Co-noticee penalty upheld where Settlement Commission settlement for main noticee did not bar separate liability

Settlement in favour of the main noticee did not automatically extend immunity to co-noticees where the Settlement Commission expressly reserved liberty to the Revenue to proceed against them. As the co-noticees were found to have engaged in distinct conduct, including unauthorized transportation of the goods, their liability had to be assessed separately and was not confined to mere abetment. The penalty on the co-noticees was therefore upheld.

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Issues: Whether the co-noticees were entitled to have the penalty set aside merely because the main noticee had approached the Settlement Commission and the matter had been settled in respect of some applicants.

Analysis: The show cause notice covered multiple noticees for misuse of the exemption under Notification No. 21/2002-Customs and diversion of crude palm oil. The Settlement Commission disposed of the application of some noticees and imposed penalty, while specifically leaving the Revenue free to proceed against the remaining co-noticees. The present appellants were found to have engaged in acts distinct from mere abetment, including unauthorized transportation of the goods, and their liability was examined separately. In such circumstances, settlement in favour of the main noticee did not automatically confer immunity on co-noticees, especially where the Commission had not granted immunity from prosecution and had reserved liberty to the Revenue.

Conclusion: The co-noticees were not entitled to blanket immunity, and the penalty on them was upheld.

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