Co-noticee penalty fails where the main noticee order is set aside and no basis remains for demand.

A co-noticee penalty and demand for alleged invoices issued without supply of goods could not survive once the Tribunal had already set aside the order in the main noticee's case on appreciation of evidence. With the foundational finding against the main noticee no longer standing, the basis for sustaining the co-noticee proceedings disappeared. The Tribunal therefore held the demand and penalty unsustainable, set aside the impugned order, and granted consequential relief.

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Issues: Whether the penalty and demand imposed on a co-noticee for alleged issuance of invoices without supply of materials could survive after the Tribunal had already set aside the order in the case of the main noticee.

Analysis: The appellant was proceeded against as a co-noticee on the allegation that invoices had been issued without actual supply of goods, thereby facilitating fraudulent credit. The Tribunal noted that in the connected case of the main noticee, the impugned order had already been set aside after appreciation of the evidence. In that situation, the basis for sustaining the present demand and penalty did not remain.

Conclusion: The demand and penalty were held unsustainable, the impugned order was set aside, and the appeal was allowed with consequential reliefs.

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