Consequential excise penalties cannot survive once the underlying duty demand is set aside and no independent basis is shown.

Penalties imposed under Rule 209A of the Central Excise Rules, 1944 could not survive once the underlying duty demand in the connected matter had been set aside. The penalties were only consequential to the demand confirmed against the main noticee, and the Tribunal followed its earlier order setting aside similar penalties on co-noticees in the connected appeal. In the absence of any independent material to sustain the penalties, and despite the Revenue's pending High Court appeal without stay, the Tribunal held the penalties unsustainable and set them aside.

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Issues: Whether penalties imposed under Rule 209A of the Central Excise Rules, 1944 could survive when the underlying duty demand in the connected case had already been set aside by the Tribunal.

Analysis: The penalties in the present matters were imposed only as a consequence of the duty demand confirmed against the main noticee in the common adjudication. The Tribunal noted that, in the connected appeal, the duty demand had already been dropped and the consequential penalties on other noticees had also been set aside. Since the present appellants stood on the same footing and no contrary material was shown to sustain the penalties independently, the earlier order was followed. The pendency of the Revenue's appeal before the High Court did not alter the position, as no stay of the Tribunal's earlier order had been granted.

Conclusion: The penalties under Rule 209A were unsustainable and were set aside.

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