Co-Noticee can apply for waiver of Penalty under Sabka Vishwas Scheme 2019 If main Noticee Issued Discharge Certificate: CESTAT [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the co-noticee is eligible to seek waiver of penalty under Sabka Vishwas Scheme, 2019 if main noticee is issued discharge certificate.

Shri Ravi Seswani, the appellant/assessee is in the business of trading of food grades/chemicals, raw materials, like flavour, Chocolate Powder, Colour, etc. A Show cause notice was issued alleging that both the appellants had supplied raw material to M/s Asha Food Products and other related concerns which was used in the manufacture of excisable goods cleared clandestinely and therefore penalty under rule 26 of Rules was proposed against the appellant.

By the order, the CGST Central Excise Commissioner in Indore confirmed that the appellants would be subject to a penalty of Rs. 10 lakhs under rule 26.  In a series of rulings, the tribunal held that co-notices could request a waiver of the penalty under the scheme by filing a declaration after the principal noticees had filed the declaration under the scheme, deposited the duty that needed to be paid under the Sabka Vishwas Scheme, 2019, and the department had issued the discharge certificate.

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The co-noticee had not filed the declaration after the main noticee received the discharge certificate under the SVLDR Scheme, 2019 towards the duty liability, but the bench of Binu Tamta (a judicial member) noted that this was merely a procedural error for which the appellant could not be held liable for the penalty, especially since there was no revenue loss. As a result, the co-noticee was granted the right to have the penalty waived.

In light of the relief available to them under section 124 (i)(b) of the Finance Act, 1994, the appellant would have paid "nil" rate of duty if they had applied under the SVLDR Scheme, the tribunal held, even though the appellant had not filed the declaration after the main noticees had received the Discharge Certificate towards the duty liability.

To Read the full text of the Order CLICK HERE

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