ORDER
P.G. Chacko, Member (J)
1. These appeals are against three different orders passed by the Commissioner (Appeals) upholding Order-in-Original No. 45/2003 of the original authority. The original authority had confirmed a demand of duty of Rs. 19,321/- against A.P.S. Cottons (appellants in E/1177/04) and had appropriated the amount of Rs. 19,321/- already paid by the said party, towards such demand. This demand of duty has been sustained by the lower appellate authority, and this part of the order of the lower appellate authority is not under challenge in the appeal of A.P.S. Cottons. The original authority had also appropriated an amount of Rs. 11,503/- already deposited by the party, towards redemption fine in lieu of confiscation of the non-duty-paid cotton yarn seized from them. A.P.S. Cottons have challenged this fine. The original authority had also imposed a penalty of Rs. 10,000/- on A.P.S. Cottons under Rule 25 of the Central Excise Rules, 2002 and a separate penalty of equal amount on its proprietor Shri P. Neerthilingam under Rule 26 of the said Rules. Appropriation was also made towards these penalties from the amount already deposited by APS Cottons. These penalties are also under challenge in the appeal of APS Cottons. The original authority had also imposed penalties of Rs. 10,000/-each under Rule 26 ibid on N.A. Pappuraja Sons Ginning Factory and its Manager, Shri V.P. Balamurugan. These penalties have been challenged in appeals E/1179/04 and E/1178/04 respectively.
2. Heard both sides. Ld. Counsel for the appellants reiterates the grounds of the appeals and ld. DR opposes these grounds. I have given careful consideration to the submissions.
3. It appears from the records that A.P.S. Cottons used to supply cotton to yarn manufacturers like Priyadarshini Fabs. Ltd. (one of the parties penalised by the lower authorities) and that Priyadarshini Fabs Ltd. owed some amount to A.P.S. Cottons towards sale price of cotton supplied by the latter. To realise such dues from Priyadarshini Fabs. Ltd., A.P.S. Cottons forcibly took away a consignment of finished cotton yarn from their premises and stored the same in the godown of N.A. Pappuraja Sons Ginning Factory with the consent of Shri V.P. Balamurugan (Manager). This quantity of cotton yarn was seized by the department upon finding that the goods had not suffered central excise duty. While further investigations were under way, A.P.S. Cottons paid the duty of excise amounting to Rs. 19,321/- on the seized yarn and also deposited a further amount of Rs. 31,503/-for securing release of the goods. The goods were accordingly released to them, This was followed by a show-cause notice, which proposed appropriation of the amount of Rs. 19,321/- towards duty of excise on the cotton yarn and also proposed confiscation of the goods and penalties on all the noticees. It was this show cause notice which was adjudicated upon by the original authority as already indicated. Ld. Counsel for the appellants submits that the seized cotton yarn (valued by the department at Rs. 2,10,018/-) was overvalued and therefore the redemption fine of Rs. 11,503/- imposed on A.P.S. Cottons in lieu of confiscation of the said yarn is on the higher side. On this aspect, it is submitted by ld. DR that the value of the cotton yarn determined by the department was never challenged before and, further, that the redemption fine being only 5% of this value cannot be said to be unreasonable. As regards penalty, ld. Counsel submits that separate penalties were wrongly imposed on A.P.S. Cottons and its proprietor for the same offence and that only one of these penalties, if at all, could have been imposed. Ld. Counsel has also a grievance that the quanta of these penalties are too high to match the offence found against the parties. These submissions of ld. Counsel have also been contested by ld. DR on the strength of the findings recorded in the impugned order. Touching the penalty imposed on N.A. Pappuraja Sons Ginning Factory, ld, Counsel submits that this penalty is unwarranted inasmuch as there is no evidence whatsoever indicating any connection between the said party and storage of cotton yarn in their godown. As regards the penalty imposed on Shri V.P. Balamurugan (Manager), the grievance of ld. Counsel is, again, in relation to its quantum. Ld. DR also has been heard on this aspect.
4. After considering the submissions, I find that separate penalties on M/s. A.P.S. Cottons and its proprietor have been imposed for the same offence. This is not sustainable in law. As regards the personal penalty of Rs. 10,000/-imposed on the proprietor under Rule 26 of the Central Excise Rules, 2002, the proprietor seems to have no grievance inasmuch as he has not filed any appeal against this penalty. This being so, the penalty on A.P.S. Cottons under Rule 25 of the said Rules should be vacated as it is settled law that there can be no separate penalties on a proprietary concern and its proprietor for the same offence. The offence of having physically dealt with the non-duty-paid cotton yarn is not disputed by A.P.S. Cottons. Hence a penalty on them or their proprietor is justifiable. While upholding the penalty imposed on the proprietor who has not chosen to appeal against it, I vacate the penalty imposed on A.P.S. Cottons. But the redemption fine being only 5% of the value of the goods is reasonable and requires no modification. In the result, Appeal No. E/1177/04 stands partly allowed.
5. As rightly pointed out by ld. Counsel, there is no evidence of any nexus between N.A. Pappuraja Sons Ginning Factory and the storage of cotton yarn in their godown. The yarn was stored in the godown pursuant to some understanding between A.P.S. Cottons and Shri V.P. Balamurugan (Manager of N.A. Pappuraja Sons Ginning Factory). The factory owner was not party to such understanding. Even Shri Balamurugan did not claim that he had instructions from the factory owner to permit storage of the offending goods in their godown. Thus there is no evidence of the factory owner having done anything which could render the goods liable for confiscation. Hence the factory-owner was not liable for penalty under Rule 26 of Central Excise Rules, 2002. In the result, Appeal No. E/1179/04 is allowed.
6. The appellant (Shri Balamurugan) in Appeal No. E/1178/04 was, at the material time, Manager of N.A. Pappuraja Sons Ginning Factory. He is a graduate and, at the material time, he was admittedly engaged in the day-today administration of the factory. He can hardly plead ignorance of law. The law stipulated that excisable goods removed from factory were liable to confiscation if they were not duty-paid. Admittedly Shri V.P. Balamurugan physically dealt with non-duty-paid cotton yarn by storing the same in a godown which was, at the material time, under his management. This act rendered the goods liable for confiscation and also rendered himself liable for penalty under Rule 26 ibid. The only question which remains to be considered is whether the quantum of penalty imposed on him requires to be interfered with. It has been submitted by Id. Counsel that the appellant has only a meagre salary of Rs. 2,500/- from N.A. Pappuraja Sons Ginning Factory. This submission is not supported by anything contained in the relevant appeal memo, wherein the grievance is only that the penalty of Rs. 10,000/- is “high, heavy, harsh and far excessive”. Nevertheless, I find that the lower authorities imposed equal penalties on the proprietor of A.P.S. Cottons, who claimed ownership of the offending goods; and Shri V.P. Balamurugan who provided temporary storage facility for the goods. The facts and circumstances of the case, however, do not indicate that the offences committed by the owner of the non-duty-paid goods and the person who temporarily acted as ‘bailee’ of the goods were of the same gravity. A lesser penalty should have been imposed on Shri V.P. Balamurugan. In the facts and circumstances of the case, I reduce the penalty on Shri Balamurugan to Rs. 7,000/-. With this modification, the impugned order is sustained to the extent it relates to the appellant and Appeal No. E/1178/04 is dismissed.
(Order dictated and pronounced in open Court)