2015 (1) TMI 333 - AT - Central Excise

Enhancement of penalty without issuing any SCN - Held that - adjudicating authority has imposed penalty on the appellant under rule 25 of the Central Excise Rules, 2002. The first appellate authority has enhanced the penalty without issuing any show-cause notice to the appellant. We find that the first proviso to the provisions of section 35A(3) mandates for issuance of a show cause notice. In the absence of any such show cause notice, we are of the view that the impugned order is liable to be set aside. At the same time, since the appeal filed by the appellant against the order of the adjudicating authority needs to be decided, we remand the matter back to the first appellate authority to reconsider the issue afresh after following the principles of natural justice. - Matter remanded back - Decided in favour of assesse.

Summary

Issues:
Imposition of penalty without show cause notice under section 35A of Central Excise Rules, 2002.

Analysis:
The judgment by the Appellate Tribunal CESTAT MUMBAI, delivered by M.V. Ravindran, pertains to an appeal against an order-in-appeal dated 29.10.2009. The main issue in this case revolves around the imposition of penalty on the appellant. The Tribunal had remanded the matter back to the first appellate authority on a previous occasion. The first appellate authority, without issuing a show cause notice, enhanced the penalty imposed on the appellant. The appellant argued that as per section 35A, a show cause notice is mandatory for enhancing penalties. Upon reviewing the records, it was found that the first appellate authority had indeed increased the penalty without providing a show-cause notice, contravening the first proviso to section 35A(3). Consequently, the Tribunal held that the impugned order must be set aside due to the absence of the requisite notice. However, recognizing the need for the appeal to be decided, the Tribunal remanded the matter to the first appellate authority for a fresh consideration following the principles of natural justice.

The judgment underscores the importance of procedural fairness and adherence to statutory requirements in matters of penalty imposition under the Central Excise Rules, 2002. It clarifies that the first proviso to section 35A(3) necessitates the issuance of a show cause notice before enhancing penalties, emphasizing the significance of due process and the principles of natural justice. By setting aside the impugned order and allowing the appeal by way of remand, the Tribunal ensures that the appellant's case is reconsidered in a manner consistent with legal requirements and fair procedures. This decision serves as a reminder of the essential safeguards embedded in the legal framework governing penalty imposition, safeguarding the rights of the parties involved and upholding the integrity of the adjudicative process.

Overall, the judgment highlights the Tribunal's commitment to upholding procedural fairness and statutory compliance in matters of penalty imposition, underscoring the significance of adherence to legal provisions and principles of natural justice in administrative proceedings. The decision not only rectifies the procedural lapse in the present case but also reaffirms the overarching importance of due process and fair treatment in the adjudication of disputes related to penalty assessments.