2025 (9) TMI 1403

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.... GLS Films Industries Pvt. Ltd., which is allowed as it is apparently a typo error. Same is allowed as order was against Shri Sandeep Goyal. 1.1 In the instant bunch of cases what remains to be decided is whether availing of SVLDR Scheme by the main accused and obtaining discharge under the same will also discharge co-noticees from their penalties or not? 2. The advocates /counsels including those pleading on merits in this regard seek to rely on para 10 (i) of the Circular No. 1071/4/2019-CX.8 dated 27.08.2019 of the CBIC and also on various decisions. The appellants further state that it is a settled principle that when the main demand is settled under SVLDRS-2019, derivative penalties on co-noticees especially those not independent....

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....8/2023 dated 30.11.2023-CESTAT-Mumbai (Annexure-7) Penalty on co-noticee not sustainable when main noticee settles under SVLDRS; relief under Section 124 of Finance Act, 2019 applies to all connected parties. It was observed in para 6 as follows: "Therefore, to the extent that the impugned order upheld recovery of duties under section 11A of Central Excise Act, 1944 none of the individual appellant herein would have been eligible to be declarant; the scheme itself does not acknowledge the existence of such appellant even though the scheme is intended to erase the detriment of penalty in each and every case. It is on record that the principal-noticee has been accorded the prescribed relief including erasure of penalties arising ther....

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....of imposition of penalty u/r 26 in case where the matter is settled under SVLDRS on co-noticees. viii. In Shri Paresh B Patel vs Commissioner of C.E & S.T.-VALSAD in Final Order No. 12569/2024 on 29 October, 2024 (Annexure-11), following the division bench judgment in the case of M/s. Siemens Ltd., the same view was taken and penalty was deemed not maintainable if the main noticee settles tax dues under SVLDRS. ix. Division Bench of Hon'ble CESTAT, Ahmedabad delving deep in the mattter in the case of Prakash Steelage Ltd vs C.C.E & S.T.-Bharuch in Final Order No. 12591-12595/2024 on 6 November, 2024 (Annexure-12) and following judgments given by the two coordinate Division Benches, held in para 4 that the penalties imp....

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....es under SVLDRS, penalty on co-noticees cannot survive independently. xiii. After hearing both sides, the single-member bench observed that the decision in Vipinbhai Kantilal Patel, rendered by a Division Bench, was binding and directly applicable to the facts of the case. The tribunal distinguished the revenue's reliance on Four R Associates, observing that it was a single-member decision and could not override the binding precedent laid down by a Division Bench. xiv. In Banas Enterprises vs. Commissioner of CGST & Central Excise, on 08.05.2025 vide Final Order No. 10323/2025 (Annexure-17) relying upon Vipinbhai Kantilal Patel vs. CCE, Ahmedabad held that when the case of duty evasion of the main party M/s. Narendra P....

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....adjudicating proceedings against co-noticees being Directors were not proper; when demand of duty against Company had been settled under SVLDR Scheme, imposition of penalty against Director would fail on simple ground that if they had applied under said Scheme, they would have paid "nil" duty in view of relief available to them under Section 124(1)(b) of Finance (No.2) Act, 2019. Same view taken by Hon'ble Division Bench of Mumbai CESTAT in Siemens Ltd. Vs Commissioner of Central Excise-(2024) 18 Centax 164 (Tri-Bom) (Annexure-20) holding "EXCISE- Since if appellants had applied under SVLDRS, they would have paid nil liability in view of section 124(i)(b) of Finance Act, 1994 dealing with Sabka Vishwas (Legacy Dispute Resolution) Scheme....

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....mpugned 0-1-0 para 30.4.14 pg. 611 of the paper book), penalty on the Appellant co-noticee as Director of the buyer company in the same case cannot be sustained, even if they did not file a declaration under the SVLDRS and hence, по penalty is imposable on Appellant co-noticee like a few co-noticees of Ahmedabad as brought out at the end of para 30.7.3.7 of the impugned O-1-O, placed in a similar situation, like in the case of the Appellant, who was prevented from availing the scheme for the reasons as mentioned above, the penalty imposed in the impugned order on him/the Appellant under Rule 26(1) of the C.E Rules, 2002, hence, is liable to be set aside and be kindly set aside. 3. Learned AR, on the other hand, seeks to rely ....