2016 (12) TMI 849 - HC - Central Excise

Validity of an order under Section 14AA of the Central Excise Act, 1944 - opportunity of being heard - principles of natural justice - Held that - although the impugned order is a reasoned one, the same was passed without hearing the petitioners. The Commissioner has passed the impugned order. No materials have been placed on record to suggest that the Commissioner had given a notice of hearing to the petitioners. The show-cause notice was issued by a different personnel of the department. The reply thereto has not been taken into consideration by the Commissioner. In such circumstances, I am of the view that the Commissioner has acted in breach of the principles of natural justice in passing the impugned order - matter remanded to the Commissioner for fresh consideration - appeal allowed by way of remand.

Summary

Issues:
- Breach of principles of natural justice under Section 14AA of the Central Excise Act, 1944 by the Commissioner of Central Excise-II.

Analysis:
The petitioners challenged an order under Section 14AA of the Central Excise Act, 1944 issued by the Commissioner of Central Excise-II, dated December 15, 2005. The petitioner's counsel argued that the Commissioner did not provide a reasonable opportunity of hearing before passing the impugned order. The counsel emphasized that Section 14AA imposes dual obligations on authorities: to issue a reasoned order and to ensure the principles of natural justice are followed. While the Commissioner issued a reasoned order, the petitioners were not granted a hearing, and their response to the show-cause notice was not considered. This failure to adhere to natural justice principles was cited as a breach warranting court intervention.

The department's counsel contended that a show-cause notice was indeed issued, but the records did not clarify whether the petitioner's response was taken into account. Referring to a previous judgment involving similar provisions, it was highlighted that authorities must fulfill both the obligation of providing a reasoned order and ensuring natural justice when exercising powers under Section 14AA. In the present case, although the order was reasoned, the Commissioner did not grant the petitioners a hearing or consider their response to the show-cause notice. The Commissioner's actions were deemed a breach of natural justice principles.

Consequently, the court set aside the impugned order and remanded the matter to the Commissioner for fresh consideration. The Commissioner was directed to provide a reasonable opportunity of hearing to the petitioners before issuing a new order. The court emphasized the need for a reasoned order and instructed the Commissioner to complete the process within four weeks from the date of communication of the order. The petition was disposed of with no costs awarded.