By TIOL News Service

MUMBAI, APR 11, 2016: THE issue is that if the main appellant, against whom, the demand of excise duty, interest and penalty were proposed, discharges the liability of duty, interest and 25% of penalty within one month from the date of show cause notice whether the proceedings against Co-noticees in the same show cause notice shall stand concluded and whether they are not liable for penalty under Rule 26 of CER, in terms of proviso to Sub-Section 2(2) of Section 11A of CEA.

The Commissioner (Appeals) held that as per the first proviso to section 11A(2) the proceedings in respect of such person and other person to whom notice was served under Sub-section (1) shall be deemed to be conclusive. Inasmuch as since the SCN u/s 11A(1) demanding duty was issued only to the main assessee and not to the noticees on whom penalty was proposed u/r 26 of CER, 2002, only the proceedings against the main assessee can be considered conclusive and not in respect of other co-noticees.

The appellants are before the CESTAT.

They seek to derive support from the following decisions -

+ Abir Steel Rolling Mills 2013-TIOL-1048-CESTAT-DEL

+ Guardian Castings Pvt. Ltd. Ravindra C Aggarwal 2015-TIOL-396-CESTAT-MUM

+ Ambika Waste Management Pvt. Ltd. & Others 2016-TIOL-28-CESTAT-MUM

The AR relies upon the following contrary decisions AnandAgarwal& Others 2013-TIOL-26-CESTAT-DEL & Ghanshyamdas C. Goyal 2015-TIOL-756-CESTAT-MUM.

The Bench distinguished the case laws cited by the AR &observed -

"5. I have carefully considered the submissions made by both the sides. I find that the appellants sought waiver of penalty imposed under Rule 26 of Central Excise Rules, 2002 on the ground that the main noticee in the show cause notice against whom duty, interest and penalty was proposed have paid duty, interest and 25% of penalty within one month from the date of show cause notice. The proceedings against the present appellant should also stands concluded along with the main assessee. I find that on the very same legal issue various Benches of this Tribunal and also Hon'ble P & H High Court has held that once the main assessee pays duty, interest and 25% of penalty within one month of the show cause notice other co-noticees against whom the penalty under Rule 26 was proposed, proceedings their against shall also be concluded. Accordingly, no penalty can be imposed in terms of proviso to Section 11A(2) of the Central Excise Act."

Holding that all the appellants are entitled for immunity as per proviso to Section 11A (2) of CEA, 1944, the penalty imposed on them u/r 26 of the CER, 2002 was waived and the appeals were allowed.

In passing: Also read - Co-noticees entitled for penal waiver if the main noticee pays duty, interest and penalty - Rule 26 of CER, 2002 amended  

(See 2016-TIOL-855-CESTAT-MUM)