2007 (3) TMI 25 - AT - Central Excise

Redemption fine and Penalty Appellant contended that although goods were found excess, these were not liable to seizure Authority decided excess good did not jump out of the factory to hold evasion of duty and accordingly appeal is allowed

Summary

Issues: Challenge to appeal order imposing redemption fine, duty liability, and penalty without proper notice under Section 35A(3) of the Central Excise Act, 1944; Allegation of bias by the Commissioner (Appeals); Imposition of penalty and fine without following due procedural of Excise Law; Failure to consider relevant legal citations by the authorities below.

Analysis:
1. The appellant challenged the appeal order imposing redemption fine, duty liability, and penalty, arguing that the ld. Commissioner (Appeals) lacked jurisdiction to enhance liability without issuing notice under the first proviso to Section 35A(3) of the Central Excise Act, 1944. The appellant contended that the Commissioner's action of imposing penalty resulting in additional liability was contrary to law and hit by Section 12E(2) of the Act. The appellant also claimed that the seizure of goods did not continue due to the illegality of the search operation. The appellant further argued that the Commissioner acted with bias against them, and supported the original adjudication order, stating that the excess goods found were not liable to seizure as they were inside the factory and had undergone Excise Procedure with duty collected by the Revenue upon removal.

2. The ld. DR for the Revenue supported the order of the ld. Commissioner (Appeals), asserting that the order was sustainable in the eyes of the law.

3. The Tribunal noted that the first proviso to Section 35A(3) of the Central Excise Act, 1944 mandates that any order enhancing penalty or fine, resulting in increased liability for the appellant, necessitates an opportunity of hearing. The Tribunal observed that a new fine imposed by the Appellate Authority without being levied by the adjudicating authority required such an opportunity, which was not provided in this case. The Tribunal agreed with the appellant's argument that the excess goods had undergone Excise Procedure and duty had been collected by the Revenue, making any arbitrary levy unnecessary. The Tribunal highlighted that relevant legal citations provided by the appellant were not considered by the authorities below. It emphasized that the seizure of owned goods only warranted probing the source, and in the absence of evidence proving evasion of duty, imposition of fine and penalty was unwarranted.

4. Consequently, the Tribunal allowed the appeal, setting aside the impugned order-in-appeal.

This judgment underscores the importance of following due process and providing a fair opportunity of hearing before imposing penalties or fines, especially when there is an increase in liability for the appellant. It also highlights the significance of considering relevant legal precedents and evidence in reaching a decision to ensure fairness and adherence to the law.