2025 (6) TMI 358 - AT - Central Excise

Imposition of penalty under Rule 15 of CENVAT Credit Rules 2004 on the co-noticee when the main noticee has settled the dispute under SVLDR Scheme and has paid the tax as per the scheme - HELD THAT - Admittedly the main noticee has settled the issue under the SVLDR Scheme and this fact has also been recorded by the adjudicating authority in the Order-in-Original that the main noticee has been issued discharged certificate (i.e. Form SVLDRS-4) for full and final settlement of the tax dues under Section 127 of the Finance Act 2019 read with Rule 9 of the SVLDR Scheme 2019. In the case of Auto Ignition Ltd 2025 (5) TMI 314 - CESTAT CHANDIGARH the Division Bench of this Tribunal has held that Further we find that CESTAT in various decisions cited (supra) has set aside the penalty on co-assessees when the main assessee has settled the issue under scheme but co-assessees failed to submit the required declaration. Conclusion - Once the main noticee has settled the issue under SVLDR Scheme no penalty can be imposed on the co-noticee. Appeal allowed.

Summary

The Appellate Tribunal (CESTAT Chandigarh) examined an appeal against the Commissioner (Appeals)'s order dated 28.03.2023, which allowed the Revenue's appeal and set aside the Order-in-Original that had dropped penalty under Rule 15 of the CENVAT Credit Rules, 2004. The appellant, a co-noticee, contended that penalty could not be imposed on them since the main noticee, M/s Ved Jyoti Alloys Pvt. Ltd, had settled the dispute under the SVLDR Scheme and paid the tax accordingly. This position was supported by precedents including JPFL Films Pvt Ltd v. CCE, Ludhiana, Ekam International v. CCE, Ludhiana, and Auto Ignition Ltd v. CCE, Delhi-IV, which held that "once the main noticee has settled the issue under SVLDR Scheme, no penalty can be imposed on the co-noticee."The Tribunal noted that the main noticee had obtained a discharge certificate (Form SVLDRS-4) under Section 127 of the Finance Act, 2019 read with Rule 9 of the SVLDR Scheme, 2019. Relying on the Division Bench's reasoning in Auto Ignition Ltd, which set aside penalties on co-assessees when the main assessee settled the issue under SVLDRS, the Tribunal concluded that the impugned order imposing penalty on the co-noticee was "not sustainable." Accordingly, the appeal was allowed, and the impugned order was set aside.