2017 (7) TMI 339 - HC - Central Excise

Principles of Natural Justice - copies of documents relied upon by prosecution not made available - procedure prescribed under the notification issued in respect of Excise Rule 12 CCC - It is alleged that, the petitioner had availed of CENVAT Credit on the strength of invoices which are doubtful - Held that - an opportunity of hearing to a delinquent would encompass within its wake the materials sought to be relied upon against him in the proceeding to be made over to him so that the delinquent is in a position to make an effective representation on the charges levelled against him - The impugned order stands vitiated by the non-adherence of the principles of natural justice. A post facto so called compliance thereof will not cure the proceedings which stands already vitiated - petition allowed - decided in favor of petitioner.

Summary

Issues: Challenge to order dated February 9, 2017 by Chief Commissioner, Central Excise, Kolkata Zone. Allegation of breach of principles of natural justice and failure to follow prescribed procedure under Excise Rule 12 CCC.

In this judgment by the Calcutta High Court, the petitioners challenged an order passed by the Chief Commissioner, Central Excise, Kolkata Zone dated February 9, 2017. The petitioners argued that the authorities failed to follow the procedure prescribed under the notification related to Excise Rule 12 CCC. They contended that the impugned order referred to reports dated December 20, 2016, December 21, 2016, and February 2, 2017, but copies of these reports were not provided to them during the hearing, leading to a breach of principles of natural justice. The petitioners relied on a previous case to support their argument that the proceedings were vitiated due to the lack of access to documents relied upon by the prosecution.

The respondents, on the other hand, claimed that the writ petition was premature as final proceedings had not yet taken place, and the department had not issued a show cause notice. They argued that the petitioners would receive copies of the documents once the notice was issued, and providing them earlier could potentially affect the proceedings. The department distinguished a previous case cited by the petitioners, stating that the facts of the present matter were different, and the precedent did not apply.

The court examined the procedure under Rule 12CCC of the Central Excise Rule, 2002, and noted that it required the adjudicating authority to ensure that the records and evidence were sufficient to form a reasonable belief before taking any measures. The court emphasized that the delinquent should have access to the materials relied upon against them to make an effective representation. Referring to the previous case cited by the petitioners, the court held that the failure to provide copies of investigation reports to the petitioner violated the principles of natural justice as prescribed by the notification.

Despite the department's argument that providing the documents at a later stage would suffice, the court ruled that the violation of natural justice had already occurred and could not be cured post facto. Consequently, the court set aside the impugned order, stating that the authority could proceed against the petitioner based on the same materials but following the correct procedures. The judgment was disposed of, with certified copies made available to the parties upon request.