Rule 26 penalty on a director requires evidence of involvement and a confiscation basis; mere office is insufficient.

Penalty under Rule 26 of the Central Excise Rules cannot be sustained against a director merely because of his office where the record shows no evidence of his involvement in the alleged illegal activity. The absence of any proposal in the show cause notice for confiscation, and the absence of a confiscation order, further made Rule 26 invocation unjustified. On these facts, the penalty was held unsustainable and was set aside.

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Issues: Whether penalty under Rule 26 of the Central Excise Rules could be sustained against a director in the absence of evidence of his involvement and without any proposal or order of confiscation.

Analysis: The penalty was imposed solely on the footing that the appellant was a director of the concerned company and, therefore, must have been aware of the alleged illegal activity. The record disclosed no evidence of the appellant's involvement. It was also noted that the show cause notice did not propose confiscation of goods and no confiscation order had been passed by the adjudicating authority. In these circumstances, invocation of Rule 26 was held to be unjustified.

Conclusion: Penalty under Rule 26 could not be imposed on the appellant and the penalty was set aside.

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