Personal penalty under Rule 26 fails where confiscation is not proposed and no monetary gain is alleged.

Personal penalty under Rule 26 of the Central Excise Rules, 2002 cannot be sustained unless the goods are liable to confiscation and that statutory basis is clearly pleaded in the show cause notice. Where the notice does not propose confiscation and there is no allegation of financial enrichment by the persons proceeded against, the preconditions for imposing a personal penalty are not met. On that reasoning, the penalty on the respondents was held unsustainable, and the Revenue's challenge failed.

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Issues: Whether penalty under Rule 26 of the Central Excise Rules, 2002 could be sustained against the respondents when the show cause notice did not propose confiscation of the goods and there was no allegation of financial enrichment.

Analysis: The respondents were proceeded against as persons connected with the assessee's operations, but the notice did not contain a proposal for confiscation of the goods. Penalty under Rule 26 is attracted only where the goods are liable to confiscation. In the absence of such a foundation in the notice, and without any allegation of personal monetary gain, the requisite conditions for imposing personal penalty were not met.

Conclusion: The penalty on the respondents was unsustainable and the Revenue's appeals were liable to be dismissed.

Ratio Decidendi: Personal penalty under Rule 26 of the Central Excise Rules, 2002 cannot be imposed unless the goods are liable to confiscation and the statutory basis for such liability is expressly made out.

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