In the instant case, in the earlier round of proceedings, the Hon’ble CESTAT, Mumbai remanded the matter by an order dated August 11, 2009 and in remand proceedings, the First Appellate Authority enhanced the penalty imposed on John Deere Equipment Pvt. Ltd. (the Appellant) without issuing any Show Cause Notice.
Aggrieved from the Order-in-Appeal passed by the first Appellate Authority, the Appellant preferred an appeal to the Hon’ble CESTAT, Mumbai again.
The Hon’ble CESTAT, Mumbai noted that the Adjudicating Authority had imposed penalty on the Appellant under Rule 25 of the Central Excise Rules, 2002. However, the first Appellate Authority had increased this penalty without issuing any Show Cause Notice to the Appellant.
Accordingly, the Hon’ble CESTAT, Mumbai held that in terms of the first proviso of the Section 35A(3) of the Central Excise Act, 1944, it is mandatory to issue a Show Cause Notice and in the absence of any such Show Cause Notice, the Order of the First Appellate Authority is liable to be set aside.
At the same time, since the appeal filed by the Appellant against the order of the Adjudicating Authority needs to be decided, the Hon’ble CESTAT remanded the matter back to the First Appellate Authority to reconsider the issue afresh after following the principles of natural justice.