Composite Central Excise penalty under Section 11AC bars separate rule-based penalties for the same contraventions.

Separate penalties under Rule 9(2), Rule 52A and Rule 226 of the Central Excise Rules, 1944 were not sustainable where the same contraventions were already covered by a penalty imposed under Section 11AC of the Central Excise Act, 1944. The basis for relief was that the offences sought to be penalised under the rules were comprehended within the Section 11AC penalty, so additional punishment for the same misconduct was unwarranted. On that footing, the separate rule-based penalties were vacated.

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Issues: Whether separate penalties under Rule 9(2), Rule 52A and Rule 226 of the Central Excise Rules, 1944 could survive when penalty had already been imposed under Section 11AC of the Central Excise Act, 1944 for the same contraventions.

Analysis: The application pointed out an apparent mistake in the earlier final order, which had stated that no penalty could be imposed under Rules 9(2) and 52A despite those rules providing for penalty. On reconsideration, it was accepted that the real basis for relief was that the offences for which penalties were proposed under those rules were already comprehended by the penalty imposed under Section 11AC. The same reasoning was applied to the penalty under Rule 226 as well. Since the contraventions under the rules stood covered by the Section 11AC penalty, no separate penalty under the cited rules was warranted.

Conclusion: Separate penalties under Rule 9(2), Rule 52A and Rule 226 of the Central Excise Rules, 1944 were held not leviable and were vacated in view of the penalty already imposed under Section 11AC of the Central Excise Act, 1944.

Ratio Decidendi: Where a composite penalty under Section 11AC of the Central Excise Act, 1944 is imposed for contravention of the Central Excise Rules with intent to evade duty, separate penalties for the same offences under the rules are not sustainable.

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