2016 (12) TMI 1159 - AT - Central Excise

Levy of Penalty - Rule 25 & 26 of the Central Excise Rules, 2002 - Held that - confiscation and penalty under this Rule can be decided against a producer, manufacturer, registered person, warehouse or the registered dealer. As the appellant is none of these, therefore, no penalty can be imposed upon the appellant under Rule 25 of the Central Excise Rules, 2002 - it is observed that no such observations have been made by the Adjudicating Authority and the First Appellate Authority to justify that imposition of penalty under Rule 26 of the Central Excise Rules, 2002 - Decided in favor of the assessee.

Summary

Issues: Penalty imposition under Rule 25 of Central Excise Rules, 2002; Incorrect provision in show cause notice affecting penalty imposition.

In this case, the appellant challenged the penalty imposed under Rule 25 of the Central Excise Rules, 2002, by the Adjudicating Authority and upheld by the First Appellate Authority. The appellant argued that as he was not the manufacturer but a partner in the concerned firm, the penalty should not be imposed on him. The appellant contended that the penalty was already paid by the partnership firm. The appellant relied on case laws to support the argument that personal penalty on a partner cannot be imposed if the penalty has been imposed on the partnership firm. On the other hand, the Respondent argued that mentioning of a wrong provision in the show cause notice should not prevent the imposition of penalty under Rule 26 of the Central Excise Rules, 2002. The Respondent cited a case law to support this argument.

Upon hearing both sides and examining the case records, the Tribunal analyzed the issue of penalty imposition under Rule 25 of the Central Excise Rules, 2002. The Tribunal observed that as per the provisions of Rule 25, penalty can be decided against a producer, manufacturer, registered person, warehouse, or registered dealer. Since the appellant did not fall under any of these categories, the penalty under Rule 25 could not be imposed on him. The Tribunal also addressed the argument regarding the incorrect provision in the show cause notice affecting the penalty imposition. It noted that no justification was provided by the Adjudicating Authority or the First Appellate Authority to impose penalty under Rule 26 of the Central Excise Rules, 2002. The Tribunal referred to a case law where it was established that once a penalty is imposed on a partnership firm, a separate penalty cannot be imposed on the partner as the partner is not a separate legal entity.

Based on the above observations and legal principles, the Tribunal set aside the penalty imposed on the appellant with any consequential relief. The operative portion of the order was pronounced in the open court, providing relief to the appellant in this matter.