Penalty waiver for co-noticees follows settlement of the principal duty demand under the legacy dispute resolution scheme.

Settlement of a duty-demand dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 is stated to waive penalties not only for the principal noticee but also for co-noticees facing penalty proceedings under Rule 26 of the Central Excise Rules, 2002. The notes state that binding Division Bench decisions prevail over a contrary Single Member view. Consequently, penalties imposed on co-noticees are described as unsustainable where the principal noticee has settled the underlying duty demand under the Scheme.

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Issues: Whether penalty proceedings under Rule 26 of the Central Excise Rules, 2002 can be sustained against co-noticees after the principal noticee has settled the duty-demand dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Analysis: Settlement of the duty demand under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 entails waiver of penalty not only for the principal noticee against whom the demand was confirmed but also for co-noticees. The applicable Division Bench decisions govern over a contrary Single Member decision.

Conclusion: Penalties imposed upon the co-noticees are unsustainable after settlement of the principal noticee's duty-demand case under the Scheme; the issue is decided in favour of the assessee.

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