Co-noticee penalty cannot survive once the principal demand and penalty are set aside in central excise proceedings.

A penalty imposed on a co-noticee under Rule 209A of the Central Excise Rules, 1944 could not survive once the demand and penalty against the principal manufacturer had already been set aside. The tribunal treated the co-noticee penalty as consequential to the main proceedings and held that, after the foundational liability in the principal case was annulled, there was no independent basis to sustain the co-noticee's penalty. The penalty was therefore not sustainable and was set aside.

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Issues: Whether the penalty imposed on a co-noticee under Rule 209A of the Central Excise Rules, 1944 could survive after the demand and penalty against the principal noticee were set aside.

Analysis: The co-noticee's penalty was examined in the context of the earlier final order by the Tribunal, which had already set aside the impugned demand and penalty against the principal manufacturer. Once the foundational demand and penalty in the main proceedings were annulled, the penalty imposed on the co-noticee, being consequential in nature, could not be sustained independently.

Conclusion: The penalty on the co-noticee was not sustainable and was set aside.

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