Rule 26 penalty upheld where director's statements admitted clandestine removal of excisable goods without invoices or duty payment.

Penalty under Rule 26 of the Central Excise Rules, 2002 was sustained against a director where his own statements admitted shortages, removal of excisable goods without invoices or duty payment, and later confirmed clandestine clearance of iron and steel scrap for cash in the open market. The plea that he was not an active director and was only named because he lived near the factory was rejected because no contemporaneous disclosure was made to investigators and the record did not show that he was uninvolved in the company's day-to-day affairs during the relevant period. The appeal against the penalty was rejected.

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Issues: Whether the penalty imposed under Rule 26 of the Central Excise Rules, 2002 on the director for his role in the removal of excisable goods without invoices and without payment of duty called for interference.

Analysis: The penalty was founded on the director's own statements admitting shortages and clearance of goods without invoices and duty payment, and on his later statement confirming clandestine removal of iron and steel scrap against cash in the open market. The contention that he was not an active director and was merely called because he lived near the factory was rejected, as no contemporaneous disclosure was made to the investigating officers and the record did not show that he was not looking after the day-to-day affairs of the company during the relevant period.

Conclusion: The penalty under Rule 26 was upheld and the appeal challenging it was rejected.

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