Hansa Gosalia vs Commissioner of Central Excise, Thane-II

Whether the CESTAT was justified in confirming the penalty levied u/s 209A of the Central Excise Rules, 1944 is the question raised in this appeal. The appellants as also Dipesh Gosalia, son of Hansa Gosalia were directors of a company known as Gosalia Emultech Private Limited. On receiving information that the company had contravened various provisions of the Customs Act, 1962 as also the Central Excise Act, 1944, the premises of the company were searched on 11th October 1999 wherein shortage of inputs as also the final products were noticed.

Dipesh Gosalia, director of the company as also Pankaj Gosalia, in their statements, admitted to the differences in stock of raw material was on account of the fact that they have taken credit of duty on the basis of the invoices without actually receiving the goods. By an order-in-original dated 28th March 2003, the adjudicating authority held that the company had fraudulently taken credit of duty paid on inputs to the extent of Rs. 14,08,241.71 without actually receiving the inputs. It was further held that the company had clandestinely cleared the goods without payment of duty amounting to Rs. 5,66,524.61. While confirming the aforesaid duty demand with interest and penalty on the company, the adjudicating authority imposed penalty of Rs. 2,00,000/- on each of the appellants herein under Rule 209A of the Central Excise Rules, 1944.

Appeal filed by the appellants against imposition of penalty under Rule 209A was dismissed by the CESTAT vide order dated 28th September 2010. Challenging the aforesaid order, the present appeals are filed.

It is contended by Mr. Nadkarni, learned counsel appearing on behalf of the appellants that the appellants were not concerned with the day-to-day business of the company and in fact Bharat Parekh, full time director of the company, and Ghansyam Bharati, principal officer of the company were engaged in the day-to-day business of the company and, therefore, penalty imposed against the appellants is unjustified.

We find it difficult to accept the submission of the counsel for the appellants. The finding of fact recorded by the adjudicating authority and upheld by the CESTAT is that Shri Pankaj Chovatia, authorized signatory of the company was engaged in the day-to-day business of the company and said Mr. Pankaj Chovatia in his statement had stated that the credit was availed on the inputs without receiving such inputs as per the directions of Shri Dipesh Gosalia, son of Hansa Gosalia. The finding of fact recorded by the adjudicating authority and upheld by the CESTAT is that the appellants were aware of the developments taking place in the company and, therefore, the appellants are liable for penalty. The argument of the appellants that Shri Bharat Parekh and Ghansyam Bharti were looking after the day-to-day business of the company is a wholly inconsistent stand taken for the first time in this appeal and without any basis.

In these circumstances, no fault can be found with the decision of the CESTAT that the appellants are liable to pay penalty for the contravention of the provisions of law. Both the appeals are accordingly dismissed with no order as to costs.