2024 (11) TMI 202 - AT - Central Excise

Appeals allowed by remand due to natural justice violations in adjudication proceedings lacking adequate personal hearings

Art Luminaires, Ashwin Dias Versus Commissioner of C.E. & S.T. -Daman

The CESTAT Ahmedabad allowed appeals by remand after finding violations of natural justice principles where the adjudicating authority failed to provide ... Violation of principles of natural justice - no personal hearing has been conducted by the adjudicating authority - Valuation of lighting fixtures supplied to brand owner - levy of separate penalty on a partner of a partnership firm - levy of redemption fine - goods are not available. Principles of natural justice - HELD THAT:- It is found that in the entire case, no personal hearing has been conducted by the adjudicating authority though, the adjudicating authority has given a notice of hearing on 21.09.2017 but by one notice two consecutive date of hearing i.e. 03.10.2017 & 13.10.2017 was fixed. In this regard, it is found that it is a settled law that by giving one hearing notice letter even though, two or three dates are given it is to be considered as one date of hearing and as per the statute, minimum three opportunities of personal hearing is required to be given to the assessee. Moreover, the appellant also filed a letter dated 29.11.2017 explaining the reason for non attendance and requested for a fresh date of hearing. However, by that time, the adjudication order came to be passed. As regard the second show cause notice, even though, hearing is conducted but the order was passed on the same line of the order passed in the show cause notice dated 30.03.2017. Therefore, taking total stock of the proceeding, there is a clear violation of principles of Natural Justice in adjudication of the show cause notices. Levy of personal penalty on Shri Ashwin Dias - HELD THAT:- It is found that Shri Ashwin Dias is undisputedly partner of M/s. Art Luminaires which is a partnership firm. The Hon’ble jurisdictional High of Gujarat in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS JAI PRAKASH MOTWANI [2009 (1) TMI 501 - GUJARAT HIGH COURT] & judgment in the case of SHAH PETROLEUMS AND SNEHAL ARVINDBHAI SHAH VERSUS C.C.E. & S.T. -SURAT-II [2023 (2) TMI 67 - CESTAT AHMEDABAD] held that in case of partnership firm, no separate penalty can be imposed on the partner. In view of the settled legal position by the Hon’ble High Court of Gujarat irrespective of any merit of the case, the personal penalty on Mr. Ashwin Dias is clearly not sustainable. Hence, the same is set aside. Levy of Redemption Fine - goods are not available - HELD THAT:- It is found that the Ld. Commissioner (Appeals) is absolutely correct in setting aside the redemption fine, as the issue is squarely covered by the Larger Bench judgment in the case of SHIV KRIPA ISPAT PVT. LTD. VERSUS COMMISSIONER OF C. EX. & CUS., NASIK [2009 (1) TMI 124 - CESTAT MUMBAI - LB] wherein, it was held that when the goods are not available for confiscation no redemption fine can be imposed. Therefore, there are no infirmity in the order of the Commissioner (Appeals) to the extent, it set aside the redemption fine. Appeals are allowed by way of remand to the adjudicating authority for passing a fresh order by observing the principles of Natural Justice. Issues:1. Valuation of lighting fixtures supplied to brand owner.2. Imposition of separate penalty on a partner of a partnership firm.3. Setting aside of redemption fine by the Commissioner (Appeals).Analysis:Issue 1: Valuation of lighting fixtures supplied to brand ownerThe appeals revolve around whether the lighting fixtures supplied by the appellant to the brand owner should be valued based on the average sale price of the brand owner, Wipro, under Rule 10A(ii) of the Central Excise Valuation Rules, 2000. The department alleged a relationship between the appellant and Wipro, asserting that the appellant was a job worker of Wipro, thus liable to pay excise duty based on Wipro's sale price. Show cause notices were issued, leading to differential duty demands and penalties. The appellant contended that they were not related to Wipro under Section 4, and duty was correctly paid on transaction value, citing various judgments in support.Issue 2: Imposition of separate penalty on a partnerThe question arose whether a separate personal penalty under Rule 26 of the Central Excise Rules, 2002 could be imposed on Mr. Ashwin Dias, a partner of the partnership firm. The appellant argued that precedents established that no separate penalty could be levied on a partner of a partnership firm, citing relevant case laws.Issue 3: Setting aside of redemption fineThe issue centered on whether the Ld. Commissioner (Appeals) erred in setting aside the redemption fine of Rs.1,20,00,000 on the grounds that the goods were not available for confiscation. The appellant argued that if goods are not available, no confiscation or redemption fine can be imposed, supported by a Larger Bench judgment.The Tribunal found a violation of principles of natural justice in the adjudication process due to lack of adequate opportunities for personal hearings. The personal penalty on Mr. Ashwin Dias was set aside based on established legal precedents prohibiting separate penalties on partners of partnership firms. The setting aside of the redemption fine was upheld, as the goods were not available for confiscation, aligning with the legal position. Consequently, the appeals by M/s. Art Luminaires were remanded for fresh orders ensuring adherence to natural justice principles, Mr. Ashwin Dias' appeal was allowed, and the revenue's appeal was dismissed.This detailed analysis highlights the key legal issues, arguments, and the Tribunal's findings in the judgment, encompassing the valuation of goods, penalty imposition, and redemption fine setting.