Separate show cause notice required for confiscation and penalty; retrospective use of Section 11AC was rejected.

Waiver of notice for duty demand did not extend to confiscation or penalty, so adverse action could not be sustained without a separate show cause notice and opportunity of hearing. The commentary also notes that Section 11AC of the Central Excise Act, 1944 was inapplicable to the period before its enactment, though Rule 173Q remained relevant on the facts. Because confiscation and penalty could not stand on the existing notice, the matter was sent back for fresh adjudication after issuing proper notice specifically for those consequences.

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Issues: (i) Whether confiscation and penalty could be sustained without a proper show cause notice when the notice waiver related only to duty demand; (ii) Whether the penalty provision under Section 11AC of the Central Excise Act, 1944 was applicable to the case; (iii) Whether the matter required remand for fresh adjudication.

Issue (i): Whether confiscation and penalty could be sustained without a proper show cause notice when the notice waiver related only to duty demand.

Analysis: The waiver of notice for duty demand did not extend to confiscation or imposition of penalty. A person must be given notice and an opportunity of representation before adverse consequences such as confiscation or penalty are imposed, and the earlier waiver could not be treated as a waiver of those separate consequences.

Conclusion: Confiscation and penalty could not be sustained without a proper show cause notice and opportunity of hearing.

Issue (ii): Whether the penalty provision under Section 11AC of the Central Excise Act, 1944 was applicable to the case.

Analysis: The penalty provision under Section 11AC was held to be inapplicable for the period prior to its enactment, as reflected in the Board circular relied upon. The order nevertheless noted that Rule 173Q remained attracted on the facts.

Conclusion: Section 11AC of the Central Excise Act, 1944 was not attracted.

Issue (iii): Whether the matter required remand for fresh adjudication.

Analysis: Since the order of confiscation and penalty could not stand in the absence of a proper notice, the matter had to be reconsidered by the adjudicating authority after issuing notice specifically for confiscation and penalty and deciding the case afresh.

Conclusion: The matter was remanded for de novo adjudication after issuing a proper show cause notice.

Final Conclusion: The appellate order was interfered with only in relation to confiscation and penalty, and the dispute on those aspects was sent back for fresh decision after due notice.

Ratio Decidendi: Where the assessee has waived notice only in respect of duty demand, confiscation and penalty cannot be imposed without a separate show cause notice and opportunity of hearing, and a penalty provision not yet in force cannot be applied retrospectively.

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