SVLDRS settlement does not absolve co-noticees where evidence shows active abetment in fraudulent Cenvat credit misuse.

Settlement of the principal noticee under SVLDRS does not automatically extinguish the liability of co-noticees; each noticee must independently seek and qualify for settlement. On the facts, the Tribunal treated the appellant's separate role in issuing bogus LRs and facilitating diversion of goods, supported by admissions and documentary evidence, as sufficient to sustain abetment-based penalty for fraudulent availment of Cenvat credit under the Central Excise Rules, 2002. The appeal was dismissed, confirming that co-noticee liability turns on independent evidence and not merely on the main party's settlement.

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Issues: (i) Whether settlement of the main party's case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDRS) absolves co-noticees from penalties imposed under the Central Excise Rules, 2002; and (ii) Whether the penalty imposed on the appellant for abetment in fraudulent availment of Cenvat credit is sustainable on the facts and evidence.

Issue (i): Whether settlement of the main party under SVLDRS relieves co-noticees from penalties.

Analysis: The Tribunal examined precedent and recent decisions including this Tribunal's earlier decisions and CESTAT Allahabad rulings which hold that settlement by the main party does not automatically absolve other noticees; each noticee must independently seek settlement under SVLDRS. The appellate record shows no independent settlement application by the appellant and the impugned order contains findings against co-noticees based on direct and circumstantial evidence linking them to the wrongful availment of credit. The Tribunal considered whether the factual findings and documentary admissions sustain independent liability of co-noticees despite settlement by the principal party.

Conclusion: The Tribunal concludes that settlement of the main party under SVLDRS does not automatically absolve co-noticees; co-noticees must separately approach SVLDRS. This conclusion is adverse to the appellant.

Issue (ii): Whether the penalty imposed on the appellant for abetment in fraudulent availment of Cenvat credit is sustainable.

Analysis: The impugned order records that the appellant issued bogus LR(s) and admitted in statements knowledge of diversion and misuse of documents. The Tribunal reviewed the adjudicating authority's findings (paras 96.1 & 96.2) and relied on documentary and statement evidence showing issuance of fake LRs and facilitation of diversion of goods, as well as prior Tribunal precedent upholding penalties where a person played an active role in the modus operandi. The Tribunal found no reason to disturb the factual findings or penalties imposed under the Central Excise Rules, 2002.

Conclusion: The Tribunal upholds the penalty imposed on the appellant for abetment in fraudulent availment of Cenvat credit; the appeal is dismissed and the decision is adverse to the appellant (in favour of the Revenue).

Final Conclusion: The decision confirms that liability for abetment in fraudulent Cenvat credit is determined on the facts and evidence against each noticee, and that settlement by the main party does not negate independent liability of co-noticees.

Ratio Decidendi: Settlement of the principal party under SVLDRS does not automatically extinguish liability of co-noticees; each co-noticee must independently establish entitlement to settlement, and where direct or circumstantial evidence (including admissions) establishes a co-noticee's active role in facilitating fraudulent Cenvat credit, penalties under the Central Excise Rules, 2002 are sustainable.

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