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Issues: (i) Whether land, building, plant and machinery could be confiscated under Rule 173Q(2) of the Central Excise Rules, 1944 when the show cause notice did not propose such confiscation; (ii) Whether interest under Section 11AB of the Central Excise Act, 1944 could be demanded for a duty liability arising from a period prior to the insertion of that provision.
Issue (i): Whether land, building, plant and machinery could be confiscated under Rule 173Q(2) of the Central Excise Rules, 1944 when the show cause notice did not propose such confiscation.
Analysis: Rule 173Q(2) permits confiscation of land, building, plant, machinery and connected articles where the duty leviable exceeds the prescribed limit. However, the show cause notice and corrigendum did not call upon the respondent to explain why such assets should not be confiscated. Confiscation could not be ordered without prior notice, since notice is required both by law and by the principles of natural justice.
Conclusion: The confiscation of land, building, plant and machinery was not permissible and the issue was decided in favour of the respondent.
Issue (ii): Whether interest under Section 11AB of the Central Excise Act, 1944 could be demanded for a duty liability arising from a period prior to the insertion of that provision.
Analysis: Section 11AB had been inserted with effect from 28-9-1996, and the demand notice in the matter had been issued on 6-12-1995. Interest liability under that provision could not be fastened retrospectively for a period anterior to its insertion.
Conclusion: Interest under Section 11AB could not be demanded and the issue was decided in favour of the respondent.
Final Conclusion: The Revenue's challenge failed, and the adjudication order was upheld insofar as it declined confiscation and interest under Section 11AB.
Ratio Decidendi: Penal or confiscatory consequences cannot be imposed without prior notice in the show cause proceedings, and a statutory interest provision cannot be applied retrospectively to demands arising before its insertion.
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