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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI

PRINCIPAL BENCH - COURT NO. 1

EXCISE APPEAL NO. 50201 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 Ashish Sharda, ...… Appellant M-38-39, Mahesh Colony

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. 50655/2026

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

2

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

reasons:

“Penalty Proposal upon Shri Ashish Sharda, Jaipur-It has been alleged in the SCN(s) that Sh. Ashish Sharda of Jaipur was owner of Nazar Pan Masala but all the activity in respect of Nazar brand of Pan Masala was controlled by his uncle Sh. Natwar Lal Sharda. The Noticee, Sh. Natwar Lal Sharda in his statements has accepted that Sh. Ashish Sharda was involved in his bunisess of Pan Masala/Gutkha and connived with him in clandestine manufacture of Pan Masala/Gutkha at unregistered factory and evasion of Central Excise duty. In view of above, I find that the ingredients of Rule 26 are satisfied in the case of Shri Ashish Sharda. Therefore, I hold that Sh. Ashish Sharda 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. Learned counsel also contended that 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, 1944, E/50201/2025 or under the provisions of the 2002 Rules. Learned counsel also contended that the order is based on the statement of Natwar Lal Sharda made under section 14 of the Central Excise Act, which

2. the Central Excise Act

3 E/50201/2025

statement could not have been relied upon as the procedure contemplated under section 9 (D) of the Central Exicse Act had not

been followed.

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 goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or rupees ten

thousand, whichever is greater:

PROVIDED that where any proceeding for the person liable to pay duty have been concluded under clause (a) or clause (d) of sub-section (1) of section 11AC of th