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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI

PRINCIPAL BENCH - COURT NO. 1

EXCISE APPEAL NO. 50597 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 Anil Babulal Jain ...… Appellant

36, Dhoble Layout, Surya Nagar, Behind Lata Mangeshkar Garden,

Nagpur (M.H.)

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. 50662/2026

JUSTICE DILIP GUPTA:

This appeal has been filed against 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. 2002 Rules

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2. The contention of Shri Ankur Upadhyay, learned counsel for the appellant is that penalty could not have been imposed upon the appellant under rule 26 of the 2002 Rules for the reason that the show cause notice dated 28.12.2020 in which the appellant is a noticee does not propose that the appellant knew or had reason to believe that the excisable goods were liable to confiscation under the provisions of the Central Excise Act 1994 or under the provisions of the 2002 Rules. Learned counsel for the appellant pointed out that the appellant is not a noticee in the other show cause notice dated 27.01.2018 that had a proposal for confiscation of the excisable

goods.

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

appellant.

4. Rule 26(1) of the 2002 Rules is reproduced below:

“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 the Act in respect of duty, interest and penalty, all proceedings in respect of penalty against other persons, if any, in the said proceedings shall also be deemed to be

concluded.”

5. It is clear from the show cause notice dated 28.12.2020 that there is no allegation in the show cause notice that the appellant

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knew or had reason to believe that the excisable goods were liable to

confiscation.

6. The appellant is not a noticee in the show cause notice dated 27.01.2018 that was issued for proposing penalty under rule 26 of

the 2002 Rules.

7. The view that has been taken finds support from the decision of the Tribunal in Shri Ramesh Garg, Chairman of M/s K.S. Oil Ltd. vs. Commimissioner, CGST, Customs & Central Excise² and

the relevant portion of the order is reproduced below:

“5. In the impugned order, goods have not been confiscated nor have any goods been held liable to be confiscated. We, therefore find, the essential ingredient to impose penalty under Rule 26, namely, confiscation of the goods or goods are liable for confiscation, has not been fulfilled in this case. Therefore, the penalty could not

have been imposed under Rule 26.”

8. In this view of the matter, the imposition of penalty on the appellant cannot be sustained and is set aside. The impugned order d