Rule 26 penalty requires a recorded culpable act or omission linked to duty evasion; penalty was set aside.

Penalty under Rule 26 of the CENVAT Credit Rules, 2004 cannot be sustained unless the order records a culpable act or omission by the person sought to be penalised, connected with intent to evade duty. On the facts noted, the appellant was only a Deputy Manager (Operational), and there was no finding or material showing involvement in policy decisions or any active role in duty evasion. The penalty was therefore held unsustainable and was set aside.

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Issues: Whether penalty imposed under Rule 26 of the CENVAT Credit Rules, 2004 was sustainable in the absence of any finding that the appellant had committed any act or omission with intent to evade duty.

Analysis: The impugned order did not record any finding of commission or omission by the appellant with intent to evade payment of duty. The only basis noted was that the appellant was an employee of the company and that policy decisions were taken by the management. On the facts recorded, the appellant was only a Deputy Manager (Operational) and there was nothing on record to show involvement in the company's policy decisions or any culpable role attracting penalty under Rule 26.

Conclusion: The penalty was not sustainable and was set aside.

Ratio Decidendi: Penalty under Rule 26 cannot be sustained unless the order records a culpable act or omission by the person sought to be penalised, connected with evasion of duty.

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