2018 (7) TMI 1596 - HC - Central Excise

Principles of Natural Justice - Opportunity of personal hearing not provided - Availability of alternative remedy - Rebate Claim - Circular No.1053/2/2017- CX, dated 10.03.2017 - Held that - In the instant case, after giving show cause notice granting 30 days time, the authority, without waiting for any reply, on the 32nd day, passed an order - The impugned order passed within two days from the date of lapse of the time granted in the show cause notice is certainly in violation of principles of natural justice and, therefore, it is liable to be set aside. While adjudicating the issues, it is incumbent on the adjudicating authority to provide opportunity of personal hearing, not one, at least three, with sufficient interval of time, so that,the noticeee may avail the opportunity of being heard. The very object of the Master Circular issued by the Central Board of Excise and Customs mandates that the provision of personal hearing is very essential before deciding any issue by a quasi judicial authority. Section 33-A reads that the opportunity of being heard to a party in a proceeding, if the party so desires, shall be given. Sub-Section (2) of Section 33-A mandates that if sufficient cause is shown, at any stage of proceeding, that time shall be granted for reasons to be recorded in writing. Further, it provides for three adjournments to a party, which means that adjudicating authority shall not arbitrarily curtail the opportunity, but shall give opportunity in letter and spirit. The provision, if read as a whole and cogently, compels the adjudicating authority to adhere to the principles of natural justice by affording personal hearing. When an order is passed in violation of principles of natural justice, a Writ Petition under Article 226 of the Constitution of India can be entertained. The availability of alternative remedy is not a bar for entertaining the Writ Petition. In such circumstances, the Writ Petition is maintainable. The matter is remanded back to the first respondent for consideration afresh - petition allowed.

Issues Involved:
1. Violation of principles of natural justice.
2. Requirement for personal hearing in adjudication.
3. Compliance with statutory provisions and departmental circulars.
4. Maintainability of writ petition despite alternative remedies.

Issue-wise Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner challenged the impugned order on the grounds of violation of principles of natural justice. The petitioner argued that the adjudicating authority did not provide an opportunity for a personal hearing before passing the order, which is a fundamental requirement under the principles of natural justice, commonly known as "audi alteram partem" (no one should be condemned unheard). The court acknowledged that the order was passed within two days after the lapse of the time granted in the show cause notice, without affording any opportunity for a personal hearing or submission of objections, thereby violating the principles of natural justice.

2. Requirement for Personal Hearing in Adjudication:
The petitioner contended that as per the Master Circular issued by the Central Board of Excise and Customs, it is mandatory for the adjudicating authority to provide at least three opportunities for a personal hearing with sufficient intervals. The court noted that the Master Circular mandates that the adjudicating authority should fix a date and time for personal hearing and provide at least three opportunities for the noticee to avail the opportunity of being heard. The court emphasized that the provision of personal hearing is essential before deciding any issue by a quasi-judicial authority.

3. Compliance with Statutory Provisions and Departmental Circulars:
The respondents relied on Section 33-A of the Central Excise Act, 1944, which states that the adjudicating authority shall give an opportunity of being heard to a party if the party so desires. The court interpreted that even if the party does not explicitly request a personal hearing, the opportunity of being heard is an inbuilt procedure in any adjudicatory process and cannot be dispensed with. The court further stated that the Master Circular issued by the Central Board makes personal hearing mandatory and is binding on all quasi-judicial authorities.

4. Maintainability of Writ Petition Despite Alternative Remedies:
The respondents argued that the petitioner should have exhausted alternative remedies before approaching the court. However, the court cited a Full Bench decision of the Hyderabad High Court, which held that a writ petition can be entertained against an Order-in-Original if sufficient grounds are made out warranting exercise of judicial review under Article 226 of the Constitution. The court concluded that when an order is passed in violation of principles of natural justice, a writ petition under Article 226 is maintainable, and the availability of alternative remedies is not a bar.

Conclusion:
The court allowed the writ petition, setting aside the impugned order dated 29.07.2016, and remanded the matter back to the first respondent for fresh consideration. The petitioner was directed to file all objections within one month, and the first respondent was instructed to afford at least three opportunities for personal hearing with sufficient intervals before passing a new order on merits and in accordance with law. The court emphasized the importance of adhering to the principles of natural justice and the mandatory provisions of personal hearing as stipulated in the Master Circular and statutory provisions.

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