2007 (3) TMI 449 - AT - Central Excise

Summary

Issues:
Challenge to appeal order imposing redemption fine, duty liability, penalty, and interest for clandestine manufacture and clearance of packaged drinking water. Jurisdiction of Commissioner (Appeals) to enhance liability without issuing notice under Section 35A(3) of the Central Excise Act, 1944. Legality of imposition of penalty resulting in additional liability. Seizure of goods and procedural compliance under Excise Law. Opportunity of hearing for imposition of new fine by Appellate Authority without levy by Adjudicating authority. Consideration of Tribunal decisions and principles of law regarding seizure of goods and evasion of duty.

Analysis:

1. The appellant contested the appeal order imposing a redemption fine, duty liability, penalty, and interest for the alleged clandestine manufacture and clearance of packaged drinking water. The appellant argued that the Revenue's appeal was baseless as the adjudication order had already cleared them of charges. Additionally, the appellant challenged the jurisdiction of the Commissioner (Appeals) to enhance liability without issuing a notice under the first proviso to Section 35A(3) of the Central Excise Act, 1944. The appellant also raised concerns about the imposition of penalty resulting in additional liability and argued that the order was contrary to law under Section 12E(2) of the Central Excise Act, 1944.

2. The appellant further contended that the seizure of goods did not continue due to the illegality of the search operation. The appellant claimed that the Commissioner (Appeals) had acted with bias and failed to appreciate the circumstances that cleared the appellant of charges, leading to an unfair decision against them. The appellant's counsel supported the order of adjudication and argued that the excess goods found were not liable for seizure as they had undergone the necessary Excise Procedure and duty had been collected by the Revenue upon removal.

3. During the hearing, it was highlighted that the first proviso to Section 35A(3) of the Central Excise Act, 1944 mandated an opportunity of hearing when an order enhanced penalty or fine, increasing the appellant's liability. The appellant's counsel argued that the imposition of a new fine by the Appellate Authority without being levied by the Adjudicating authority was arbitrary. The appellant cited various Tribunal decisions to support their argument, emphasizing that the seizure of owned goods only required probing the source without evidence of evasion of duty. It was concluded that the imposition of the fine was unjustified, and the levy of penalty was unwarranted in the absence of proof of duty evasion.

4. Ultimately, the appeal was allowed, and the impugned order-in-appeal was set aside, indicating a favorable outcome for the appellant based on the arguments presented and the legal principles applied during the proceedings.

This comprehensive analysis of the legal judgment showcases the issues raised, arguments presented, legal provisions invoked, and the ultimate decision rendered by the Appellate Tribunal CESTAT, Kolkata in this case.