2004 (4) TMI 97 - HC - Central Excise

Summary

Issues:
Challenge to order of Settlement Commission under Central Excise Act, 1944.

Analysis:
1. The petition challenged the order of the Settlement Commission dated 24-2-2003 under Section 32F of the Central Excise Act, 1944. The petitioner, a manufacturer of man-made fabrics, was accused of clandestine removal of processed fabrics leading to a demand of central excise duty of Rs. 2.13 Crores. The Settlement Commission determined the excise duty liability at Rs. 1,48,19,820/- and imposed a penalty of Rs. 10 lakhs. The petitioner contended that the Commission considered a report without providing a copy, violating principles of natural justice.

2. The primary contention was that the Settlement Commission relied on a report dated 18-9-2002 without providing a copy to the petitioner, infringing natural justice principles. The petitioner argued that earlier directions by the Commission indicated a need for concrete evidence, which the report may have influenced. The respondents, however, cited Section 32J and 32M of the Act, stating the petitioner must request copies of documents, and the Commission's order is conclusive and cannot be reopened.

3. The Court observed that the Settlement Commission has discretion to furnish copies of reports to the petitioner, especially when adverse evidence is presented. In this case, the Commission did not intimate the petitioner about the report or provide an opportunity to request a copy. The Court highlighted the necessity for the petitioner to meet adverse material and noted no valid reason was presented for withholding the report.

4. The Court, exercising its jurisdiction under Article 226, set aside the Commission's order due to the violation of natural justice principles. It directed the Commission to provide the petitioner with a copy of the report dated 18-9-2002 and conduct a hearing thereafter. The petitioner was instructed to deposit an additional sum of Rs. 28 lakhs in four monthly instalments, without prejudice to either party's rights.

5. The judgment, while not delving into the merits of the case, emphasized the importance of fair procedures and the right to challenge evidence. By ensuring the petitioner's access to relevant documents and a fair hearing, the Court upheld principles of natural justice and granted relief while maintaining financial obligations for the petitioner.