Penalty notice must clearly specify the breach; vague excise allegations cannot sustain Rule 25 penalty.

Penalty under Rule 25 of the Central Excise Rules, 2001 was held unsustainable where the show cause notice did not identify the precise clause or specific nature of breach alleged. The notice mentioned non-compliance with warehousing provisions under Rule 20, but it failed to set out the particular Rule 25 charge, depriving the assessee of clear notice and an effective opportunity to defend. As penalty under excise law is independent of duty liability, a definite factual and legal foundation was required before imposition. In the absence of such foundation, the penalty was set aside.

---

---

Issues: Whether penalty under Rule 25 of the Central Excise Rules, 2001 could be sustained when the show cause notice did not specify the precise clause or nature of breach forming the basis of the penalty.

Analysis: The notice referred to non-compliance with warehousing provisions under Rule 20, but it did not disclose which clause of Rule 25 was attracted or set out a specific penalty charge. Since penalty under the excise law is independent of duty liability, the assessee was entitled to know the exact allegation so as to defend the case effectively. In the absence of a clear foundation for imposition of penalty, the levy could not be sustained.

Conclusion: Penalty was not sustainable and the assessee succeeded on the limited issue of penalty.

---