Penalties on co-noticees set aside when main appellant settles duty demand under SVLDRS-2019

CESTAT Ahmedabad held that penalties imposed on co-noticees cannot survive when the main appellant's duty demand case is settled under SVLDRS-2019. The tribunal relied on precedents establishing that the scheme provides penalty waiver for both main assessees and co-noticees once duty demands are settled. Following Division Bench decisions in Anil K Modani and Subhash Panchal cases, which prevail over contradictory Single Member Bench rulings, the penalties on co-noticees were set aside even though they had not filed declarations under SVLDRS-2019. Appeals were allowed.

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Issues:
Whether penalties on co-noticees can be continued when the main appellant's case involving demand of duty has been settled under SVLDRS-2019Rs.

Analysis:
The judgment dealt with the issue of whether penalties on co-noticees can be continued when the main appellant's case involving demand of duty has been settled under SVLDRS-2019. The appellants argued that penalties on co-noticees should not be sustained once the main case is settled under SVLDRS-2019, citing various judgments in support of their position. The respondent, on the other hand, relied on different judgments to support the continuation of penalties on co-noticees. After considering the submissions and perusing the records, the Tribunal found that under SVLDRS-2019, there is a waiver of penalties on the main assessee against whom the demand was confirmed as well as on other co-noticees. The Tribunal referred to specific provisions of the Finance Act, 2019, and concluded that penalties against co-noticees should be erased in line with the relief scheme. Therefore, the penalties on the appellants were deemed not sustainable, and the appeals were allowed.

In another case discussed in the judgment, the issue revolved around the personal penalty imposed on an appellant under Rule 26 of the Central Excise Rules, 2002, in connection with duty evasion by another party. The appellant argued that since the main party's case had been settled under SVLDRS-2019, the personal penalty should be set aside. The Tribunal, after considering the submissions and relevant judgments, including those from different CESTAT benches, concluded that once the main case of duty evasion is settled under SVLDRS-2019, the penalty on the co-appellant shall not survive. Therefore, the penalty was set aside, and the appeal was allowed.

The judgment highlighted the importance of the SVLDRS-2019 scheme in settling cases involving duty demands and penalties. It emphasized that once the main case is resolved under the scheme, penalties on co-noticees should not be sustained. The Tribunal referred to multiple judgments to support this stance and clarified that penalties imposed on co-noticees should be erased in line with the relief scheme provided under SVLDRS-2019. The decision in both cases reiterated the principle that penalties on co-noticees cannot continue once the main case is settled under the SVLDRS-2019 scheme, ensuring consistency in the application of the law across different cases.

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