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2018 (2) TMI 1022 - AT - Central ExciseSSI Exemption - Dummy units - clubbing of clearances - During the course of investigation, it appeared that some records namely delivery notes, invoices of unused receipts were not only related to APPD but also to another two units viz; The Veera Silver Frames (VSF) and Sri Ambigai Lumber Board Works (ALBW) - Department took the view that although three units in the names of APPD, VSF, ALBW were apparently engaged in manufacture of Plywood and Block Boards, in reality only one unit APPD was manufacturing the said products and that the other two units were dummy units - SCN was only issued to APPD and not to VSF and ALBW - penalty - principles of natural justice. Held that: - It has been a long received rule that no one is to be condemned, punished or deprived in any judicial proceeding unless, he has had an opportunity of being heard - This is the essence of the maxim Audi Alteram Partem, namely no man should be condemned unheard. The maxim, being a cardinal principle of justice, is required to be followed in all judicial proceedings - The Central Excise Act, 1944 also similarly requires that where recovery of duties not levied or not paid or short levied or short paid etc. is proposed to be recovered from any person the Central Excise officer shall serve notice on such person, inter alia requiring him to show cause why he should not pay the amount specified in the notice. In the two show cause notices dt. 08.11.2012 & 08.01.2013 and in the statement of demand dt. 30.12.2013 the proposals for imposition of penalties under Rule 25 / Rule 26 (1) of the Rules have been made against VSF, ALBW and also Managing Partners and Partners of VSF and ALBW. All these persons should have been separately asked to show cause in the notice why proposed penalty should not be imposed on them - there are a number of Tribunal decisions which have consistently held that non-issue of SCN on the affected persons would vitiate the proceedings. The penalties imposed cannot sustain on account of their having not been asked to show cause with regard to proposal to impose such penalty, the penalties are therefore set aside. The Hon'ble High Court of Bombay, in the case of CCE Mumbai Vs Sapna Engineering [2017 (3) TMI 782 - BOMBAY HIGH COURT] held that non-issue of SCN to the unit considered as a dummy unit vitiates the entire proceedings. Since the alleged "dummy units" namely VSF and ALBW having not been put to notice by way of issue of SCN, the entire proceedings for clubbing of value of clearances of those units with that of APPD will get vitiated ab initio. Hence the proceedings which have culminated in the impugned orders confirming differential duty liability on APPD by reason of clubbing of clearances of VSF and ALBW with that of APPD along with the imposition of penalties on APPD cannot sustain. Appeal allowed - decided in favor of appellant.
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