2000 (2) TMI 113 - HC - Central Excise

Summary

Issues Involved:
1. Validity of the CBEC Circular No. 459/16/99.
2. Interference with appellate powers of the Commissioner of Central Excise (Appeals).
3. Requirement of personal hearing by the Commissioner (Appeals) while considering stay/exemption applications u/s 35F of the Central Excise Act.
4. Impact of refusal to afford an opportunity of hearing by the Commissioner of Central Excise (Appeals) on the impugned orders.

Summary:

Validity of the CBEC Circular No. 459/16/99:
The petitioners challenged the CBEC Circular No. 459/16/99, dated 30-3-1999, as ultra vires of Sections 35A, 35F, and 37B of the Central Excise Act, 1944, Sections 128A and 129E of the Customs Act, 1962, and Articles 14, 19(1)(g), and 265 of the Constitution of India. The court held that the Central Board of Excise and Customs (CBEC) lacked the authority to issue such a circular as it fetters the exercise of quasi-judicial powers by the Commissioner (Appeals). The circular was deemed illegal and invalid, as it interfered with the statutory discretion of the appellate authority.

Interference with Appellate Powers:
The court observed that the CBEC circular interfered with the appellate powers of the Commissioner (Appeals) by directing how stay/exemption applications should be disposed of, which is against the statutory provisions. The circular was found to be an instruction or direction that fetters the powers of the appellate authority, thus making it ultra vires and invalid.

Requirement of Personal Hearing:
The court emphasized that the principles of natural justice require that a fair procedure be followed, which includes affording an opportunity of hearing to the appellant before disposing of stay/exemption applications u/s 35F of the Central Excise Act. The court noted that the refusal to afford a hearing results in denial of a valuable opportunity and renders the appeal ineffective. The court held that the Commissioner (Appeals) should afford an opportunity of hearing while considering such applications.

Impact of Refusal to Afford Hearing:
The court held that the refusal to afford an opportunity of hearing by the Commissioner of Central Excise (Appeals) vitiates the impugned orders. The court quashed the impugned orders and remitted the matter back to the Commissioner (Appeals) to afford an opportunity of hearing and pass fresh orders according to law. The court directed that the exercise of powers should be fair, judicious, and objective, ensuring that the appeal remedy is not rendered nugatory.

Conclusion:
The court allowed the writ petitions, quashed the impugned orders, and directed the Commissioner (Appeals) to adopt a fair procedure without reference to the CBEC circular while considering the stay/exemption applications. The court emphasized the importance of affording an opportunity of hearing to ensure compliance with the principles of natural justice.