By TIOL News Service

CHENNAI, JULY 26, 2018: THE petitioner submitted a rebate application along with the required documents on 02.05.2016. Pursuant to the same, a SCN was issued on 24.06.2016 (received on 27.06.2016) proposing to reject the rebate claim of Rs.12,40,360/-. Since the petitioner failed to file his objections within 30 days, the impugned order was issued on 29.07.2016.

The petitioner is before the Madras High Court contending that there has been a violation of the principles of natural justice.

Reliance is placed on paragraph 14.3 of the Board Master Circular 1053/2/2017-CX, dated 10.03.2017 stating that it is a mandatory requirement to follow the principles of natural justice; that no one should be condemned unheard.

Attention is also invited to paragraph 15 of the SCN wherein it is mentioned that if no cause is shown against the action proposed to be taken within 30 days of receipt of notice, or if they do not appear before the adjudicating authority, when the case is posted for hearing, the case would be decided exparte on merits.

Therefore, according to the petitioner, after the lapse of 30 days, whether a cause is shown or not, the adjudicating authority should fix a date of hearing and if the petitioner does not appear on notice, the case would be decided exparte on merits. However, in the instant case, the order in original was passed within two days after the lapse of time granted in the show cause notice. Therefore, the order passed by the first respondent is in violation of principles of natural justice and hence should be set aside.

The Counsel for the respondent Revenue placed reliance Section 33A [Adjudication Procedure] of the CEA, 1944 and submitted that the petitioner failed to respond to the show cause notice and had not expressed his wish to be heard in person; that in the absence of any request for personal hearing, the statutory provision does not mandate the adjudicating authority to provide personal hearing. Reliance is inter alia placed on the decision in Optigrab International vs. Government of India - 2009-TIOL-473-HC-MAD-CUS.

The petitioner counters this submission by placing reliance on the decisions in -

JT (India) Exports vs. UOI - 2003-TIOL-163-HC-DEL-EXIM-LB;

Alfred Berg & Co.(I) (P) Ltd - 2009-TIOL-790-HC-MAD-CX ;

Automotive Tyre Manufacturers Association vs. Designated Authority - 2011-TIOL-03-SC-CUS ;

Kantilal B.Mohite vs UOI - 2013-TIOL-803-HC-MUM-CX ;

Logic Transware India Pvt Ltd vs. CC. - 2013-TIOL-721-HC-DEL-CUS ;

Shrushthi Plastics Pvt Ltd vs. CCE, Puducherry - 2015-TIOL-1860-HC-MAD-CX ;

General Mills India Pvt Ltd. vs. UOI - 2014-TIOL-1630-HC-MUM-ST ;

Deputy Commissioner of Central Excise, Chennai vs. Dorcas Market Makers Pvt. Ltd. - 2015-TIOL-820-HC-MAD-CX ;

Panoli Intermediate (India) Pvt. Ltd. vs. Union of India - 2015-TIOL-1556-HC-AHM-CX-LB;

Data Field India Ltd. vs. Dy Commissioner of Customs (EOU), Chennai - 2015-TIOL-2719-HC-MAD-CUS

Electronics Corporation of India Ltd. vs. UOI - 2018- TIOL-484-HC-AP-CX-LB.

The High Court adverted to the Master Circular (supra) and inter alia observed –

+ From this, it can be inferred that while adjudicating the issues, it is incumbent on the adjudicating authority to provide opportunity of personal hearing, not one, at least three, with sufficient interval of time, so that,the noticeee may avail the opportunity of being heard. The very object of the Master Circular issued by the Central Board of Excise and Customs mandates that the provision of personal hearing is very essential before deciding any issue by a quasi judicial authority.

+ The word "shall" employed in the provision [s.33A of the CEA, 1944] envisages the importance of compliance of principles of natural justice. The words "if the party so desires" further exemplify the compulsory requirement of personal hearing by the adjudicating authority, when it is specifically asked for. What if, the person does not express his desire for personal hearing?.

+ In the view of this Court, the opportunity of being heard is an inbuilt procedure in any adjudicatory process and it cannot be dispensed with . …"Justice not only be done but it should manifestly seem to be done". With that object only, the Board of Central Excise issues circular after circular setting out the procedures for adjudication. It only amplifies the provision, where it is silent and the provision shall not be read to give a meaning that it excludes personal hearing to those not asked for it.

+ In this context, we see that the Circular issued by the Central Board makes personal hearing mandatory and is binding on all the quasi judicial authorities. They cannot disobey or ignore the circular, as it has the binding force on them.

+ The provision, if read as a whole and cogently, compels the adjudicating authority to adhere to the principles of natural justice by affording personal hearing.

+ It is not a penal proceeding to apply the provisions in strict sense. When an authority has the power to demand duty levied, he equally has a duty to refund the excess duty collected. It cannot be knocked off on technical grounds.

The High Court while agreeing to the case laws cited by the petitioner distinguished the case laws cited by the counsel for the Revenue and concluded that they cannot be applied to the case on hand.

Insofar as the issue of approaching the High Court without exhausting the alternative remedy is concerned, the High Court referred to the Full Bench of Hyderabad High Court in Electronics Corporation of India Ltd. vs. UOI - 2018-TIOL-484-HC-AP-CX-LB, and held that when an order is passed in violation of principles of natural justice, a Writ Petition under Article 226 of the Constitution of India can be entertained; that the availability of alternative remedy is not a bar for entertaining the Writ Petition; that the Writ Petition is maintainable.

In fine, the Writ Petition was allowed.The impugned o-in-o dated 29.07.2016 was set aside and the matter remanded for consideration afresh.

(See 2018-TIOL-1447-HC-MAD-CX)