2006 (10) TMI 247 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the imposition of penalty on the appellant manufacturer under Rule 25 of the Central Excise Rules and the sustainability of the penalty in the absence of specific reliance on the relevant sub-rule, as well as the position of confiscation and redemption fine concerning the seized goods.

Details of the Judgment:

Issue 1: Imposition of Penalty under Rule 25
The case involved the appellant manufacturer who had been manufacturing readymade garments exempt from Central Excise duty for several years. Following a change in the law, certain garments became liable to duty. The appellant, believing they were exempt, was later visited by an Excise officer who seized goods and issued a show-cause notice for confiscation and penalties under Rule 25 and Section 11AC of the Central Excise Act. The Commissioner reduced the penalty but did not specify the clause of Rule 25 being relied upon. The Tribunal held that without specifying the clause, the order was not sustainable, citing the need for the assessee to be informed of the exact nature of the contravention.

Issue 2: Sustainability of Penalty without Specific Reliance
The appellant's counsel argued that the order was unsustainable as it did not specify the clause of Rule 25 being relied upon, similar to a previous Supreme Court ruling. The absence of specific reliance on a particular clause of the rule hindered the appellant's ability to understand the case against them and raise a valid defense. The lack of clarity in the order regarding the law violated led to the appeal succeeding and the impugned order being set aside.

Conclusion:
The judgment highlighted the importance of specifying the particular provision in a rule when imposing penalties to ensure the respondent party is aware of the charges and can defend themselves effectively. The lack of specificity in the order regarding the clause of Rule 25 being applied rendered the order unsustainable, leading to the appeal succeeding and the impugned order being set aside.

Note: The judgment was delivered by Shri C.N.B. Nair, J.