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2020 (8) TMI 864 - HC - Central ExciseLevy of penalty - Rebate of duty - failure to issue a show cause notice for a proposal to impose penalty under Section 11AC of the Act - relevancy of documents sought for - principles of natural justice - HELD THAT:- In the present case, the petitioner had claimed and received rebate of duty by production of a Disclaimer Certificate issued by M/s.ERTP. On investigation by the department, it was found that production particulars submitted by M/s.ERTP to the department was less when compared to the actual production, since M/s.ERTP had suppressed the same. The issue therefore before the department, at that point of time, was as to whether M/s.ERTP suppressed the production during the relevant time and thereby, enabling the petitioner to claim rebate based on such suppressed production. The fact of suppression was revealed to the department through a private file seized by them, which contained details of processed fabrics, dispatched by M/s.ERTP during January 1997 to July 2000. When the disclaimer certificate issued by M/s.ERTP was based on suppression of production details, it is for M/s.ERTP to substantiate the issue raised by the department in this regard. However, M/s.ERTP neither replied to the show cause notice nor participated in the hearing conducted by the department thereafter, but had rather accepted the contents of the documents relied upon by the department and admitted their guilt. Thus, the proceedings initiated against M/s.ERTP was never challenged and had become final - the petitioner instead of availing the opportunities to peruse and take copies of the documents relied upon by the department, had been insisting the department to give them the copies, even after the period stipulated in the show cause notice had expired. Relevancy of the documents sought for by the petitioner for establishing his case and their bonafides in making such a request - HELD THAT:- This issue that requires to be answered by the petitioner was as to why the excess rebate amount claimed on the basis of suppressed production furnished by M/s.ERTP, should not be demanded from the petitioner. The proposal to recover was only on the basis of suppression of production details by the petitioner's processor namely M/s.ERTP. The documents relied upon by the department are the ones depicting the actual production and clearance of goods made by M/s.ERTP - there are no bona-fides on the part of the petitioner in insisting for the copies of documents which may not relevant or sufficient to enable them to give a reply. The petitioner, had not only refrained from availing the opportunities given to them for perusing and taking copies of the documents, but had, after obtaining some of the copies, chosen to seek for further documents, which will not assist them in anyway for giving an effective reply to the show cause notice. Consequently, it can be held that there were reasonable opportunities extended to the petitioner and therefore, there is no violation of principles of natural justice in this regard - It is a settled proposition of law that whenever a penalty of such a nature is imposed, the same should be preceded with a prior notice of proposal. In the absence of the same, it would be appropriate to give an opportunity to the petitioner to put forth his objections with regard to the imposition of penalty under Section 11 AC of the Act alone. However, the petitioner shall not once again indulge in seeking for the documents relied upon by the department for the purpose of giving a reply to the proposal for penalty under Section 11AC, but, shall address this issue independently on its legal permissibility. The revisions filed stands confirmed, except the portion of the order imposing penalty of ₹ 15,84,083/- under Section 11AC of the Central Excise Act, which is set aside - petition disposed off.
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