Penalty confined to the applicable rule and statutory ceiling; unsupported penalties on other appellants were set aside.

Diversion of export-cleared consignments into the Domestic Tariff Area attracted penalty only under Rule 14A of the Central Excise Rules, 1944, because the other rules relied on by the authorities were inapplicable on the facts. The Tribunal also confined the penalty to the statutory ceiling of Rs. 2,000 per consignment, resulting in an aggregate limit of Rs. 10,000 for five consignments. Penalty on the other two appellants was set aside because no contravention of the rules was established against them.

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Issues: (i) whether penalty could be imposed only under Rule 14A of the Central Excise Rules, 1944 and, if so, what was the permissible quantum; (ii) whether penalty on the other two appellants was sustainable.

Issue (i): whether penalty could be imposed only under Rule 14A of the Central Excise Rules, 1944 and, if so, what was the permissible quantum.

Analysis: The dispute arose from diversion of export-cleared consignments into the Domestic Tariff Area. The Tribunal held that, on the facts, Rule 14A alone applied and the other rules invoked by the authorities were not applicable. It further held that the penalty under Rule 14A was limited to Rs. 2,000 per consignment. As five consignments were involved, the aggregate penalty was worked out accordingly.

Conclusion: Penalty was confined to Rule 14A of the Central Excise Rules, 1944 and the maximum permissible penalty was Rs. 10,000 for the five consignments.

Issue (ii): whether penalty on the other two appellants was sustainable.

Analysis: The Tribunal found no contravention of the rules by the other two appellants and held that the imposition of penalty on them could not be sustained in law.

Conclusion: Penalty on the other two appellants was set aside.

Final Conclusion: The penalties were restricted to the amount legally permissible against the appellant concerned, while the penalties on the remaining two appellants were annulled.

Ratio Decidendi: Where only the penal provision actually applicable to the facts can be invoked, penalty must be confined to that provision's statutory limit, and penalty cannot be sustained against persons against whom no contravention is established.

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