recovery of penalty imposed on the director from the refund of company

[Hariharan Sundaram]

Respected experts, One of my client submitted a refund claim consequent of an order of the tribunal. While sanctioning the refund , the Deputy commissioner has deducted certain amount owing to penalty imposed on the director. whether any recovery mechanism avaliable in Central Excise to recover the penalty imposed on the Director of the company from the amount of refund due to the Company? Kindly let your views with circulars / case laws thank you

AI Summary

Director Penalties Can't Offset Company Refunds Under Central Excise; Different Rules for Partnerships and LLPs A client sought advice on whether a penalty imposed on a company's director could be recovered from the company's refund under Central Excise. Experts responded that a company and its director are distinct legal entities; thus, penalties on directors cannot be offset against the company's refund without the director's consent. However, in partnerships, partners and the firm are not legally distinct, allowing penalties on partners to be recovered from the firm's refunds. In Limited Liability Partnerships, similar to companies, penalties on partners cannot be recovered from the LLP's funds.