Penalty under Rule 26 requires a specific substantiated role; general negligence and scheme settlement cannot justify continuation.

Penalty under Rule 26 of the Central Excise Rules, 2002 was found unsustainable where the allegation against the appellant was only general negligence based on his position as General Manager and no specific or direct role was substantiated. The Tribunal also noted that the main dispute had already been settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, which provided relief from penalty in the relevant circumstances. In the absence of a clear and direct allegation, the penalty could not be confirmed and was set aside.

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Issues: Whether penalty imposed under Rule 26 of the Central Excise Rules, 2002 was sustainable when no specific allegation or substantiated role was established against the appellant, and whether the settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 had any bearing on the continuance of such penalty.

Analysis: The Tribunal noted that the allegation against the appellant was only of general negligence arising from his position as General Manager and did not disclose any specific or direct role warranting imposition of penalty. It further noted that the dispute involving the main assessee had already been settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, and that the scheme provided relief from penalty in the relevant circumstances. In the absence of a substantiated allegation against the appellant, confirmation of the penalty of Rs. 10 lakhs was not justified.

Conclusion: The penalty under Rule 26 of the Central Excise Rules, 2002 was set aside and the appeal was allowed.

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