2010 (9) TMI 299 - HC - Central Excise

Principal of natural justice - order of tribunal - Held that - The notice dt. 3.9.2010 was served the same day in the evening. The order classifying the petitioner s goods was passed on the next date. The petitioner s goods were earlier held to be non-excisable by the Tribunal. The instructions may be issued under section 37-B of the Act but it is doubtful if they can nullify a judgment though principles of res-judicata do not apply in taxing statutes. In our opinion, It is not such an issue that could be decided in such a shoddy manner without affording reasonable opportunity to the petitioner; The order is against the principles of natural justice; it is illegal and is set aside.

Summary

Issues:
1. Classification of goods under the Central Excise Act.
2. Validity of the order dated 04.09.2010.
3. Compliance with principles of natural justice.
4. Applicability of statutory provisions and instructions issued by the Board.

Classification of Goods:
The petitioner claimed that the goods manufactured were non-excisable based on Chapter 54 of the Tariff Act. The Tribunal upheld this view. However, the government issued instructions classifying certain goods as excisable. The petitioner challenged this classification, citing the Tribunal's previous decision and the statutory provisions. The court found that the order classifying the goods lacked a reasonable opportunity for the petitioner and violated natural justice principles. It was deemed illegal and set aside.

Validity of Order 04.09.2010:
The order dated 04.09.2010, classifying the petitioner's goods, was challenged by the petitioner on grounds of lack of opportunity before the order was passed. The court agreed that the order was passed without affording a reasonable opportunity to the petitioner, thus declaring it illegal and quashing it.

Compliance with Principles of Natural Justice:
The court emphasized the importance of adhering to principles of natural justice in legal proceedings. It noted that the order classifying the goods was against these principles as it did not provide a fair opportunity for the petitioner to present objections. The court deemed the order illegal and set it aside.

Applicability of Statutory Provisions and Board's Instructions:
The petitioner argued that the instructions issued by the Board could not override the statutory provisions of the Tariff Act. The court agreed with this argument, stating that while the instructions may be issued under the Act, they cannot nullify a judgment. The court highlighted that the issue at hand required a fair and thorough decision, emphasizing the importance of following legal procedures.

In conclusion, the court dismissed one writ petition as infructuous and allowed the other with costs. It directed the petitioner to appear before the Assistant Commissioner to file objections against the notice and provided an interim arrangement for the petitioner to continue operations without interference until the classification issue was resolved. The court stressed the need for fair procedures and compliance with legal principles in such matters.