Clandestine removal penalty on director reduced where connected findings narrowed the proved demand and limited individual liability.

Penalty on a managing director for alleged clandestine removal was confined to the extent supported by the surviving evidence after the Tribunal's earlier findings in the connected matter substantially reduced the proved demand. The Tribunal treated the earlier final order as decisive in narrowing the factual basis for individual liability, and held that the director's penalty could not remain at the original level where the broader allegation of clandestine activity was not sustained. The penalty was therefore reduced to Rs. 25,000 under Rule 209A of the Central Excise Rules, 1944.

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Issues: Whether the penalty imposed on the director under the Central Excise Rules, 1944 was liable to be maintained, reduced, or set aside in light of the Tribunal's earlier findings in the connected matter.

Analysis: The penalty on the appellant was founded on the allegation that, being the Managing Director, he was aware of and benefited from the clandestine removal by the company. The Tribunal took notice of its earlier final order in the connected proceedings, where the demand and penalties were substantially reduced on the basis that only a limited part of the demand was supported by evidence and the remaining findings rested on conjecture. In the present matter, the Tribunal followed those earlier findings and held that the appellant's penalty could not stand at the original amount in view of the reduced liability accepted in the connected case.

Conclusion: The penalty was reduced to Rs. 25,000 under Rule 209A of the Central Excise Rules, 1944.

Ratio Decidendi: Where connected adjudication findings substantially narrow the proved demand and negate the broader allegation of clandestine activity, the penalty on an individual noticee must be confined to the extent supported by the surviving evidence.

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