2014 (8) TMI 16 - AT - Central Excise

Levy of separate penalty on partner of the firm - clandestine removal of goods - Held that - it is observed that respondent partner was a party to the whole fraud committed by the partnership concern and is liable to penalty - a penalty of ₹ 1,00,000/- imposed on the respondent under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2002 - Decided in favor of revenue.

Summary

Issues:
1. Imposition of penalty on a partner when a penalty has already been imposed on the partnership firm.

Analysis:
The appeal filed by the Revenue was against the Order-in-Appeal (OIA) dated 28.09.2006, which upheld the Order-in-Original (OIO) dated 31.08.2004 passed by the adjudicating authority without imposing any penalty on the partner of the partnership firm. The Revenue contended that a separate penalty on the partner can be imposed if a clear-cut role is played by the partner in clandestine activities, citing various case laws to support their argument. The respondent did not appear, and the Revenue emphasized the partner's active involvement in the fraudulent activities. The Tribunal referred to the case law of M/s. Labdhi Prints vs. CCE & ST, Surat, where it was established that penalty on the partner can be imposed. The Tribunal noted the partner's knowledge of the fraudulent activities and upheld the penalty imposed on him by the first appellate authority.

The Tribunal observed that the respondent partner was complicit in the fraudulent activities of the partnership concern, justifying the imposition of a penalty on him. The lower authorities' orders were set aside, and a penalty of &8377;1,00,000/- was imposed on the partner under relevant Central Excise Rules. The Tribunal concluded that the appeal filed by the Revenue was allowed based on the partner's involvement in the fraudulent activities, leading to the imposition of the penalty.

In summary, the Tribunal's judgment addressed the issue of imposing a penalty on a partner when a penalty had already been imposed on the partnership firm. The decision highlighted the partner's active involvement in fraudulent activities, leading to the imposition of a penalty on the partner despite the partnership firm being penalized. The Tribunal relied on relevant case laws and established precedents to support its decision, ultimately allowing the Revenue's appeal and imposing a penalty on the partner for his role in the fraudulent activities.