2011 (3) TMI 1133 - AT - Central Excise

Penalty - Whether the penalty can be imposed on the partner when the partnership firm already penalised or not - Held that - As decided in Jupiter Exports 2007 (6) TMI 2 - HIGH COURT, BOMBAY and Jai Prakash Motwani (2009 (1) TMI 501 - GUJARAT HIGH COURT) the issue involved is no more res integra, wherein it was held that when partnership is penalised, separate penalties cannot be imposed on the partners.

Summary

Issues:
Whether penalty can be imposed on a partner when the partnership firm is already penalized.

Analysis:
The appeal was filed by the Revenue against an order where the penalty on the partner was dropped by the lower appellate authority. The key issue in this case revolved around whether a penalty can be imposed on a partner when the partnership firm has already been penalized. The learned SDR cited various decisions to support their argument, including cases like CCE vs. Rajnikant Ratilal Kadiwala, CCE vs. Ashirwad Synthetics, and Prakash Metal Works vs. CCE. However, as per the judgment, the decisions in the cases of CCE vs. Ashirwad Synthetics and CCE vs. Rajnikant Ratilal Kadiwala were considered ex-parte and not reliable. Additionally, the case of Prakash Metal Works vs. CCE was deemed irrelevant to the present case as it did not address the specific issue at hand.

The absence of representation from the respondents led to the matter being heard solely on its merits. The judgment further discussed the relevance of decisions in cases like CC vs. Jupiter Exports and Jai Prakash Motwani. The Bombay High Court's ruling in Jupiter Exports emphasized that separate penalties cannot be imposed on partners when the partnership is penalized. Similarly, the Gujarat High Court in Jai Prakash Motwani's case highlighted that partners are not separate legal entities and cannot be penalized separately once the firm has been penalized.

Based on the precedents set by the Bombay and Gujarat High Courts, the Tribunal concluded that the issue was no longer open to debate. In the present case, where the partnership firm had already been penalized, and the penalty on the partner was waived by the Commissioner (Appeals), the Tribunal found no fault in the impugned order. Consequently, the appeal filed by the Revenue was rejected, upholding the decisions of the High Courts and maintaining the waiver of penalty on the partner.

In summary, the judgment clarified the legal position regarding the imposition of penalties on partners when the partnership firm is penalized, citing relevant case law and emphasizing that partners cannot be penalized separately once the firm is penalized.