Jee Pumps Pvt Ltd vs C.C.E.-Ahmedabad-I - (Customs, Excise and Service Tax Appellate Tribunal) (24 Jun 2022)

An assessee should be given sufficient opportunity to explain their case particularly for invocation of penal provision

MANU/CS/0145/2022

Excise

The Appellant have defaulted the regular payment of duty thereafter the department frozen the bank account of the Appellant and recovered the non paid duty, interest and penalty in terms of Rule 8(3A) of Central Excise Rules, 2002. In the present appeal, the Appellant challenged the imposition of penalty only.

The department has not followed the principle of natural justice as no SCN was issued. It is submitted that, there is no malafide on the part of the Appellant, non-payment of duty at the relevant time is due to the Financial Crisis. The entire duty were declared in the invoice, ER-1 return therefore, when the case is of only delayed payment of Excise duty, no malafide is attributed to the Appellant. Further, submission is that without issuance of SCN, the recovery of the amount is in violation of principle of natural justice.

The only challenge in present appeal is imposition of penalty under Rule 8 (3A) of Central Excise Rules, 2002. Though the rule clearly prescribes the penalty however, the Revenue has not followed the principle of natural justice as they have not issued any SCN and no opportunity was given to the Appellant to defend or explain their case. It is a settled law that, even though there is no explicit provision for issuance of SCN, as per the principle of natural justice, an assessee should be given sufficient opportunity to explain their case particularly for invocation of penal provision.

In the present case admittedly neither SCN was issued to the Appellant nor was any opportunity given. Therefore, the penalty is liable to be set aside only on the ground of principle of natural justice. Hence, the penalty is set aside. Appeal allowed.

Tags : PENALTY LEVY VALIDITY