2024 (8) TMI 1147 - AT - Central Excise

Penalty on co-noticee for goods purchased from main noticee - case of appellant is that only because the appellant had not filed declaration under the scheme, the penalty imposed against them cannot sustain on the ground that the penalty against the main noticee has been set aside - HELD THAT - The main appellant M/s. Ogun Steel Rolling Mills (P) Ltd. has opted for SVLDR Scheme and have been issued Discharge Certificate. As per Section 124 (1) (b) of the Finance Act, 1994, if only penalty is in dispute and the duty demand is NIL, then such penalty shall be waived under the scheme. The relief under Section 124 (1) (b) is not subject to the satisfaction of the Designated Committee and it is as per the provisions of the scheme. In case, the appellant had filed declaration, the Committee would not have any option but to grant relief under Section 124. The filing of declaration is only procedural option to be made by the appellant. The very same issue has been considered by the Tribunal in the case of M/S JPFL FILMS PRIVATE LIMITED, JALAN JEE POLYTEX LTD., KAVITA INTERNATIONAL AGENCY, KULDEEP SINGH, DP SINGH, R KNITFAB, PERFECT DESIGNER, VK KALRA, RELIANCE INDUSTRIES LIMITED, KANPUR WOOL INDUSTRIES, SWASTIK TRADING CO., APEX CORPORATION AND MANSA TRADERS VERSUS COMMISSIONER OF CENTRAL EXCISE, LUDHIANA 2023 (12) TMI 304 - CESTAT CHANDIGARH . It was held by the Tribunal that when the main appellant has been granted immunity and relief from penalty under Section 124 of the SVLDR Scheme, the assessee, against whom penalty has been imposed in the very same proceedings, cannot be denied relief of penalty merely because they have not filed declaration under the scheme. Taking note of the fact that the main appellant has settled the dispute under SVLDR Scheme and only penalties have been imposed against these appellants, the penalty imposed against these appellants also require to be set aside. The impugned orders are set aside to the extent of setting aside the penalty imposed against these appellants - Appeal allowed.

Summary

Issues:
Imposition of penalty on co-noticee for goods purchased from main noticee; Applicability of Sabka Vishwas Scheme for penalty waiver; Excessive penalty imposition compared to alleged duty evasion; Interpretation of Section 124 (1) (b) of the Finance Act, 1994 in SVLDR Scheme.

Analysis:
The judgment revolves around the imposition of a penalty on the appellant, a co-noticee who purchased goods from the main noticee, M/s. Ogun Steel Rolling Mills (P) Ltd. The main noticee settled the dispute under the Sabka Vishwas Scheme, leading to the argument for penalty waiver for the co-noticee as per the scheme's provisions. The appellant contended that the penalty imposed was excessive compared to the alleged duty evasion, seeking relief from the penalty. The Tribunal considered the interpretation of Section 124 (1) (b) of the Finance Act, 1994 in the SVLDR Scheme to determine if the penalty should be waived for the appellants who did not file a declaration under the scheme.

The appellant's counsel argued that since the main noticee had settled the dispute under the SVLDR Scheme and received immunity from penalty, the co-noticee should also be granted relief from the penalty. The Tribunal cited previous cases and held that the relief under the scheme is not subject to the satisfaction of a committee and that filing a declaration is a procedural formality. The Tribunal emphasized that procedural infractions should not impede a substantial right, and the benefit of the scheme cannot be denied to the appellants solely for not filing a declaration.

Based on the above analysis, the Tribunal concluded that the penalty imposed on the appellants should be set aside as the main appellant had settled the dispute under the SVLDR Scheme. The impugned orders were set aside to the extent of the penalty imposed on the appellants, and the appeals were allowed with consequential relief, if any. The judgment highlights the importance of interpreting statutory provisions in schemes like SVLDR to ensure fair treatment and relief for all parties involved in tax disputes.