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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI

PRINCIPAL BENCH - COURT NO. 1

EXCISE APPEAL NO. 50199 OF 2025

(Arising out of Order-In-Original No. 144/2024-CE date 27.09.2024 passed by Additional Director General (Adjudication), New Delhi)

Shri Mukesh Agrawal ...… Appellant

40, 1^st Floor, Pratap Nagar-II Tonk Phatak, Jaipur- 302015

Versus

Additional Director of General ...… Respondent (Adjudication)

West Block Vill Wing-6, 2^nd Floor, R.K. Puram, New Delhi

APPEARANCE Shri Ankur Upadhyay, advocate for the appellant

Shri P.R.V Ramanan, special counsel and Shri Rakesh Kumar, authorized representative of the department

CORAM:

HON’BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON’BLE MR. P.V. SUBBA RAO, MEMBER TECHNICAL

DATE OF HEARING : 19.02.2026 DATE OF DECISION: 06.04.2026

FINAL ORDER NO. 50653/2026

JUSTICE DILIP GUPTA:

This appeal has been filed to assail that portion of the order

dated 27.09.2024 passed by the Additional Director General (Adjudication) that has imposed penalty upon the appellant under rule 26 of the Central Excise Rules, 2002¹ read with rules 17 and 18 of the Pan Masala Packing Machine (Capacity Determination and

Collection of Duty) Rules, 2008.

1. the 2002 Rules

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2. The Additional Director General (Adjudication) however, imposed penalty upon the appellant under rule 26 for the following

reasons:

“Penalty Proposal upon Shri Mukesh Agrawal @ Dilip Agrawal, Jaipur :- It has been alleged in the SCN(s) that Shri Mukesh Agrawal @ Dilip Agrawal, Jaipur was the key associate of the Noticee, Sh. Natwar Lal Sharda and actively involved in the business of Pan Masala/gutkha with him. He was engaged in procurement of raw materials and sale of finished goods on daily basis on direction of the Noticee, Sh. Natwar Lal Sharda. Sh. Mukesh Agrawal assisted the Noticee to maintain the records and involved in supply of raw materials and sale of finished goods cleandestinely manufactured in the said unregistered factory at Bastar. He was instrumental controlling controlling all the business activities of the said unregistered factory through Sh. Rajkumar Menghani @ Raju Bhai of Indore. He was receiving remuneration from one of the companies, namely, M/s Shree Sidheshwr Tobacco Products Pvt. Lt. controlled by the Noticee, Sh. Natwar Lal Sharda in the bank account of his wife on direction of the Noticee, Sh. Natwar Lal Sharda. In view of above, I find that the ingredients of Rule 26 are satisfied in the case of Shri Mukesh Agrawal @ Dilip Agrawal. Therefore, I hold that Sh. Mukesh Agrawal @ Dilip Agrawal is liable to penalty under Rule 26 of the Central Excise Rules, 2002 readwith readwith Rule 17 & 18 of Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules,

2008.”

3. The contention of Shri Ankur Upadhyay, learned counsel for the appellant is that the reply submitted by the appellant has not been considered and penalty has been imposed upon the appellant under rule 26 of the 2002 Rules only on the basis of the averments made in the show cause notice. Learned counsel also contended that

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penalty could not have been imposed upon the appellant under rule 26 of 2002 Rules for the reason that the show cause notice dated 27.01.2018, in which the appellant is a noticee, does not propose that the appellant knew or had reason to believe that excisable goods were liable to confiscation under the provisions of the Central

Excise Act, 1944² or under the provisions of the 2002 Rules.

4. Shri P.R.V Ramanan, learned Special Counsel appearing for the department however, supported the imposition of penalty upon the

appellant.

5. As penalty has been imposed under rule 26(1) of the 2002 Rules, it will be appropriate to reproduce the same and it is

reproduced:

“26. Penalty for certain offences (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable