2023 (2) TMI 370 - SC - Central Excise

Constitutional Validity of section 9-D of the Central Excise and Salt Act, 1944 - the case is that while deciding the writ petitions afresh on remand, the High Court could not have limited its decision only to the issue relating to vires of section 9-D - breach of essential pre-requisites of section 9-D by the department in the adjudication orders - effect of the principles and pre-requisites laid down by the High Court for invocation of section 9-D vis- -vis the appellants case. Vires of section 9-D of the Excise Act - HELD THAT - The writ petitions were instituted before the High Court way back in 1992 before any adjudication order was passed praying, inter-alia, for cross-examination of the remaining witnesses whose cross-examination had already been permitted but who were not produced. Pursuant to the liberty given by the High Court, the appellants filed an application for amendment mentioning in detail as to how and for what reasons invocation of section 9-D by the Commissioner was illegal and also challenging the vires of section 9-D of the Excise Act - the appeals carried to this Court by the appellants from the orders of the Tribunal confirming the demands against the appellants also stand dismissed. We are, therefore, left to wonder in which proceedings would the principles and prerequisites and/or the parameters of the conditions precedent in section 9-D, laid down by the High Court, could at all be applied. Even if section 9-D were intra vires, whether the parameters thereof were completely ignored by the excise authorities? - HELD THAT - With the final decision on all the appeals arising from the orders of the Tribunal being rendered against the appellants, there is no pending lis where the principles and conditions precedent could be applied. The endeavour of the appellants to have these appeals argued before us is, therefore, of purely academic interest and would not serve any real purpose - While dismissing the civil appeals, we endorse the views of the High Court insofar as it spurned the challenge of the appellants to the constitutional validity of section 9-D of the Excise Act. For unnecessarily protracting the proceedings before this Court, although no lis survived for resolution, we impose costs of Rs.5,00,000/- on the appellants. This amount is to be paid to any charitable organization involved in providing help, assistance and relief to children suffering from cancer. Such costs shall be paid within a month from date. Within two weeks thereof, proof of payment shall be produced before the Registrar who shall satisfy himself that the recipient organization is, in fact, providing care to children suffering from cancer. In default thereof, the amount of costs shall be recovered as arrears of land revenue.

Summary

Issues Involved:

1. Constitutional validity of Section 9-D of the Central Excise and Salt Act, 1944.
2. Alleged breach of essential pre-requisites of Section 9-D by the department in adjudication orders.
3. Denial of opportunity to cross-examine witnesses by the excise authorities.
4. Procedural fairness in the adjudication process by the excise authorities.

Detailed Analysis:

1. Constitutional Validity of Section 9-D of the Central Excise and Salt Act, 1944:

The High Court declared Section 9-D of the Excise Act as intra vires and dismissed the writ petitions challenging its constitutionality. The appellants did not contest this finding before the Supreme Court. The Supreme Court, while examining the appeals, endorsed the High Court's view that Section 9-D is not unconstitutional or ultra vires.

2. Alleged Breach of Essential Pre-requisites of Section 9-D by the Department:

The appellants argued that the High Court should have applied the principles and pre-requisites laid down for invoking Section 9-D to test the legality and correctness of the department's actions. They contended that the High Court erred by not deciding on the other issues raised in the writ petitions, particularly the breach of Section 9-D's parameters by the department. The Supreme Court noted that the High Court had limited its decision to the vires of Section 9-D and did not address the alleged breaches by the department.

3. Denial of Opportunity to Cross-examine Witnesses:

The appellants' grievance was that the excise authorities relied on statements of 75 witnesses, but cross-examination was allowed for only 29 witnesses, many of whom denied any flow back to the appellants. The remaining statements remained untested. The appellants argued that the denial of cross-examination violated the principles of natural justice. The High Court noted that the appellants had invoked the writ jurisdiction due to the denial of adequate opportunity for cross-examination. However, the Supreme Court observed that the appellants had pursued appeals before the Tribunal and the Supreme Court, where the issue of cross-examination could have been addressed.

4. Procedural Fairness in the Adjudication Process by the Excise Authorities:

The appellants contended that the adjudication orders were passed without following principles of natural justice, particularly the denial of cross-examination. The High Court, in its earlier order, had noted that the question of fairness of the procedure and the denial of opportunity to cross-examine witnesses was available to the appellants before the Supreme Court. The Supreme Court observed that the High Court had not decided the question of constitutionality of Section 9-D or the fairness of the procedure adopted by the adjudicating authority. The Supreme Court remitted the matter to the High Court for fresh consideration, but the High Court once again focused only on the vires of Section 9-D and did not address the procedural fairness issues.

Conclusion:

The Supreme Court dismissed the civil appeals, endorsing the High Court's view on the constitutionality of Section 9-D. The Court noted that there were no pending proceedings where the principles and pre-requisites of Section 9-D could be applied. The Court imposed costs of Rs. 5,00,000 on the appellants for unnecessarily protracting the proceedings and directed the amount to be paid to a charitable organization involved in providing help to children suffering from cancer.