Natural justice limits appellate enhancement of penalty and confiscation where statutory notice and hearing are not given.

An appellate authority cannot enhance penalty or order confiscation and redemption fine without serving the statutory notice under Section 35A(3) and giving the affected party a fair opportunity of hearing. Failure to issue such notice before proposing enhancement violates the principles of natural justice because the party is denied an opportunity to meet the proposed adverse action. On that procedural defect, the matter was required to be remanded to the Commissioner (Appeals) for de novo consideration after fresh notice and hearing; the merits of confiscability, penalty, and redemption fine were left open for reconsideration.

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Issues: Whether the appellate authority could enhance penalty and order confiscation and redemption fine without serving notice under sub-section (3) of Section 35A of the Central Excise Act, 1944 and without granting an opportunity of hearing.

Analysis: The appellate authority recorded that no show cause notice had been served under Section 35A(3) before enhancing the penalty and directing confiscation with redemption fine. Such non-service deprived the appellant of an opportunity to meet the proposed enhancement and amounted to violation of the principles of natural justice. In view of this procedural defect, the merits of the competing contentions on confiscability, penalty, and redemption fine were left for reconsideration by the appellate authority after issuing a fresh notice and hearing the appellant.

Conclusion: The matter was required to be remanded to the Commissioner (Appeals) for de novo consideration after fresh notice and hearing. The appeal succeeded on this procedural ground.

Ratio Decidendi: Enhancement of penalty or confiscatory relief by an appellate authority cannot be sustained unless the affected party is given the statutory notice and a fair opportunity of hearing; failure to do so violates natural justice and requires remand.

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