2006 (4) TMI 428 - AT - Central Excise

Penalty imposition set aside due to time-barred proceedings.

The Tribunal set aside the penalty imposition challenged under Rules 9(2), 173Q, and Rule 209A of CE Rules due to a show cause notice issued after an ... Penalty Issues:1. Challenge to imposition of penalty under Rules 9(2), 173Q, and Rule 209A of CE Rules.2. Validity of penalty imposition after a lapse of 8 years.3. Interpretation of show cause notices and orders for penalty imposition.Analysis:1. The appeal challenged the imposition of penalties under Rules 9(2), 173Q, and Rule 209A of CE Rules. The Commissioner imposed these penalties through Order-in-Original No. 1/2000 based on a show cause notice issued on 16-7-1998. However, an earlier show cause notice from 1-11-1990 did not propose penalties, and no penalties were confirmed in Order-in-Original No. 6/97 dated 12-6-1997. The appellants argued that the Department could not reopen the penalty issue after an 8-year lapse from the initial notice.2. The learned Counsel relied on the judgment in the case of Jain Shudh Vanaspathi Ltd. to argue that subsequent penalty proceedings after such a delay were time-barred. The Departmental Representative reiterated the department's contentions.3. Upon careful consideration, the Tribunal found in favor of the appellants. The show cause notice from 1-11-1990 did not include allegations for penalty imposition, focusing only on duty recovery. The subsequent show cause notice from 16-7-1998, proposing penalties after an 8-year gap, was deemed without jurisdiction. Citing the Calcutta High Court judgment in Jain Shudh Vanaspathi case, the Tribunal held that the officer became functus officio after the initial adjudication. As the first notice did not invoke penal provisions, the Department's attempt to allege penalties years later was deemed legally unsustainable. Consequently, the impugned order imposing penalties was set aside, granting the appellants the requested relief.This detailed analysis of the judgment highlights the issues raised, legal arguments presented, and the Tribunal's reasoning leading to the decision to set aside the penalty imposition.