(Per : HONOURABLE MR.JUSTICE V. M. SAHAI) 1. We have heard Mr.Anand Nainavati, learned counsel appearing for the appellant. Though Rule has been served on the respondents, no one appears for the department.
2. This Appeal has been admitted on the following substantial questions of law.
1. Whether penalty can be imposed upon the appellant under Rule 209A of the erstwhile Central Excise Rules, 1944 now Rule 26 of Central Excise Rules, 2011 in the facts and circumstances of the case ?
2. Whether in the facts and circumstances of the case, the Tribunal was right in upholding the penalty of Rs. 10,00,000/- imposed on the appellants under Rule 209A of the erstwhile Central Excise Rules, 1944 now Rule 26 of Central Excise Rules, 2001 ?
3. Whether penalty can be imposed on partner separately when partnership firm itself has been penalised ?
3. It is not disputed that penalty has been imposed on the firm. The Tribunal has imposed penalty on the partner only on the ground that total amount of duty involved was approximately Rs. 88 lacs and equal amount of penalty has been imposed on the appellant firm. Therefore, penalty imposed on Mr.P.N.Shah, partner of the firm was on the higher side and it has reduced it to Rs. 10 lacs. Penalty of Rs. 87,96,398/- has been imposed on the firm under section 11AC of the Central Excise Rules, 1944. It has been held by the Division Bench of Gujarat High Court in Commissioner of Central Excise vs. Jai Prakash Motwani, 2010 (258) E.L.T.204 (Guj) that where no specific Rule is attributed to the partner in the firm, then once firm has already been penalised, separate penalty cannot be imposed upon the partner because a partner is not a separate legal entity and cannot be equated with employee of a firm. From the order of the Tribunal or other orders on record, we do not find that any specific role has been assigned as provided by Rule 26 of Central Excise Rules. The Division Bench of this Court in Commissioner of Central Excise (supra) has held that where penalty has been imposed on the firm, no separate penalty can be imposed on its partner. We agree with the view taken by the Division Bench. Therefore, we find force in the submission of the learned counsel for the appellant and the question is answered in the negative, in favour of the assessee and against the department. The appeal is allowed. Penalty imposed on the appellant is set aside.
(V.M.SAHAI,J) (N.V.ANJARIA,J) ***vcdarji