2023 (9) TMI 178 - AT - Central Excise

Continuance of the adjudicating proceedings against the co-noticees (Directors) when the subject matter of the show cause notice has been settled by the main noticee viz. the Company under SVLDR Scheme - Section 124 (1) of the Finance (No.2) Act, 2019 - HELD THAT - The Circular No.1071/4/2019-CX.8 dated 27.08.2019 as well as the FAQ, the co-noticee has a responsibility to opt or apply for the scheme, once the main notice has been issued the discharge certificate of the duty liability, which in the present case, the appellant has failed to do so. It is opined that this is only a procedural flow, for which the appellant cannot be burdened with the liability of penalty, in asmuch as, there is no loss to the Revenue. The amount proposed in the show cause notice stands settled with the issuance of the discharge certificate issued in favour of the main noticee. The interpretation placed is based on the provisions of the Circular, which explains that the scheme is a bold endeavor to unload the baggage relating to the legacy taxes viz. central excise and service tax that have been subsumed under GST and allow business to make a new beginning and focus on new GST, therefore, it is incumbent on all the officers and staff of CBIC to be partner with the trade and industry to make the scheme a grand success. This Tribunal in similar circumstances has set aside the said penalty imposed in the case of SHRI B.V. KSHATRIYA VERSUS COMMISSIONER OF GST CE, NASHIK 2023 (5) TMI 858 - CESTAT MUMBAI . The impugned order and the penalty imposed on the appellants set aside - appeal allowed.

Summary

Issues:
Two separate appeals filed against the dismissal of appeals by the Adjudicating Authority.

Summary:

Issue 1: Liability of co-noticees when main noticee settles the matter under SVLDR Scheme
The appellants, directors of a company, challenged penalties imposed on them despite the company settling the matter under the SVLDR Scheme. The Adjudicating Authority imposed penalties on the directors, which were upheld by the Commissioner (Appeals). The appellants argued that once the main noticee settles the duty liability, co-noticees can opt for the scheme for penalty waiver, as per circulars and FAQs. The Tribunal referred to previous orders and held that penalties should be set aside as the appellants would have paid 'nil' duty under the SVLDR Scheme. The Tribunal emphasized the importance of making the scheme a success and allowed the relief sought by the appellants, setting aside the penalties imposed.

Separate Judgement:
The Tribunal pronounced the order on 29.08.2023, allowing both appeals and setting aside the penalties imposed on the appellants.