2017 (8) TMI 463 - AT - Central Excise

Simultaneous penalty on partnership firm and on partner - The basic allegation against the firm is that they have cleared the excisable goods without payment of duty against the said certificates to premises other than ones mentioned in those certificates - Held that - on the same allegation when the penalty has been imposed on the partnership firm, then no separate penalty on the partner is warranted under Rule 26 - penalty imposed on appellant set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Imposition of personal penalty on the partner of a firm under Rule 26 of the Central Excise Rules 2002.

Analysis:
1. Imposition of Penalty: The appeal challenged the penalty of ?1,00,000 imposed on the partner of a manufacturing firm for alleged clearance of excisable goods without payment of duty against certificates. The firm was directed to pay the amounts debited in the Cenvat Register under protest. The Commissioner confirmed the demand and imposed the penalty on the partner under Rule 26 of the Central Excise Rules 2002.

2. Contentions of the Appellant: The appellant argued that the penalty was arbitrary and unjustified, emphasizing that goods were re-warehoused correctly despite discrepancies in delivery premises. The appellant cited judicial precedents to support the claim that when penalties are imposed on a firm, partners should not be separately penalized. References were made to cases like Kamdeep Marketing Pvt. Ltd Vs. CCE, Indore and Classic ITM Vs. CC, New Delhi to assert that separate penalties on partners are not warranted if penalties are already imposed on the firm.

3. Legal Precedents: The appellant relied on decisions where penalties on partners were deemed unnecessary when penalties were imposed on the respective firms. The Tribunal's Division Bench rulings in cases like Kamdeep Marketing Pvt. Ltd and Classic ITM emphasized that additional penalties on partners, when penalties were already levied on the firms, were not sustainable. The judgments highlighted that in cases where partnership firms are penalized, separate penalties on partners are not justified.

4. Respondent's Argument: The Commissioner, represented by the learned AR, supported the findings of the impugned order, maintaining the validity of the penalty imposed on the partner.

5. Judgment: After considering the arguments, legal precedents, and material presented, the Judicial Member opined that when penalties are imposed on partnership firms, additional penalties on individual partners are not warranted under Rule 26. Citing the decisions referenced by the appellant, the judgment allowed the appeal and set aside the penalty imposed on the partner. The ruling emphasized that when penalties are already enforced on the firm, partners should not face separate penalties.

This detailed analysis of the judgment showcases the legal intricacies involved in the imposition of penalties on partners of firms under Rule 26 of the Central Excise Rules 2002, emphasizing the importance of established legal precedents in determining the validity of such penalties.