2018 (7) TMI 2102 - HC - Central Excise

Principles of Natural Justice - non-furnishing of the letter dated 20-1-2001 - HELD THAT - It is seen from the communication, dated 27-12-2005 issued by the Commissioner of Central Excise that the assessee was finally directed to appear for personal hearing on 25-1-2006 without fail with liberty to file written submissions if any. However, the assessee seems to have submitted a letter dated 25-1-2006 requesting for two months time to reply to the show cause notice. This is evident from the record of personal hearing which was also signed by the Manager (Excise) of the assessee. Therefore, it is evident that finally on 25-1-2006, during the personal hearing, though two months time to reply to the show cause notice was sought for, the assessee, did not give such reply. On the other hand, an order in Original was passed on 28-2-2006. There is no violation of principles of natural justice in this case, as contended by the appellant, insofar as the non-furnishing of the said letter dated 20-1-2001 is concerned. It is contended that the Tribunal having passed a final order directing the Revenue to furnish a copy of the said letter with enclosures to the assessee, is not empowered to modify its own order, which in-turn would amount to review, in the absence of any power to do so under the Central Excise Act - HELD THAT - In the case on hand, admittedly the Tribunal dismissed those applications as withdrawn, however by granting liberty to file Modification Petition. We have already pointed out that the Tribunal has no power to grant such liberty as well. Therefore in the absence of any statutory provision empowering the Tribunal to entertain Modification Petition, the above case laws, which are otherwise distinguishable on facts as well, are not helping the appellant in any manner. Limitation in filing Modification Petition - HELD THAT - The very application for modification filed before the Tribunal is the one without any sanctity of law, the question of considering the limitation in filing such application does not arise. It is evident that the assessee has already filed their reply to the show cause notice and contested the matter before the Adjudicating Authority. Thereafter, the Adjudicating Authority has also passed the above orders in Original, dated 21-11-2008 and 27-11-2008. Challenging the same, the assessee filed appeals before the Tribunal which in-turn remanded the matter to the adjudicating authority once again, without going into the merits of the matter. Therefore, We are of the view that since the Adjudicating Authority has already considered and passed orders on merits also by considering the reply submitted by the assessee, it is for the Tribunal to consider the merits of the matter once again in the appeal, as admittedly, the Tribunal is also a fact finding authority. The matter is remitted back to the Tribunal for hearing the main appeals and passing orders on the same on merits and in accordance with law - Appeal allowed by way of remand.

Summary

Issues Involved:

1. Violation of principles of natural justice due to non-furnishing of a letter dated 20-1-2001.
2. Maintainability of rectification and modification applications under Section 35C(2) of the Central Excise Act, 1944.
3. Jurisdiction of the Tribunal to modify its own orders.
4. Limitation period for filing modification applications.

Issue-wise Detailed Analysis:

1. Violation of Principles of Natural Justice:

The appellant contended that the order-in-original was passed in violation of principles of natural justice as the letter dated 20-1-2001, a material document referred to in the show cause notice, was not supplied. The Tribunal had earlier directed the Revenue to furnish this letter before adjudication. The court found that the letter dated 20-1-2001 was an explanation given by the assessee themselves regarding shortages and excess of fabrics. It was noted that this letter was not an adverse document against the assessee but their own explanation. The court observed that the letter was indeed supplied to the assessee’s representative on 26-3-2002, and the assessee had acknowledged receipt of all relied upon documents except one. The court concluded that there was no violation of principles of natural justice as the letter was already provided and non-furnishing did not cause any prejudice to the assessee.

2. Maintainability of Rectification and Modification Applications:

The appellant argued that the rectification and subsequent modification applications filed by the Revenue were not maintainable under Section 35C(2) of the Central Excise Act, 1944, which only allows for rectification of mistakes apparent from the record. The court agreed, stating that the Tribunal is not empowered to modify its own order unless there is a mistake apparent on the face of the record. The court emphasized that the power to rectify does not equate to the power to review or modify an order.

3. Jurisdiction of the Tribunal to Modify Its Own Orders:

The court examined whether the Tribunal could modify its own orders under Rule 41 of the Customs, Excise, and Service Tax Appellate (Procedure) Rules, 1982. It concluded that statutory rules cannot override the provisions of the Central Excise Act, 1944. The Tribunal is not empowered to review or modify its own orders beyond rectifying mistakes apparent from the record. The court held that Rule 41 does not provide the Tribunal with the power to modify its orders but only to give directions to give effect to its orders or to prevent abuse of its process.

4. Limitation Period for Filing Modification Applications:

The appellant contended that the modification application was filed beyond the six-month limitation period prescribed under Section 35C(2). The court found that since the modification application itself was not maintainable, the question of limitation did not arise.

Conclusion:

The court allowed the appeals, setting aside the impugned orders and remitted the matter back to the Tribunal for hearing the main appeals on merits. The Tribunal was directed to pass orders expeditiously, considering the long duration since the commencement of adjudication proceedings.