules (CMVR), 1989). It has further been contended that for imposition of penalty under Rule, 26 of the Central Excise Rules, 2002, the person need to be engaged in a acquiring possession non-duty paid goods or he should be concerned with transportation, removing, depositing, keeping, concealing, selling or purchasing of any excisable goods which he knows or have reason to believe that same are liable for confiscation under Central Excise act. It has been the contention that since the appellant has not engaged in any of these activities and therefore the learned adjudicating authority should not have imposed penalty upon him under Rule 26 of the Central Excise Rules, 2002. The learned Advocate has also submitted that following case law in his favour as follows:-
