2001 (1) TMI 411 - AT - Central Excise

Summary

Issues:
- Imposition of penalty on the Director under Rule 209A of the Central Excise Rules.
- Applicability of penalty when the main party's penalty was vacated under the Kar Vivad Samadhan Scheme.

Analysis:
1. Imposition of Penalty on the Director: The appellant, a Director of a company, was imposed a penalty under Rule 209A of the Central Excise Rules for acts of omission and commission. The Deputy Commissioner confirmed a demand of Central Excise duty against the company and imposed penalties. The Commissioner (Appeals) reduced the penalty imposed on the appellant from Rs. 4,80,000 to Rs. 3,00,000. The appellant challenged this order in the present appeal.

2. Applicability of Penalty under KVS Scheme: The company, along with the appellant, appealed against the Deputy Commissioner's order. While the company settled its dispute under the Kar Vivad Samadhan Scheme, the appellant's appeal was pending. The settlement of the company's penalty was recorded, and the Commissioner (Appeals) upheld the penalty on the appellant. The appellant argued that the penalty on him should be set aside as the main party's penalty was vacated under the KVS Scheme, citing a Tribunal decision and a Board's Circular.

3. Judgment: The Tribunal noted that the Board's Circular, in force during the Commissioner (Appeals) consideration, stated that settlement under the KVS Scheme provides immunity to all co-noticees. The Tribunal's decision in a similar case supported this position, emphasizing that it would be unfair to hold a co-noticee liable when the main manufacturer's penalty was settled. The Tribunal held that the lower appellate authority should have set aside the penalty on the appellant based on the Board's Circular, which is binding on departmental authorities. Consequently, the impugned order imposing the penalty on the appellant was set aside, and the appeal was allowed.