Clandestine removal and partner liability sustain central excise penalty, though the partner's personal penalty was reduced.

Confirmation of duty, interest and penalty on the processing unit was upheld on findings of clandestine removal, and the limitation plea was treated as covered against the appellant by binding precedent. The partner's personal penalty under the central excise penalty provisions was sustained in principle because he was the working and active partner in charge of factory and excise affairs, with the clandestine activity undertaken with his knowledge and consent; however, the penalty amount was reduced in view of the unit's immediate deposit of duty and the extent of evasion.

---

---

Issues: (i) Whether the confirmation of duty, interest and penalty against the processing unit on the basis of clandestine removal and the limitation challenge required interference; (ii) Whether the personal penalty imposed on the partner under the central excise penalty provisions was liable to be sustained in full or reduced.

Issue (i): Whether the confirmation of duty, interest and penalty against the processing unit on the basis of clandestine removal and the limitation challenge required interference

Analysis: The appeal against the demand was not pursued on merits, as the confirmation of duty arose from findings of clandestine removal and the limitation plea was accepted to be covered against the appellant by binding precedent. The demand of duty and consequential interest therefore stood affirmed.

Conclusion: The confirmation of duty, interest and penalty against the processing unit was upheld, and the appeal on this issue failed.

Issue (ii): Whether the personal penalty imposed on the partner under the central excise penalty provisions was liable to be sustained in full or reduced.

Analysis: The partner was found to be the working and active partner, in charge of day-to-day factory and excise affairs, and the clandestine activity was held to have taken place with his consent and knowledge. Liability to penalty was therefore established under the relevant penalty provisions, but the quantum was moderated in view of immediate deposit of duty by the unit and the extent of evasion.

Conclusion: The partner's penalty was sustained in principle but reduced in amount.

Final Conclusion: The appeal of the processing unit was rejected, while the partner's appeal succeeded only to the limited extent of reduction of penalty.

Ratio Decidendi: Findings of clandestine removal, coupled with established knowledge and participation of a partner in excise evasion, justify penalty under the central excise penalty provisions, though the quantum may be reduced on mitigating circumstances.

---