Post-adjudication penalty notice held unsustainable where the original show cause notice never proposed penalty.

Where a duty demand had already been adjudicated under the Central Excise framework without any penal proposal in the original show cause notice, a later fresh notice issued only to impose penalty after adjudication was held unsustainable. The post-adjudication initiation of penalty proceedings was treated as invalid because the penal provisions had not been invoked at the stage of the original demand notice. The penalty order was therefore set aside, with consequential relief.

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Issues: Whether penalty proceedings could validly be initiated by a fresh show cause notice after the duty demand had already been adjudicated without any prior proposal for penalty.

Analysis: The original show cause notice and adjudication order dealt with duty demand under Rule 9(2) of the Central Excise Rules read with the proviso to Section 11A of the Central Excise Act, but no penal proposal was invoked at that stage. A subsequent notice was issued only to impose penalty under the penal provisions after adjudication had concluded. Such post-adjudication initiation of penalty proceedings was held to be unsustainable, and the authority was bound to follow the earlier judicial view relied upon before it.

Conclusion: The fresh penalty proceedings were invalid and the penalty order could not be sustained.

Final Conclusion: The appeal succeeded and the penalty order was set aside, with consequential relief.

Ratio Decidendi: Where duty demand has already been adjudicated without invoking penal provisions in the original notice, a later fresh notice solely to impose penalty after adjudication is not maintainable.

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