2009 (2) TMI 575 - AT - Central Excise

Summary

Issues:
1. Imposition of penalty on a partner under Rule 209A of the Customs Excise Rules, 1944 when penalty is already imposed on the appellant unit.

Analysis:
The Commissioner (Appeals) set aside the penalty of Rs. 25,000/- on the partner of the appellant unit, citing that since a penalty had already been imposed on the appellant unit, a separate penalty on the partner is not necessary as they do not have separate independent existence. The Commissioner relied on various decisions of the Tribunal, including Kedarnath Silk Mills v. C.C.E, Hyderabad, Nita Dyeing & Ptg. Works v. CCE, Surat-I, Sarpin Pharmacal v. CCE, Ahmedabad-II, and Vallabh Alloys Ltd. v. CCE, New Delhi. However, the learned D.R. argued that there are other decisions supporting the imposition of a penalty on the partner. Referring to the case of Prakash Metal Works reported in 2007, where the Supreme Court upheld the penalty on both the partner and the firm, the Tribunal set aside the Commissioner's order. Despite this, considering the total duty demand was only Rs. 79,752/- and a penalty of Rs. 50,000/- was imposed on the appellant unit, the Tribunal found a penalty of Rs. 25,000/- on the partner to be excessive and reduced it to Rs. 5,000/-.

This judgment clarifies the issue of imposing a penalty on a partner when a penalty is already imposed on the appellant unit. The Tribunal overturned the Commissioner's decision based on the Supreme Court's ruling in Prakash Metal Works, which upheld penalties on both partners and firms. The Tribunal considered the total duty demand and the penalty imposed on the appellant unit to determine the appropriate penalty on the partner, reducing it to Rs. 5,000 from Rs. 25,000. The judgment highlights the need to assess penalties based on individual circumstances and the relationship between partners and the appellant unit, ensuring fairness and proportionality in penalty imposition.