Finality of substantive penalty defeats connected personal penalty where no independent legal basis survives.

Where the substantive penalty against the trading concern had already been set aside and that order had attained finality, the Gujarat HC upheld deletion of the proprietor's personal penalty under the Central Excise Rules, 1944. The Tribunal had removed the penalty on the same footing as the annulled penalty against the trading concern, and the revenue did not dispute that no appeal had been pursued against that final order. In the absence of any surviving legal basis, the connected personal penalty could not be sustained.

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Issues: Whether the personal penalty imposed on the proprietor under the Central Excise Rules, 1944 could be sustained when the penalty on the trading concern had already been set aside and that order had attained finality.

Analysis: The Tribunal had deleted the proprietor's penalty on the same reasoning on which the penalty against the trading concern had been annulled. The revenue did not dispute that the order in favour of the trading concern had been accepted and no appeal had been pursued against it. In these circumstances, the foundation for sustaining the personal penalty was absent, and no legal infirmity could be shown in the Tribunal's approach.

Conclusion: The issue was decided against the revenue and in favour of the assessee; the Tribunal's deletion of the personal penalty was upheld.

Ratio Decidendi: Where the substantive penalty against the primary noticee has attained finality, a connected personal penalty based on the same footing cannot be sustained in the absence of any surviving legal basis.

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