1997 (11) TMI 314 - AT - Central Excise

Penalty under Section 11AC cannot be retroactively levied on duty demand. Lack of specificity in show cause notice. Fresh adjudication ordered.

The Tribunal held that the penalty under Section 11AC could not be retroactively levied on duty demand raised during a specific period, as it came into ... Stay/Dispensation of pre-deposit Issues:1. Penalty under Section 11AC levied on duty demand raised during a specific period.2. Lack of specific indication of tariff headings in the show cause notice for duty demand.3. Classification of certain items as chargeable to duty under Tariff Headings 4410 and 9403.4. Prejudice caused to the appellants due to lack of specific details in the order-in-original.5. Requirement of pre-deposit amount for further adjudication.Analysis:1. The appellant sought dispensation of pre-deposit of duty and penalty amounting to Rs. 18,31,871/- demanded for items classified under Tariff Headings 4410 and 9403 during May 1993 to February 1994. The appellant contended that penalty under Section 11AC could not be levied retroactively as it came into force post the period in question, citing legal precedents and circulars. The department did not contest this position, leading the Tribunal to hold that the penalty under Section 11AC was not sustainable.2. The appellant argued that the show cause notice lacked specificity regarding the tariff headings under which duty was to be charged for individual items. This lack of clarity hindered the appellant's ability to defend against the charges effectively. Despite the appellant's contentions and the absence of specific details in the order-in-original, the lower authority merely mentioned that most items fell under Tariff Headings 4410 and 9403. The Tribunal acknowledged the prejudice caused by the lack of specific details and set aside the lower authority's order for fresh adjudication.3. The appellant raised concerns about certain items like ceilings and column claddings being classified as furniture items and charged to duty. The Tribunal noted the appellant's argument that the lower authority failed to address this issue adequately and did not provide detailed tariff headings for each item in question. This lack of specificity led to the Tribunal remanding the matter for further examination, emphasizing the need for a proper classification of items chargeable to duty.4. The Tribunal observed that the lack of specific details in the show cause notice and the order-in-original prejudiced the appellant's ability to respond effectively to the charges. While acknowledging that some items might be chargeable to duty, the Tribunal emphasized the need for a fresh examination of the matter to ensure a fair adjudication process. The Tribunal directed the appellant to make a pre-deposit of Rs. 6,00,000/- and remanded the case for de novo adjudication.5. To facilitate further adjudication, the Tribunal ordered the appellant to pre-deposit a specified amount and report compliance to the lower adjudicating authority by a set date. The Tribunal dispensed with the pre-deposit of the balance amount pending the lower authority's adjudication. Additionally, the Tribunal clarified that all issues were left open for further examination, and any extension of time for pre-deposit could be sought through a formal application to the Tribunal.