2018 (11) TMI 494 - HC - Central Excise

Principles of Natural Justice - it is alleged that the assessee had suppressed material facts from the authorities which the jurisdictional Assistant Commissioner could unearth in course of the exercise undertaken by such officer - Held that - It is not in dispute that the relevant report of the jurisdictional Assistant Commissioner dated November 21, 2001 was not made available to the assessee at any point of time before or after the passing of the order of the said Commissioner. It is also not in dispute that such report was not referred to in the show cause notice that culminated in the process of adjudication resulting in the order dated September 21, 2007 being passed by the said Commissioner. It is elementary that when some matter is used against a person to condemn such person, such person must be afforded an opportunity to look into such matter and furnish any explanation in such regard. At any rate, an opportunity to furnish an explanation must always be afforded. If such opportunity is not afforded but the matter is relied upon to render an adverse finding against such person, it would amount to the breach of the fundamental canons of natural justice - In the present case, it is evident that the finding rendered by the said Commissioner in the order dated September 21, 2007 is almost exclusively based on the adverse report of the jurisdictional Assistant Commissioner and such report was never made available to the petitioner nor was the same alluded to in the show cause notice that culminated in the hearing afforded by the said Commissioner. A contention that an action or a decision is contrary to the principles of natural justice can come in many hues and forms. Merely because a person is represented before an adjudicating authority does not imply that there was no breach of the principles of natural justice. A person may be represented before an adjudicating authority on a particular issue but the adjudicating authority may render a decision on a completely different issue. The mere presence or representation in such an event does not cure the breach. The judgment and order impugned in the appeal dated March 17, 2016 are set aside - the matter will be considered afresh in accordance with law by the said Commissioner and a fresh decision rendered within four months from date - appeal allowed by way of remand.

Summary

Issues:
1. Breach of principles of natural justice in passing the order challenged under Article 226 of the Constitution.

Analysis:
The appellant contended that the Court of the first instance failed to grasp the extent of the breach of natural justice principles in the order passed by the Commissioner, Central Excise, Kolkata-III Commissionarate. The Court highlighted that an order with alternative remedies may not be challenged under Article 226 unless there is a gross violation of natural justice or absurdity. The dispute revolved around the excise duty quantum concerning freight or delivery charges for reaching manufactured goods to clients. The Commissioner's order heavily relied on a report by the jurisdictional Assistant Commissioner, which the appellant was never provided or referred to during the adjudication process.

The Court emphasized that using a matter against someone without affording them an opportunity to explain or provide input breaches natural justice principles. In this case, the Commissioner's finding was primarily based on the adverse report, which was not made available to the petitioner. The judgment highlighted that the petitioner was not given a chance to address the matter used against them, rendering the order unsustainable. The single Bench's judgment, which dismissed the breach of natural justice claim, was overturned, and the order dated September 21, 2007, was set aside for fresh consideration.

The Court rejected the argument that the petitioner had adequate hearing opportunities and access to relevant documents, emphasizing that the breach of natural justice can manifest in various ways. The judgment clarified that representation before an authority does not absolve a breach, especially if decisions are made on different issues. The onus lies on the party favoring from a document to prove its availability to the adversary. The Court concluded that the failure to consider the nature of the breach of natural justice warranted setting aside the Commissioner's order and a fresh decision within four months, with the report made available to the appellant beforehand. The appeal succeeded, and costs were not awarded.