Settlement scheme limits co-noticee penalties when no direct evidence links officers to clandestine removal.

Where the principal noticee company settled the duty and penalty liability under the settlement scheme, the adjudication against that company ceased to survive, and the co-noticees could not be fastened with independent penalty on the same footing. The record also lacked direct evidence of the Manager's and Managing Director's personal involvement in clandestine removal, so the penalty under Rule 225 was not sustainable against them. The manufacturer's prior penalisation and satisfaction of the adjudicated liability were treated as sufficient to prevent further recovery from the representative co-noticees, and the penalties on the two officers were set aside.

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Issues: Whether the penalties imposed on the company's Manager and Managing Director could survive after the main noticee company settled the duty and penalty liability under the settlement scheme, and whether the penalty under Rule 225 of the Central Excise Rules could stand in the absence of evidence linking them directly to clandestine removal.

Analysis: The company was the principal noticee and the employees were proceeded against only in their representative capacities. Once the company settled the duty and penalty liability under the settlement scheme and paid the adjudicated amount, the adjudication against the principal noticee ceased to survive, and the co-noticees could not be visited with independent penalty on the same footing. The record also did not show direct evidence establishing their personal involvement in clandestine removal. The finding that the manufacturer had already been penalised and that the requirements of Rule 225 stood met was upheld.

Conclusion: The penalties on the Manager and Managing Director were not sustainable and were rightly set aside.

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