2018 (5) TMI 547 - AT - Central Excise

Penalty u/r 26 of CER 2002 on Managing Director Shri A. Ravindranath - Held that - once the appeal of the firm has been allowed on merit, then the penalty on the Managing Partner cannot be imposed under Rule 26 of the CER - penalty on the Managing Partner u/r 26 of the CER 2002 merely on the ground that he has not filed a separate appeal is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against common impugned order dated 26.12.2017 passed by the Commissioner (A).
2. Imposition of penalty under Rule 26 of Central Excise Rules, 2002 on Managing Director.
3. Validity of joint appeal by the firm and Managing Director.
4. Applicability of penalty on Managing Director after appeal of the firm is allowed.

Analysis:
1. The appeals were filed against a common impugned order dated 26.12.2017 passed by the Commissioner (A), where the appeal of the firm was allowed, but the appeal of the Managing Director was dismissed due to the penalty imposed under Rule 26 of Central Excise Rules, 2002. The issue in both appeals being identical, both were disposed of by a common order.

2. The appellants were engaged in manufacturing excisable goods and availing CENVAT credit. The case involved clandestine clearance of goods by a Gutkha manufacturing unit, implicating the appellants based on seized records. A show-cause notice was issued alleging clandestine clearances without payment of duty, leading to demand, interest, and penalties being imposed by the adjudicating authority.

3. The appellant challenged the impugned order, arguing that the penalty on the Managing Director should not stand as the appeal of the firm was allowed on merit. The appellant contended that a joint appeal by the firm and the Managing Director was permissible, citing legal precedents supporting this stance.

4. After considering submissions, the Tribunal found that a joint appeal was filed by the firm and the Managing Director. Once the appeal of the firm was allowed on merit, the penalty on the Managing Director could not be upheld under Rule 26 of the Central Excise Rules. Legal precedents were cited to support the permissibility of joint appeals by firms and partners. Consequently, the penalty on the Managing Director was set aside, aligning with the decisions relied upon by the appellant.