Separate penalty under Rule 25 is unsustainable when equal penalty under Section 11AC already covers the same transaction.

Where equal penalty had already been imposed under Section 11AC of the Central Excise Act for the same transaction, a separate penalty under Rule 25 of the Central Excise Rules, 2002 was held unsustainable. The reasoning was that the penal consequence under Section 11AC had already addressed the evasion-related default, and the Board's supplementary instructions were relied on to support the view that no further penalty should be levied on the same facts. As duty and interest had been paid before issuance of the show cause notice, the additional Rule 25 penalty was set aside.

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Issues: Whether, where equal penalty had been imposed under Section 11AC of the Central Excise Act, a further penalty under Rule 25 of the Central Excise Rules, 2002 was sustainable.

Analysis: The duty and interest had already been paid before issuance of the show cause notice. The appeal was pressed only against the additional penalty under Rule 25. The Board's supplementary instructions were relied upon to contend that no separate penalty should be imposed under Rule 25 when penalty under Section 11AC is imposed for the same transaction.

Conclusion: The additional penalty under Rule 25 of the Central Excise Rules, 2002 was not sustainable once equal penalty under Section 11AC of the Central Excise Act had been imposed.

Ratio Decidendi: Where penalty equal to the duty evaded is imposed under Section 11AC of the Central Excise Act for the same transaction, a separate penalty under Rule 25 of the Central Excise Rules, 2002 should not be imposed.

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