2024 (11) TMI 468 - AT - Central Excise

Penalty on co-noticees, when the case of main appellant involved demand of duty interest and penalty has been settled under SVLDRS-2019 - HELD THAT - As of now it is settled that once the duty demand case is settled under SVLDRS-2019, as per Scheme itself, there is a waiver of penalties on the main assessee against whom the demand was confirmed as well as on other co-noticees. Reliance placed in the case of Anil K Modani 2024 (1) TMI 444 - CESTAT MUMBAI where it was held that ' Even though the appellants herein could not, at the time of existence of the scheme have derived the benefits from the coverage by the scheme, the intent and purpose of the scheme being collection of the duty or some percentage thereof, and forgoing interest, fine and penalty, the disposal of the application of M/s JSW Ispat Steel Ltd renders the continuance of the penalty against the three appellants to be not in conformity with the relief scheme. Accordingly, they are eligible for erasure of the penalties against them.' In the case of Subhash Panchal 2024 (5) TMI 1484 - CESTAT AHMEDABAD it was held that ' it is settled that once the main case of duty evasion is settled under SVLDRS 2019 the penalty on the Co-appellant shall not survive. 4. Accordingly, the penalty is set aside.' In view of above judgments given by the two coordinate Division Benches, the penalties imposed on the co-noticees in a case where the main noticee against whom the demand is confirmed, the case is settled under SVLDRS then in respect of other co-noticees penalty will not sustain even if they have not filed a declaration under SVLDRS-2019 and decision on the issue of SVLDRS-2019 in the case of Four R Associates and others reported as 2023 (11) TMI 9 - CESTAT CHENNAI given by Single Member Bench whereas the aforesaid cited decisions are given by Division Bench. Therefore, Division Bench judgment will prevail over Single Member Bench. The penalties on the appellants are not sustainable. Hence the same are set aside - Appeals are allowed.

Summary

Issues:
Whether penalties on co-noticees can be continued when the main appellant's case involving demand of duty has been settled under SVLDRS-2019?

Analysis:
The judgment dealt with the issue of whether penalties on co-noticees can be continued when the main appellant's case involving demand of duty has been settled under SVLDRS-2019. The appellants argued that penalties on co-noticees should not be sustained once the main case is settled under SVLDRS-2019, citing various judgments in support of their position. The respondent, on the other hand, relied on different judgments to support the continuation of penalties on co-noticees. After considering the submissions and perusing the records, the Tribunal found that under SVLDRS-2019, there is a waiver of penalties on the main assessee against whom the demand was confirmed as well as on other co-noticees. The Tribunal referred to specific provisions of the Finance Act, 2019, and concluded that penalties against co-noticees should be erased in line with the relief scheme. Therefore, the penalties on the appellants were deemed not sustainable, and the appeals were allowed.

In another case discussed in the judgment, the issue revolved around the personal penalty imposed on an appellant under Rule 26 of the Central Excise Rules, 2002, in connection with duty evasion by another party. The appellant argued that since the main party's case had been settled under SVLDRS-2019, the personal penalty should be set aside. The Tribunal, after considering the submissions and relevant judgments, including those from different CESTAT benches, concluded that once the main case of duty evasion is settled under SVLDRS-2019, the penalty on the co-appellant shall not survive. Therefore, the penalty was set aside, and the appeal was allowed.

The judgment highlighted the importance of the SVLDRS-2019 scheme in settling cases involving duty demands and penalties. It emphasized that once the main case is resolved under the scheme, penalties on co-noticees should not be sustained. The Tribunal referred to multiple judgments to support this stance and clarified that penalties imposed on co-noticees should be erased in line with the relief scheme provided under SVLDRS-2019. The decision in both cases reiterated the principle that penalties on co-noticees cannot continue once the main case is settled under the SVLDRS-2019 scheme, ensuring consistency in the application of the law across different cases.