1985 (3) TMI 167 - AT - Central Excise

Summary

Issues:
Claim for rebate of duty on use of cotton seed oil in the manufacture of vegetable products; Violation of principles of natural justice in rejecting the claim; Legality of the order passed by the Appellate Collector; Adjustment of excess rebate claimed by the appellants; Jurisdictional Superintendent's actions without notice to the appellants.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi involved the claim for rebate of duty on the use of cotton seed oil in manufacturing vegetable products by M/s. Rasoi Vanaspati & Industries Ltd. The Central Government had granted exemption from excise duty for this purpose under specific notifications. The appellants submitted rebate claims, which were initially admitted by the Departments. However, discrepancies were later found in the calculation of the percentage of cotton seed oil used in the products cleared, leading to adjustments in the rebate claims made since 1-4-1972.

The appellants challenged the order passed by the Assistant Collector, alleging a violation of natural justice, lack of show cause notice, and errors in the calculation method. The Appellate Collector of Central Excise, Calcutta, rejected the appeal, prompting the appellants to file a Revision Application before the Government of India, Ministry of Finance, which was transferred to the Tribunal and treated as an appeal for consideration.

During the hearing, the appellants' counsel argued that the rejection of their claim was done without issuing a show cause notice, violating natural justice principles. The Departmental representative could not justify this approach and raised concerns about the excessive use of cotton seed oil in the products. The Tribunal noted that the actions of the Jurisdictional Superintendent and subsequent authorities lacked procedural fairness, as no opportunity for hearing was provided to the appellants before adjusting the rebate claims.

The Tribunal emphasized the importance of adherence to legal procedures and principles of natural justice. It found that the order to adjust the rebate claims without issuing a show cause notice or raising a demand within the prescribed time was unjustified and illegal. The Tribunal concluded that the impugned order was not a result of a proper judicial process and set it aside, ruling in favor of the appellants.