Rule 26 penalty reduced where duty, interest and part of the penalty were already paid by the manufacturing unit.

Liability to penalty under Rule 26 of the Central Excise Rules was maintained against a director where the manufacturer had been found to have made clandestine removals and had accepted the duty liability. The appellant did not contest the applicability of penalty, but sought reduction because duty, interest and a substantial part of the penalty had already been paid by the manufacturing unit. Taking a lenient view on the facts and prior deposit, the Tribunal reduced the penalty amount from Rs. 25,000 to Rs. 12,500 while otherwise rejecting the appeal and sustaining the finding of liability.

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Issues: Whether the penalty imposed on the director under Rule 26 of the Central Excise Rules was liable to be sustained or reduced in view of the facts and the deposit made by the manufacturing unit.

Analysis: The penalty was imposed on the director on the basis of the finding of clandestine removal by the manufacturing unit, which had accepted the duty liability. The appellant did not dispute the applicability of penalty but sought reduction on the ground that the duty, interest and a substantial part of the penalty had already been paid by the unit. Taking a lenient view in the facts and circumstances, the Tribunal found that the director was liable to penalty but that the amount deserved reduction.

Conclusion: The penalty was reduced from Rs. 25,000/- to Rs. 12,500/-, and the appeal was otherwise rejected.

Final Conclusion: The finding of liability under Rule 26 was maintained, but the punitive amount was modified downward, resulting in only partial relief to the appellant.

Ratio Decidendi: Where liability to penalty is otherwise established, the quantum may be reduced on equitable consideration of the facts and prior deposit of duty and interest.

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