Corporate penalty under Rule 26 fails where personal knowledge for confiscation-linked liability is absent.

Penalty under Rule 26 of the Central Excise Rules, 2002 cannot be sustained against a corporate entity where the provision is applied on the basis of personal knowledge linked to liability for confiscation. The Tribunal accepted that the term "any person" may in a general sense include a company, but held that a company acts only through natural persons and that the relevant guilty knowledge must exist with the individuals behind the corporate veil. Applying the Larger Bench reasoning treated as equally applicable to Rule 26, the penalty against the appellant company was set aside.

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Issues: Whether penalty under Rule 26 of the Central Excise Rules, 2002 can be imposed on a corporate or artificial person in the absence of the personal knowledge contemplated by the provision.

Analysis: The Tribunal followed the Larger Bench view that the expression "any person" may include a company in a general sense, but the penalty provision proceeds on the basis of knowledge of liability for confiscation. A corporate entity acts through natural persons, and liability under the provision is attracted only where the guilty individuals, acting behind the corporate veil, possess the relevant knowledge. Since the reasoning applied to the earlier rule was treated as equally applicable to Rule 26, the penalty could not be sustained against the appellant company on the facts of the appeal.

Conclusion: Penalty under Rule 26 of the Central Excise Rules, 2002 was not sustainable against the appellant and was set aside.

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