Order date – 24th June 2022

Facts – 

• The appellants, Jee Pumps Pvt Ltd., 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.
• The department alleged that the penalty in terms of Rule 8 (3A) is mandatory and no discretion is available to authority either to reduce or waive the penalty.
• The appellant claimed that since no Show Cause Notice was issued by the respondents, hence imposing penalty is against the principles of natural justice; hence the appeal had been filed.

Issue – 

• Whether imposition of penalty under Rule 8 (3A) of Central Excise Rules, 2002 is justifiable?

Order – 

• The authorities held that 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.
• Therefore, the penalty was set aside and appeal was allowed.