Case Summary: CESTAT Kolkata set aside a ₹62,20,990 penalty imposed on M/s. Nilachal Iron & Power Ltd. under Rule 26(2) of Central Excise Rules, 2002. The Tribunal ruled that since the principal party, Tata Steel Limited, was entirely exonerated and held entitled to the CENVAT credit, no basis for an accessory penalty remains. Key Legal Principles Established:

• Accessory Liability Rule: When the primary transaction is held lawful in the case of the principal beneficiary, co-delinquent or accessory penalties cannot survive against another party for the identical set of transactions.
• CENVAT Credit Validity: An assessee can properly take credit on inputs received from a manufacturer on the strength of duty-paid invoices under Rule 9 of the CENVAT Credit Rules, 2004, provided the manufacturer possesses a functional manufacturing facility..

Bench Matrix:

• Hon’ble Shri Ashok Jindal, Member (Judicial)
• Hon’ble Shri K. Anpazhakan, Member (Technical)

Appealing Advocates: Matter was represented by Shreya Mundhra

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