2011 (3) TMI 1131 - AT - Central Excise

Pre-deposit - personal hearing - Commissioner (Appeals) disposed of the applications for dispensing with the requirement of pre-deposit without affording opportunity of being heard in person - whether Section 35F of the Central Excise Act 1944 excludes personal hearing? - Held that - Though initially when the applications for dispensation were filed before the Commissioner (Appeals) alongwith the appeals by the appellants the same were disposed of without personal hearing to the appellants. Nevertheless they were disposed of with speaking orders communicated to the parties and dispensing with 80% and 50% of the amount demanded under the adjudicating order. By no stretch of imagination it can be held that those orders were passed mechanically or without application of mind. Besides before dismissal of the appeal for non-compliance of the said order and pursuant to the applications filed by the appellants for modification of those orders personal hearing was granted to the appellants and after taking into consideration the case putforth by the appellants they having failed to make out satisfactory case for modification of the said orders the impugned orders came to be passed. Thus it can not be said that absolutely no hearing was granted on the issue regarding the requirement of pre-deposit of the amount due and payable under the order passed by the adjudicating authorities.

Summary

Issues Involved:
1. Whether Section 35F of the Central Excise Act, 1944 necessitates personal hearing before the Commissioner (Appeals) disposes of applications for dispensing with the requirement of pre-deposit.
2. Whether the failure to grant a personal hearing vitiates the order directing pre-deposit and subsequent dismissal of the appeal for non-compliance.
3. The validity of orders passed without personal hearing in light of principles of natural justice.

Detailed Analysis:

Issue 1: Necessity of Personal Hearing Under Section 35F
The primary issue revolves around whether Section 35F of the Central Excise Act, 1944 mandates a personal hearing before the Commissioner (Appeals) disposes of applications for dispensing with the requirement of pre-deposit. The appellants argued that the lack of personal hearing rendered the orders invalid, while the department contended that Section 35F does not explicitly or implicitly require a personal hearing.

The Tribunal noted that Section 35F deals with the deposit of duty or penalty pending an appeal and allows the appellate authority to dispense with such deposits if it causes undue hardship. However, the provision does not explicitly mandate a personal hearing. The Tribunal emphasized that the rule of natural justice does not always necessitate a personal hearing, and the term "hearing" does not necessarily imply "personal hearing."

Issue 2: Effect of Failure to Grant Personal Hearing
The appellants contended that the orders directing pre-deposit and subsequent dismissals for non-compliance were invalid due to the lack of personal hearings. They cited various judgments, including ITC Limited vs. CCE (A), Chennai, where the Madras High Court emphasized the importance of personal hearings to ensure fair hearing principles.

The Tribunal, however, referred to the Supreme Court's decision in Union of India vs. Jesus Sales Corporation, which clarified that not all statutory provisions require personal hearings. The Court held that quasi-judicial authorities are expected to apply their judicial mind to the issues without necessarily granting personal hearings unless special circumstances warrant it. The Tribunal also referenced the Delhi High Court's decision in Anil Chanana, which supported the notion that personal hearings are not mandatory unless explicitly required by statute.

Issue 3: Validity of Orders Without Personal Hearing
The Tribunal examined whether the orders passed without personal hearings were vitiated. It noted that in the cases at hand, the Commissioner (Appeals) had initially disposed of the applications for dispensing with the pre-deposit without personal hearings but had issued speaking orders. The appellants were later granted personal hearings for their modification requests, and the appeals were dismissed only after considering their submissions.

The Tribunal concluded that the absence of personal hearings did not invalidate the orders, as the appellants were given opportunities to present their cases. The Tribunal found no illegality in the impugned orders and held that the orders on stay applications were not vitiated.

Conclusion:
The Tribunal dismissed the appeals, affirming that Section 35F does not mandate personal hearings and that the orders directing pre-deposit and subsequent dismissals for non-compliance were valid despite the lack of initial personal hearings. The Tribunal emphasized that principles of natural justice were not violated, as the appellants were granted opportunities to present their cases during the modification requests.