Jurisdictionally invalid show cause notice cannot sustain separate confiscation or penalty proceedings after duty demand is dropped.

Where a duty demand is dropped, associated penal consequences do not survive, and confiscation proceedings, being penal in character, cannot be sustained independently. The Tribunal also applied the larger Bench view that a show cause notice found to be without jurisdiction for the duty demand cannot be split to preserve separate confiscation or penalty proceedings; such a notice is invalid in its entirety. On that basis, the appellant was found to have a strong prima facie case, and waiver of pre-deposit of redemption fine and penalty was granted with recovery stayed.

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Issues: Whether, on the facts that the duty demand had been dropped and the show cause notice had been held without jurisdiction, pre-deposit of redemption fine and penalty should be waived and recovery stayed.

Analysis: The Tribunal relied on the principle that where the demand of duty is dropped on any ground, penal consequences cannot survive, and confiscation proceedings being penal in character cannot be sustained independently. It further applied the larger bench view that a show cause notice found without jurisdiction for duty demand cannot be split so as to sustain separate confiscation or penalty proceedings, and that such a notice is invalid in its entirety.

Conclusion: The appellant was found to have a strong prima facie case, and waiver of pre-deposit of redemption fine and penalty was granted with recovery stayed.

Ratio Decidendi: When a show cause notice is held to be without jurisdiction for the demand of duty, it is invalid in totality and the associated penal or confiscatory proceedings cannot be independently sustained.

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