2011 (3) TMI 1103 - AT - Central Excise

Penalty - non compliance with the stay order - whether the co-noticees would still be open to imposition of penalty when the case of main noticee stand settled before Settlement Commission - Held that - As decided in M/s S.K. Colombowala v. CC (Import), Mumbai 2007 (7) TMI 514 - CESTAT, MUMBAI wherein held that on settlement of dispute of main noticee by Settlement Commission, the cases against all co-noticees as regards imposition of penalty would come to an end. The distinction sought to be made by Commissioner (Appeals) that in all those decisions, Settlement Commission has fully waived the penalty whereas in the present case, the penalty on the main noticee was imposed to the extent of Rs. 2.5 lakhs, cannot be held to be a reason so as to not to follow the precedent decisions - set aside the impugned order, imposing penalty upon the appellant and allow his appeal with consequential relief.

Summary

Issues:
1. Dismissal of appeals for non-compliance with stay order directing deposit of penalty amount.
2. Differentiation in penalty imposition based on Settlement Commission's decision.
3. Legal position on penalty imposition for co-noticees when main noticee's case is settled before Settlement Commission.

Analysis:
1. The judgment addresses the dismissal of appeals by the Commissioner (Appeals) due to non-compliance with a stay order requiring the deposit of penalty amounts as a condition for hearing the appeals. The penalties were imposed under Rule 26 of Central Excise Rules.

2. The Tribunal reviewed the differentiation made by the Commissioner (Appeals) regarding penalty imposition based on the Settlement Commission's decision in a previous case. The Commissioner distinguished earlier Tribunal decisions, but the Tribunal found no merit in this distinction, citing the case of Vijay R. Bohra and the majority decision in the case of M/s. S.K. Colombowala vs. Commissioner of Customs (Import, Mumbai).

3. The judgment delves into the legal position concerning penalty imposition on co-noticees when the main noticee's case is settled before the Settlement Commission. The Tribunal emphasized that the penalty imposition on the main noticee or its waiver by the Settlement Commission should not determine the liability of co-noticees. Referring to past judgments, the Tribunal set aside the penalties imposed on co-noticees and allowed the appeal with consequential relief.

In conclusion, the Tribunal rejected the distinctions made by the lower authorities and remanded the matter to the Commissioner (Appeals) for a decision on merits without requiring any pre-deposit. The stay petitions and appeals were disposed of accordingly.