Separate penalty on partner sustained where records specifically linked him to clandestine clearances despite firm's duty payment

A separate penalty on a partner was held sustainable where the record specifically attributed involvement in clandestine clearances, even though the assessee firm had discharged the duty, interest and the reduced penalty under Section 11AC. The Tribunal distinguished authorities cited for the proposition that a partner should not be penalised absent any specific role in the show-cause notice, because here the notice recorded that a broker contacted the partner and placed orders for supply of materials, and that statement was not retracted. On those facts, the partner's participation was treated as established and the separate penalty was upheld.

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Issues: Whether the penalty imposed on the partner of the assessee could be sustained when the assessee firm had paid the duty, interest and reduced penalty under Section 11AC and the partner's own role was said to be attributable from the record.

Analysis: The assessee had accepted the duty liability and exercised the option to pay 25% of the penalty under Section 11AC of the Central Excise Act, 1944. The challenge in the appeal was confined to the separate penalty imposed on the partner. The Tribunal noted the authorities relied upon by the appellant holding that a separate penalty on a partner is not warranted where no specific role is attributed in the show-cause notice. On the facts, however, the show-cause notice recorded that the broker used to contact the partner and place orders for supply of materials, and this statement was not retracted. The Tribunal held that this showed the partner's involvement and distinguished the cited decisions.

Conclusion: The separate penalty on the partner was sustained and the appeal was dismissed.

Ratio Decidendi: Where the record specifically attributes involvement to a partner in the clandestine clearances, a separate penalty on the partner is sustainable even if the firm has discharged the duty and reduced penalty under Section 11AC.

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