Delhi High Court
Commissioner Of Central Excise ... vs Balaji Trading Co. & Ors on 21 January, 2013
Author: Badar Durrez Ahmed
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 21.01.2013
+ CEAC 5/2013
COMMISSIONER OF CENTRAL EXCISE DELHI-I... Appellant
versus
BALAJI TRADING CO. & ORS ... Respondents
Advocates who appeared in this case:
For the Appellant : Mr Kamal Nijhawan with Mr Sunit Gaur and
Mr Dinesh Patel
For the Respondent : None
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
1. This is an appeal under Section 35G of the Central Excise Act, 1944. It
has been filed by the revenue, being aggrieved by the final order No. A/655-
657/2012-EX (BR) dated 05.06.2012 passed by the Customs, Excise & Service
Tax Appellate Tribunal (CESTAT) in Central Excise Appeal Nos. 260/2012,
292/2012 and 342/2012, whereby the said appeals filed by the respondent were
allowed.
2. The Commissioner (Adjudication) had passed an order on 31.10.2011,
whereby he had imposed penalties of ` 10 lacs on Balaji Trading Company, ` 3
lacs on Pooja Agencies and ` 10,000/- on Balaji Flexipacks, respectively, under
Rule 25 of the Central Excise Rules, 2002.
3. The allegation against the respondents was that they were storing and
selling zarda which had the brand name of "Ratna" and which had been
manufactured by Prabhat Zarda Factory. It is alleged that the said Prabhat
Zarda had clandestinely cleared the said quantities of 'Ratna' Zarda and that
the same were being stored with the respondents for further sales. It is also
contended that the said respondents were related concerns of Prabhat Zarda
Factory.
4. The Commissioner passed an order-in-original dated 31.10.2011,
whereby the said penalties were imposed on the respondents under Rule 25 of
the said Rules. Rule 25 of the said Rules reads as under:-
"RULE 25. Confiscation and Penalty-- (1) Subject to the
provisions of section 11AC of the Act, if any producer,
manufacturer, registered person of a warehouse or a registered
dealer, -
(a) removes any excisable goods in contravention of any of
the provisions of these rules or the notifications issued under
these rules; or
(b) does not account for any excisable goods produced or
manufactured or stored by him; or
(c) engages in the manufacture, production or storage of any
excisable goods without having applied for the registration
certificate required under section 6 of the Act; or
(d) contravenes any of the provisions of these rules or the
notifications issued under these rules with intent to evade
payment of duty,
then, all such goods shall be liable to confiscation and the
producer or manufacturer or registered person of the warehouse
or a registered dealer, as the case may be, shall be liable to a
penalty not exceeding the duty on the excisable goods in
respect of which any contravention of the nature referred to in
clause (a) or clause (b) or clause (c) or clause (d) has been
committed, or [rupees two thousand], whichever is greater.
(2) xxxx xxxx xxxx xxxx."
5. The Tribunal, however, allowed the appeals of the respondents by
holding that Rule 25 does not apply to the respondents as it was not the case of
the prosecution that the respondents were producers, manufacturers, registered
persons of a warehouse or registered dealers. It is pertinent to note that Rule
25(1) specifically mentions four categories of persons:- (a) producer; (b)
manufacturer; (c) registered person of a warehouse; or (d) a registered dealer.
These four categories of persons are also mentioned at the end of Rule 25,
where the liability of penalty has been spelt out. It is, therefore, clear that the
penalty can be imposed on such persons only. The respondents are neither
producers nor manufacturers of the said Prabhat Zarda nor are they the
registered persons of a warehouse in which the said zarda had been stored.
The respondents are also not the registered dealers. That being the case, no
penalty can be imposed on the said respondents. The Tribunal has come to the
correct conclusion, particularly, as it was not the case of the prosecution that
the respondents fell within any one of the four categories of persons mentioned
above.
6. The learned counsel for the appellant contended that Rule 25(1)(c)
would be applicable. However, we do not agree with this contention because
sub-clause (c) would apply only in respect of the four categories of persons
mentioned in the earlier part of Rule 25(1) of the said Rules. That is clearly not
the case. Therefore, Rule 25(1)(c) would have no application in the present
case.
7. As such, no substantial question of law arises for our consideration.
The appeal is dismissed.
BADAR DURREZ AHMED, J
R.V.EASWAR, J
JANUARY 21, 2013
SR
