Tribunal overturns redemption fine and penalty on co-appellant

The Tribunal set aside the order imposing the redemption fine and penalty on the co-appellant. It was held that redemption fine is not applicable when goods are not available for confiscation or cleared under bond. Additionally, if duty, interest, and penalty are fully paid by the main appellant, penalty on the co-appellant is not justified. The appeals were allowed, and the imposition of the redemption fine and penalty on the co-appellant was overturned.

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Issues:
- Confirmation of redemption fine under Rule 25 and imposition of penalty on co-appellant under Rule 26 of the Central Excise Rules, 2002.

Analysis:
The judgment pertains to appeals against an order confirming the redemption fine under Rule 25 and imposing a penalty on the co-appellant under Rule 26 of the Central Excise Rules, 2002. The case involved an investigation revealing clandestine removal of finished goods by the appellants. The main appellant paid duty, interest, and 25% of the penalty on the goods cleared clandestinely initially. Subsequently, a show-cause notice was issued for the duty demand, interest, and penalty under Section 11AC of the Act. The main appellant's payment was appropriated, and a redemption fine and penalty were imposed. The appellants challenged this order.

The appellant's counsel argued that redemption fine should not be imposed as per the decision in Shiv Kripa Ispat Pvt. Ltd. vs. CCE, where it was held that redemption fine is not imposable when goods are neither available for confiscation nor cleared under bond. Additionally, referring to Section 11A(1)(a) of the Central Excise Rules, it was contended that penalty on the co-appellant should not be imposed since the main appellant had already paid duty, interest, and 25% of the penalty before the show-cause notice, citing the case of Tikam P. Bhojwani v. CCE.

On the other hand, the Additional Commissioner (AR) supported the impugned order's findings. The Tribunal considered both sides' submissions and referenced the Larger Bench decision in Shiv Kripa Ispat Pvt. Ltd., stating that redemption fine is not imposable when goods are not available for confiscation or cleared under bond. Consequently, the order imposing the redemption fine was set aside. Moreover, as per Section 11A(2) of the Central Excise Act, if duty, interest, and penalty have been paid in full by the main appellant, penalty on the co-appellant is not imposable. The Tribunal relied on previous judgments to support this, including Tikam P. Bhojwani, and concluded that since the main appellant had paid the required amounts, the penalty on the co-appellant was not justified. Therefore, the imposition of the penalty on the co-appellant was also set aside, and the appeals were allowed accordingly.

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