Rule 26 penalty can extend to a body corporate where goods are otherwise liable to confiscation.

Rule 26 of the Central Excise Rules, 2002 uses the expression "any person", and that wording is wide enough to include a body corporate. Penalty may therefore be imposed on a corporate entity where it deals with excisable goods knowing, or having reason to believe, that the goods are liable to confiscation. The text also clarifies that actual confiscation is not required if the goods are otherwise confiscable under Rule 25. On the stated facts, undervaluation and duty short-payment had already been established, so the goods were liable to confiscation and the Rule 26 penalty was sustained.

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Issues: (i) Whether penalty under Rule 26 of the Central Excise Rules, 2002 could be imposed on a body corporate; (ii) Whether the goods were liable to confiscation so as to sustain invocation of Rule 26.

Issue (i): Whether penalty under Rule 26 of the Central Excise Rules, 2002 could be imposed on a body corporate.

Analysis: Rule 26 uses the expression "any person". The expression is not defined in the Central Excise Act or the Rules, so the ordinary meaning aided by the General Clauses Act applies. The provision is concerned with penalising persons who deal with excisable goods knowing or having reason to believe that such goods are liable to confiscation. The Tribunal held that the expression is wide enough to include a juristic person. The reliance placed on earlier decisions excluding corporate entities under erstwhile Rule 209A was not accepted as decisive, since the statutory expression and the interpretive approach support inclusion of a body corporate.

Conclusion: Penalty under Rule 26 can be imposed on a body corporate, and this objection failed.

Issue (ii): Whether the goods were liable to confiscation so as to sustain invocation of Rule 26.

Analysis: Rule 25 makes goods liable to confiscation where excisable goods are removed in contravention of the Rules with intent to evade duty. The undervaluation and consequent duty short-payment had already been established against the manufacturer, and those findings had attained finality. The Tribunal held that actual confiscation is not a precondition for invoking Rule 26 if the goods are otherwise confiscable. On the facts, the appellant was aware that the assessable value adopted was not legally correct and that the goods were being cleared in a manner exposing them to confiscation.

Conclusion: The goods were liable to confiscation and Rule 26 was rightly invoked.

Final Conclusion: The penalty imposed on the appellant under Rule 26 was sustained, and the appeal failed.

Ratio Decidendi: The expression "any person" in Rule 26 of the Central Excise Rules, 2002 includes a body corporate, and penalty is sustainable where the goods are otherwise confiscable and the person dealt with them knowing or having reason to believe that they were liable to confiscation.

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