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COMMISSIONER OF CENTRAL EXCISE DELHI-I Vs. BALAJI TRADING CO. & ORS
January, 22nd 2013
       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






CEAC 5/2013                                                          Page 1 of 4
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




CEAC 5/2013                                                         Page 2 of 4
       (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.







CEAC 5/2013                                                            Page 3 of 4
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




CEAC 5/2013                                                            Page 4 of 4
 
 
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