2026-VIL-1665-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Penalty on co-noticee for alleged involvement in clandestine manufacture and removal of Pan Masala and Scented Jarda Tobacco – Rule 26 of the Central Excise Rules, 2002 – Penalty was imposed on the appellant as a co-noticee in proceedings initiated against a manufacturer for clandestine manufacture and removal of goods without payment of duty, on the ground that the appellant was concerned in the affairs of the manufacturing unit – Appellant contended that he had no role in the illegal activities, that his role was limited to extending a loan and assisting in procurement of laminates and miscellaneous goods, that statements of workers did not implicate him, and that invoking Rule 26 for imposing penalty on such basis is not sustainable – Whether the appellant is liable for penalty under Rule 26 of the Central Excise Rules, 2002 and whether such penalty is legally sustainable – HELD – On perusal of the impugned order and the show cause notice, the role attributed to the appellant is limited to having provided laminates and miscellaneous goods and extended a loan facility, and there is a lack of clarity arising from apparent similarity of names between the appellant and another co-noticee – Rule 26 requires that a person acquire possession of, or be concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing excisable goods, or otherwise deal with such goods with knowledge that they are liable to confiscation – No evidence on record shows the appellant was involved in any activity specified under Rule 26, and statements of workers indicate that manufacture and transportation were carried out under the supervision and directions of another person – In the absence of evidence establishing the appellant's involvement in the activities specified under Rule 26, imposition of penalty is not legally sustainable and is contrary to the statements on record – Reliance is placed on judicial precedent holding that penalty under Rule 26 cannot be sustained absent evidence brought on record by the department, and that retracted statements cannot be relied upon as the sole basis for confirming demand and penalty – The impugned order is partly set aside to the extent it imposes penalty on the appellant, without interference with the remaining portions of the order not under challenge – The appeal is allowed
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