Rule 26 penalty on companies: Tribunal found a prima facie case for waiver of predeposit and stay of recovery.

Rule 26 penalty exposure for companies was challenged on the ground that such penalty applies only to natural persons. The Tribunal distinguished a High Court ruling under a different State statute and relied on prior decisions under the Central Excise Rules to hold, for stay purposes, that the appellants had shown a prima facie case against imposition of the penalties. On that basis, waiver of predeposit and stay of recovery were granted in respect of the Rule 26 penalties.

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Issues: Whether the appellants had made out a prima facie case for waiver of predeposit and stay of recovery of penalties imposed under Rule 26 of the Central Excise Rules, 2002.

Analysis: The appellants contended that the penalty under Rule 26 was not imposable on companies and relied on prior decisions supporting the view that such penalty was confined to natural persons. The Tribunal held, for the limited purpose of the stay application, that the cited High Court decision arose under a different State statute, whereas the decisions relied on by the appellants related to the Central Excise Rules. On that basis, the Tribunal found that the appellants had established a prima facie case against the penalties.

Conclusion: The appellants were entitled to waiver of predeposit and stay of recovery in respect of the penalties.

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