2019 (10) TMI 321 - HC - Central Excise

Principles of natural justice - ex-parte order - appellant submits that since the notices were not received by his client, they were not aware of and could not participate in it - HELD THAT - A salutary constitutional principle is that a person should be heard before he is condemned. The underlying legal principle is that a person should be given an opportunity to defend himself. Here, there is substantial evidence to suggest that the appellant may not have been aware of the date of personal hearing. The appellant had suffered an ex parte order making it liable to pay a huge amount in the shape of duty, interest and penalty. The learned judge made an error in not appreciating this position and in rejecting this point made by the applicant. Furthermore, the learned judge, while relegating the appellant to an alternative remedy, had rejected the argument that the said order of the Commissioner had been passed without giving the appellant an opportunity of being heard. This immediately meant that the adjudication order passed without hearing the writ petitioner was held to be not violative of the principles of natural justice - This substantially impairs the rights of the appellant. It is rendered ineligible to establish their rights before the lowest adjudication authority. Furthermore, this point was closed before the appellate authority. The court while relegating a party to the alternative remedy should keep all points open before that authority. The Commissioner is directed to re-hear the show cause notice upon giving the appellant an opportunity of hearing by a reasoned order within four months of communication of this order - impugned order set aside.

Issues:
1. Failure to receive notices of personal hearing leading to an ex parte adjudication order.
2. Violation of principles of natural justice and denial of opportunity to be heard.
3. Impairment of appellant's rights due to rejection of arguments by the learned judge.
4. Setting aside the impugned judgment and order dated 3rd October 2018.

Issue 1: Failure to receive notices of personal hearing leading to an ex parte adjudication order
The appellant received a show cause notice in 2007, to which they promptly replied. However, due to a change in the business location in 2013, notices of personal hearing sent by the respondents in 2017 were not received by the appellant as they were sent to the former address. The appellant's senior advocate argued that the appellant was unaware of the hearing dates and, as a result, the adjudication order dated 24th January 2018 was passed ex parte. The High Court found substance in this argument based on the appellant's prompt response to the original show cause notice, the department's awareness of the change in location, and the return of the adjudication order sent to the old premises as "Not known."

Issue 2: Violation of principles of natural justice and denial of opportunity to be heard
The High Court emphasized the importance of the constitutional principle that a person should be heard before being condemned. It was noted that the appellant may not have been aware of the date of the personal hearing, leading to the ex parte order imposing a significant amount in duty, interest, and penalty. The Court criticized the learned judge for not appreciating this position and rejecting the appellant's argument, which resulted in the adjudication order being passed without giving the appellant an opportunity to be heard, violating the principles of natural justice.

Issue 3: Impairment of appellant's rights due to rejection of arguments by the learned judge
The High Court highlighted that the learned judge's error in not acknowledging the appellant's lack of awareness of the personal hearing date substantially impaired the appellant's rights. By rejecting the argument and relegating the appellant to an alternative remedy, the learned judge failed to consider that the adjudication order was passed without affording the appellant an opportunity to be heard, which violated the principles of natural justice. This decision closed the point before the appellate authority, further restricting the appellant's ability to establish their rights.

Issue 4: Setting aside the impugned judgment and order dated 3rd October 2018
Considering all circumstances and the violations of natural justice, the High Court set aside the impugned judgment and order dated 3rd October 2018. The Court directed the Commissioner to re-hear the show cause notice, providing the appellant with an opportunity for a hearing within four months. The appellant was required to furnish a bank guarantee as security. The High Court clarified that it had not adjudicated upon the merits of the matter, and any observations made were tentative, focusing on natural justice principles rather than the case's substance.

This detailed analysis of the judgment from the Calcutta High Court highlights the key issues, arguments presented, and the Court's reasoning leading to the decision to set aside the adjudication order and provide the appellant with an opportunity to be heard.

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