Separate penalty on partner upheld under customs excise rules, with penalty reduced in light of existing firm-level penalty.

Separate penalty on a partner under Rule 209A of the Customs Excise Rules, 1944 was held sustainable even where penalty had already been imposed on the firm, because the earlier contrary view based on pre-existing Tribunal decisions could not stand after the Supreme Court upheld penalties on both the partner and the firm. The Tribunal therefore reversed the order setting aside the partner's penalty, while considering the limited duty demand and the penalty already imposed on the firm, and reduced the partner's penalty to Rs. 5,000 from Rs. 25,000.

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Issues: Whether penalty could be imposed separately on a partner in addition to the penalty imposed on the firm under Rule 209A of the Customs Excise Rules, 1944, and whether the penalty amount warranted reduction.

Analysis: The order of the Commissioner (Appeals) proceeded on the view that once penalty had been imposed on the unit, a further penalty on the partner was unnecessary because the firm and the partner had no separate independent existence. The Tribunal noted that the Supreme Court had subsequently upheld imposition of penalty on both the partner and the firm. As the earlier Tribunal decisions relied upon by the Commissioner (Appeals) pre-dated that Supreme Court ruling, the view that a separate penalty on the partner was impermissible could not be sustained. At the same time, the Tribunal took into account the comparatively small duty demand and the penalty already imposed on the firm while examining the appropriateness of the partner's penalty.

Conclusion: Separate penalty on the partner was held to be sustainable, the order setting it aside was reversed, and the penalty was reduced to Rs. 5,000/- as against Rs. 25,000/-.

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