Sanjeev Khera Vs Additional Director General (Adjudication) (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, considered whether penalties imposed under Rule 26 of the Central Excise Rules, 2002 could be sustained against five appellants. The appellants argued that the impugned order did not confiscate the goods and also did not contain any finding that the goods were liable to confiscation. They submitted that the order merely stated, while imposing penalties, that the goods were liable to confiscation.
The department supported the penalties imposed under Rule 26. The Tribunal examined Rule 26(1) of the Central Excise Rules, which provides for penalty against persons dealing with excisable goods that they know or have reason to believe are liable to confiscation under the Act or the Rules.
After reviewing the impugned order, the Tribunal observed that there was no discussion or finding establishing that the goods were liable to confiscation. It noted that such a finding is an essential requirement for imposing penalty under Rule 26. According to the Tribunal, merely mentioning at the stage of penalty imposition that the goods were liable to confiscation was insufficient in the absence of a specific determination on confiscability.
The Tribunal relied on its earlier decision in Shri Ramesh Garg, Chairman of M/s K.S. Oil Ltd. v. Commissioner, CGST, Customs & Central Excise, where it was held that penalties under Rule 26 cannot be imposed unless goods are confiscated or held liable to confiscation. Referring to that decision, the Tribunal reiterated that confiscation or a finding regarding liability to confiscation is an essential ingredient for invoking Rule 26.
