2019 (8) TMI 208 - HC - Central Excise

Principles of Natural Justice - clandestine removal - shortage of stock - levy of penalty on Director - the grounds of appeal raised in the memo of appeal not adjudicated by the Tribunal - HELD THAT - The appellants had raised several grounds challenging the order of Commissioner of appeals including the ground that the weight of MS ingots had been determined by eye estimation and not by actual weightment and therefore there could not have been any addition on this score. It was also pleaded that invoice books were also compared in a follow-up action but no discrepancy was found and also that the Director of the applicant had never made admission before the authorities on the basis of which the additions have been made in the order in original - A bare perusal of the impugned judgment clearly shows that the Tribunal has not considered any of the arguments and submissions raised by the appellant but has only dismissed the appeal relying on the show cause notice dated 22/03/13 wherein it has been mentioned that invoices with the same numbers were issued on various dates and certain invoice were issued several times. The Tribunal has concluded by holding that no convincing defence was put forth by the appellant and therefore proceeded to confirm the order passed by the Commissioner (Appeals) I. An order without valid reasons cannot be sustained. To give reasons is engrained in the rule of natural justice - The Court cannot lose sight of the fact that a losing litigant has a cause to plead and a right to challenge the order if it is adverse to him. Opinion of the Court alone can explain the cause which led to passing of the final order. Whether an argument was rejected validly or otherwise, reasoning of the order alone can show. To evaluate the submissions is obligation of the Court and to know the reasons for rejection of its contention is a legitimate expectation on the part of the litigant. The contention raised before us that absence of reasoning in the impugned order would render the order liable to be set aside, particularly, in face of the fact that the Tribunal found merit and allowed the appeal - the matter is remanded to CESTAT for redetermination, after affording opportunity to the parties. Appeal allowed by way of remand.

Summary

Issues Involved:
1. Justification of Tribunal's decision-making process.
2. Adjudication of penalty on the Director of the Company.

Issue-wise Detailed Analysis:

1. Justification of Tribunal's Decision-Making Process:
The appeal was admitted on the question of whether the Tribunal was justified in not disposing of the appeal on merits and not adjudicating the grounds of appeal raised. The appellant argued that the Tribunal failed to consider the issues raised, such as the determination of the weight of MS ingots by eye estimation rather than actual weighment, the absence of discrepancies in the follow-up action, and the lack of evidence for the removal of MS ingots without payment of duty. The Tribunal's order merely referenced the show cause notice and concluded that no convincing defense was presented by the appellant, thus confirming the Commissioner (Appeals)'s order. The High Court emphasized that an order without valid reasons cannot be sustained and highlighted the importance of providing reasons as part of the rule of natural justice. The Supreme Court's precedents were cited, emphasizing that judicial orders must be supported by reasons to ensure transparency, fairness, and the right to appeal. The High Court concluded that the Tribunal's order lacked application of mind and was unsustainable due to the absence of reasoning.

2. Adjudication of Penalty on the Director of the Company:
The second issue was whether the Tribunal was justified in not adjudicating the issues and submissions regarding the penalty on the Director of the Company. The appellant contended that the Tribunal failed to address the grounds challenging the penalty imposed on the Director, including the claim that the Director never admitted to the removal of MS ingots without payment of duty. The High Court found that the Tribunal did not consider any of the arguments and submissions raised by the appellant and dismissed the appeal relying solely on the show cause notice. The High Court reiterated the necessity of providing reasons in judicial orders and held that the Tribunal's order was unsustainable due to the lack of reasoning and consideration of the appellant's submissions.

Conclusion:
The High Court allowed the appeals, set aside the Tribunal's judgment, and remanded the matter to the Tribunal for redetermination, emphasizing the need for the Tribunal to provide reasons and consider the appellant's submissions in accordance with the principles of natural justice and established legal precedents. The Tribunal was directed to redetermine the matter expeditiously within three months.