2005 (12) TMI 48 - AT - Central Excise

Action of the department of issuing SCN to initiate proceedings of penal provisions after the adjudication, is not sustainable in the eye of law - issue is also decided in a similar matter by the Calcutta (sic) imposition of penalty, once decided as held by the Calcutta High Court - Commissioner was bound by the said judgment yet he has not followed the same, which is not correct SCN can t be held legal hence penalty are not imposable

Summary

Issues:
1. Imposition of penalty under C.E. Rules after adjudication
2. Validity of fresh Show Cause Notice for penalty
3. Compliance with legal precedents regarding penalty imposition

Analysis:
1. The appeal in question arose from an Order-in-Original (OIO) imposing penalties under C.E. Rules. The Commissioner had imposed a penalty of Rs. 10 lakhs under Rules 9(2) and 173Q of C.E. Rules, along with a penalty of Rs. 50,000 on an individual under Rule 209A. Subsequently, a fresh Show Cause Notice was issued post-adjudication, calling for explanations on penalty imposition. The appellants contended that initiating penalty proceedings after adjudication is not legally sustainable, citing a judgment by the Calcutta High Court. The Commissioner, despite acknowledging the judgment, proceeded to impose penalties, leading to the challenge.

2. The appellants failed to appear despite multiple hearing notices, resulting in the matter being heard on merits. The learned SDR supported the penalty imposition based on the fresh Show Cause Notice. However, upon careful consideration, the Tribunal found the department's post-adjudication penalty proceedings legally flawed. The Tribunal referenced the Calcutta High Court's judgment, emphasizing that once a matter is adjudicated, initiating penalty proceedings is impermissible. The Commissioner's failure to adhere to this legal principle rendered the order unsustainable. Consequently, the Tribunal set aside the order, allowing the appeal with any consequential relief.

3. The Tribunal's decision highlighted the importance of legal precedents and adherence to established principles in penalty imposition cases. By emphasizing the Calcutta High Court's ruling on the inadmissibility of initiating penalties post-adjudication, the Tribunal underscored the significance of legal consistency and compliance with established legal norms. The Commissioner's deviation from the binding precedent was deemed incorrect, leading to the order's annulment. The Tribunal's decision served as a reaffirmation of the necessity to uphold legal principles and precedents in administrative actions, ensuring fairness and consistency in penalty imposition matters.