2020 (4) TMI 193 - AT - Central Excise

Imposition of penalty u/s 209A of the erstwhile Central Excise Rules 1944 in remand proceedings - case of appellant is that in remand proceedings against the main party, penalties on the appellants cannot be imposed - HELD THAT - It is a fact on record that the adjudicating authority vide his order dated 29.10.2004 dropped the penalty proposed in the show-cause notice against the appellants. The order of dropping penalty was never challenged in any subsequent proceedings.. Therefore, in remand proceedings for third party, penalty cannot be imposed on the appellant. There are no merit in the order of imposing penalties on the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Imposition of penalty under Rule 209A of Central Excise Rules 1944 on the appellants.

Analysis:
The judgment by the Appellate Tribunal CESTAT Hyderabad, delivered by Hon'ble Mr. Ashok Jindal and Hon'ble Mr. P. Venkata Subba Rao, dealt with the imposition of penalties on the appellants arising from a common issue. Initially, a show-cause notice was issued to the appellants proposing penalties under Rule 209A of the Central Excise Rules 1944. Subsequently, the adjudicating authority imposed penalties on the appellants and confirmed the demand against the main appellant. The matter was challenged before the Tribunal, which remanded it back to the adjudicating authority for reconsideration. In the remand proceedings, the penalties against the appellants were dropped by the adjudicating authority, and this decision was not challenged further. However, in a subsequent proceeding against the main party, penalties were again imposed on the appellants. The appellants contended that since the penalties were dropped against them earlier and not challenged, they could not be imposed in the remand proceedings. The Tribunal, after considering the submissions and records, found that the penalties against the appellants were indeed dropped in a previous order, which was never challenged. Therefore, the Tribunal concluded that in the remand proceedings, penalties could not be imposed on the appellants based on the earlier decision. Consequently, the Tribunal set aside the impugned order imposing penalties on the appellants, allowing the appeals with any consequential relief.

This judgment highlights the importance of finality in decisions regarding penalties imposed under excise rules. It establishes that if penalties are dropped against a party in a previous order and remain unchallenged, they cannot be subsequently imposed in remand proceedings against the same party. The Tribunal's decision was based on the principle that once a penalty is dropped against a party and that decision attains finality, imposing penalties on the same party in subsequent proceedings would not be justified. The judgment serves as a reminder of the significance of respecting the outcomes of previous adjudications and the implications of not challenging such decisions within the legal framework.