1987 (9) TMI 57 - HC - Central Excise

Summary

Issues:
Petition to quash orders passed by Superintendent, Central Excise under Rule 57-I of Central Excise Rules, 1944 without providing an opportunity to show cause.

Analysis:
The judgment by the High Court of Madhya Pradesh (Indore Bench) involved petitions under Articles 226 and 227 of the Constitution of India seeking to quash orders passed by the Superintendent, Central Excise, under Rule 57-I of the Central Excise Rules, 1944. The petitioners contended that the credit of duty paid on inputs was wrongly disallowed without being given an opportunity to show cause. The court observed that before taking action under Rule 57-I, the Superintendent had not provided any opportunity to the petitioners to present their case, which is against the principles of natural justice. The court referred to the importance of natural justice as highlighted in various Supreme Court judgments, emphasizing that individuals must be given a chance to be heard before adverse actions are taken against them.

The court further discussed the significance of affording an opportunity to be heard before taking actions that could adversely affect the interests of the petitioners. Referring to the Supreme Court's decision in Olga Tellis case, the court reiterated that the fundamental rule of natural justice 'audi alteram partem' must be followed unless there are specific circumstances that warrant its exclusion. The court emphasized that justice must not only be done but must also be seen to be done, highlighting the importance of dialogue with the affected parties before making decisions that impact them.

Ultimately, the court held that the impugned orders under Rule 57-I were contrary to the principles of natural justice as no opportunity was given to the petitioners to show cause. Consequently, the court quashed the orders and directed the proper officer to reconsider the matter afresh after providing a reasonable opportunity to the petitioners to present their case. The judgment refrained from expressing opinions on certain legal questions regarding cash recovery under Rule 57-I, leaving those matters open for future consideration. The court concluded by stating that each party shall bear its own costs in the circumstances of the case.