1991 (10) TMI 56 - HC - Central Excise

Summary

Issues:
1. Whether Magnesium Sulphate qualifies as a fertiliser for exemption from excise duty.
2. Validity of show cause notices issued to the petitioner by the Central Excise Department.
3. Whether the petitioner was denied natural justice by not being heard before passing orders.
4. Legality of orders passed without affording an opportunity to the petitioner.

Analysis:
1. The petitioner, a manufacturer of Magnesium Sulphate, claimed it to be a fertiliser entitled to exemption from excise duty. Various agricultural institutes and government bodies supported this claim. Exemption notifications were cited to support the petitioner's position. The Assistant Collector had previously acknowledged the petitioner's entitlement to duty-free supply of sulphuric acid for manufacturing Magnesium Sulphate. The court acknowledged Magnesium Sulphate as a fertiliser eligible for exemption, supporting the petitioner's claim.

2. The petitioner received show cause notices from the Central Excise Department, questioning the duty liability on Magnesium Sulphate cleared and the withdrawal of the duty-free sulphuric acid license. The petitioner responded with detailed submissions and requests for a personal hearing. However, the Department proceeded to pass orders without considering the petitioner's responses, leading to the petitioner seeking redressal from the High Court.

3. The petitioner argued that the orders (Ext. P-21 and P-27) were passed without affording an opportunity to be heard, denying natural justice. The court agreed with the petitioner, noting that the orders were issued without hearing the petitioner and directed the authorities to reconsider the matter after providing an opportunity for the petitioner to present their case.

4. Due to the lack of a hearing and the failure to consider the petitioner's submissions, the court quashed the orders (Ext. P-21 and P-27) and directed the authorities to reevaluate the matter in compliance with the principles of natural justice, emphasizing the importance of providing an opportunity for the petitioner to be heard. The Original Petition was allowed in favor of the petitioner.