Co-noticee penalty under Rule 26 does not survive once the principal dispute is settled under Sabka Vishwas scheme.

Where the principal dispute arising from an order-in-original is settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, connected co-noticee appeals challenging personal penalty under Rule 26 of the Central Excise Rules, 2002 do not survive. The Tribunal treated the penalty proceedings as unsustainable once the main dispute stood resolved under the scheme, with the result that the co-noticees' appeals were no longer maintainable and were allowed.

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Issues: Whether the personal penalty imposed on the co-noticees under Rule 26 of the Central Excise Rules, 2002 could survive after the main appeal arising from the same order-in-original had been settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Analysis: The settled position applied by the Tribunal was that once the main dispute is resolved under the legacy dispute resolution scheme, the appeals of co-noticees challenging personal penalty imposed under the same order-in-original do not survive. On that basis, the penalty proceedings against the appellants were treated as unsustainable.

Conclusion: The issue was decided in favour of the assessees and against the revenue; the co-noticees' appeals were held to be maintainable no longer and were allowed.

Final Conclusion: The personal penalties imposed on the appellants could not be sustained after settlement of the main appeal under the scheme, and the appeals were allowed.

Ratio Decidendi: Where the principal demand dispute arising from an order-in-original is settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the connected co-noticee appeals challenging personal penalty from the same order do not survive.

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