Sabka Vishwas settlement extinguishes connected co-noticee penalties arising from the same adjudication order.

Where the main noticee settles the underlying dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, connected penalty proceedings against co-noticees arising from the same adjudication order do not survive. The Tribunal followed its coordinate bench rulings and applied that principle to penalties imposed on co-noticees under section 26 of the Central Excise Act, 1944. It held that the personal penalties were not sustainable once the principal demand stood settled, and the penalties were set aside.

---

---

Issues: Whether the penalties imposed on the co-noticees under section 26 of the Central Excise Act, 1944 could be sustained when the main noticee had settled the dispute under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

Analysis: The appeals arose from personal penalties imposed on the co-noticees in the same adjudication proceedings. The Tribunal relied on its earlier coordinate bench decisions holding that once the main demand is settled under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, the connected penalty proceedings against co-noticees based on the same order cannot survive. The Tribunal followed the same approach in the present case and held that the penalty on the co-noticees was not sustainable.

Conclusion: The penalties imposed on the co-noticees were held unsustainable and were set aside in favour of the appellants.

---