Co-noticee penalty waived when duty, interest and reduced penalty were paid within time, closing proceedings for all concerned.

Where a noticee pays the duty, interest and reduced penalty within the stipulated period, the proceedings may be treated as concluded not only against that noticee but also against a co-noticee on whom a penalty has been imposed. Applying the principle reflected in the customs circular and treating Section 11A of the Central Excise Act as pari materia with Section 28 of the Customs Act, the article notes that the same closure effect extended to the partner penalised under Rule 26. The partner's penalty was therefore waived and the proceedings were regarded as ended against both persons.

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Issues: Whether the penalty imposed on the partner co-noticee was liable to be waived after the noticee had paid the duty, interest, and reduced penalty within the stipulated period.

Analysis: The proceedings arose from a demand of Cenvat credit reversal confirmed with interest and penalty under Section 11AC of the Central Excise Act, 1944, with a separate penalty imposed on the partner under Rule 26 of the Cenvat Credit Rules, 2002. The circular relied upon clarified, in the context of Section 28 of the Customs Act, 1962, that once the noticee pays the entire duty, interest, and penalty, the proceedings stand closed not only against the noticee but also against other persons on whom penalty has been imposed. Since Section 11A of the Central Excise Act, 1944 was treated as pari materia to Section 28 of the Customs Act, 1962, the same principle was applied.

Conclusion: The penalty on the partner was waived and the proceedings were deemed concluded against both the appellant and the partner.

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