1991 (2) TMI 134 - HC - Central Excise

Demand raised on basis of withdrawal of exemption but neither date nor copy of such order furnished

Summary

Issues:
1. Validity of demand raised against the petitioner for duty on Pulp Board.
2. Allegation of obtaining exemption fraudulently.
3. Failure to produce evidence in support of the case.
4. Withdrawal of exemption without notice or hearing.
5. Compliance with the direction to pass a speaking order.

Analysis:
The petitioner, a Small Scale Industry engaged in manufacturing Mill Board/Straw Board, challenged a demand for duty on Pulp Board. The petitioner claimed exemption granted in 1964 by the Central Excise Collector, Kanpur, exempting duty on a specified quantity of boards annually. The appellate authority set aside the demand due to lack of clarity on the grounds. However, a subsequent order confirmed the demand, alleging non-production of evidence by the petitioner. The respondents contended that the exemption was obtained fraudulently, leading to its withdrawal, supported by a criminal complaint under Section 420 IPC. The petitioner denied the withdrawal of exemption. The court noted the absence of a withdrawal order date or notice to the petitioner in the counter-affidavit. It emphasized that withdrawal of exemption without notice or hearing is impermissible. The Assistant Collector's failure to pass a speaking order as directed rendered the subsequent order confirming the demand invalid. The court quashed the order, directing a fresh hearing to determine duty liability and addressing any withdrawal of exemption with proper notice and opportunity for the petitioner to respond.

The judgment highlighted the importance of due process in withdrawing exemptions and the necessity for a speaking order to explain grounds for a demand. It emphasized the right of the affected party to be heard and the obligation of authorities to provide clarity on decisions affecting parties. The court's decision to quash the order and mandate a fresh hearing underscored the significance of procedural fairness and adherence to appellate directives. The ruling aimed to ensure procedural justice and uphold principles of natural justice in excise duty matters, safeguarding the rights of industry players against arbitrary actions by authorities.