1996 (3) TMI 194 - SC - Central Excise

Whether an oral hearing had to be given to the respondent by the Appellate authority before taking a decision under third proviso to sub-section (1) of Section 4-M of the Imports and Exports (Control) Act, 1947 ? Held that - In the present case on the application filed by the respondent, a direction was given to deposit only 25% of the amount of the penalty which had been imposed against the said respondent. According to us, the Appellate authority passed a reasonable order which should not have been held to be invalid by the High Court merely on the ground that before passing the said order the respondent was not given oral hearing, which amounted to violation of the principles of natural justice. Appeal allowed.

Summary

Issues Involved:
1. Requirement of oral hearing by the Appellate authority under the third proviso to sub-section (1) of Section 4-M of the Imports and Exports (Control) Act, 1947.
2. Validity of the High Court's direction to afford an opportunity to the respondent to be heard.
3. Validity of the order passed by the Appellate authority imposing a condition to deposit 25% of the penalty amount.

Issue-wise Detailed Analysis:

1. Requirement of Oral Hearing by the Appellate Authority:
The core issue was whether the Appellate authority is mandated to provide an oral hearing to the appellant before deciding on the application to dispense with the pre-deposit of the penalty under the third proviso to sub-section (1) of Section 4-M of the Imports and Exports (Control) Act, 1947. The Supreme Court noted that neither the first proviso, which allows for the condonation of delay in filing the appeal, nor the third proviso, which permits the Appellate authority to dispense with the deposit of the penalty, explicitly require an oral hearing. The Court emphasized that while a practice has developed to provide hearings in such cases, it is not a statutory requirement. The Court concluded that the discretion vested in the Appellate authority to dispense with the deposit of the penalty does not inherently necessitate an oral hearing, provided the authority applies its mind judiciously to the facts and circumstances presented.

2. Validity of the High Court's Direction:
The High Court had directed that the respondent should be given an opportunity to be heard before the Appellate authority decided on the application to dispense with the pre-deposit of the penalty. The Supreme Court disagreed with this direction, stating that the requirement of natural justice does not always mandate a personal hearing. The Court clarified that the principles of natural justice are context-dependent, and the statutory requirement for pre-deposit before hearing an appeal is not inherently unreasonable or violative of Article 14 of the Constitution. The Supreme Court held that the High Court erred in setting aside the Appellate authority's order on the grounds of not providing an oral hearing, as the statutory framework did not explicitly require it.

3. Validity of the Appellate Authority's Order:
The Appellate authority had directed the respondent to deposit 25% of the penalty amount or provide a bank guarantee for the same. The Supreme Court found this order to be reasonable, noting that the Appellate authority had exercised its discretion judiciously. The Court emphasized that the statutory requirement for pre-deposit is the norm, and any dispensation is an exception to be granted based on undue hardship. The Supreme Court concluded that the Appellate authority's decision to impose a condition of 25% deposit was within its discretionary power and did not violate principles of natural justice, even in the absence of an oral hearing.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's order. It reaffirmed that the Appellate authority's discretion to dispense with the deposit of the penalty does not inherently require an oral hearing, provided the authority considers the relevant facts and circumstances judiciously. The Court upheld the Appellate authority's order directing a 25% deposit, finding it reasonable and within the scope of its discretionary power. There were no orders as to costs.