Partner liability for excise fraud upheld where active participation and knowledge justified separate penalty beyond the firm's penalty.

Separate penalty on a partner of a partnership concern was upheld where the partner had clear knowledge of the wrongful availment of credit and was found to have actively ated in the fraudulent and clandestine excise activity. Applying earlier binding precedent, the tribunal treated a partner who is a party to the fraud as independently liable, so the fact that penalty had already been imposed on the firm did not bar action against the partner. The earlier orders exonerating the partner were held unsustainable, and penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2002 was confirmed.

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Issues: Whether a separate penalty can be imposed on a partner of a partnership concern in addition to the penalty already imposed on the firm for fraudulent and clandestine excise activity.

Analysis: The issue was treated as settled by earlier binding precedent of the Bench and by the principle that a partner who actively participates in the fraud can be proceeded against separately. The decision noted that the partner had clear knowledge of the wrongful availment of credit and was a party to the entire fraud committed by the partnership concern. On that basis, the earlier orders exonerating the partner were held unsustainable.

Conclusion: Separate penalty on the partner was justified and the imposition of penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2002 was upheld.

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