2001 (3) TMI 541 - HC - Central Excise

Summary

Issues Involved:
1. Whether the facility to pay central excise duty on a fortnightly basis under Rule 49(1) of the Central Excise Rules, 1944, can be forfeited without complying with the rule of audi alteram partem.
2. Validity of the orders dated 8-2-2001 and 20-2-2001 passed by the Deputy Commissioner, Central Excise, Jalandhar, and the Commissioner, Customs and Central Excise (Appeals), Chandigarh, respectively.
3. The applicability of the principles of natural justice in the context of forfeiture of the facility to pay duty on a fortnightly basis.

Issue-wise Detailed Analysis:

1. Forfeiture of Facility Without Audi Alteram Partem:
The primary issue is whether the facility available to the petitioner under Rule 49(1) to pay central excise duty on a fortnightly basis can be forfeited by the Deputy Commissioner without complying with the rule of audi alteram partem. The court observed that the amended Rule 49 allows manufacturers to pay excise duty on a fortnightly basis, with a further concession of 5 days. If the manufacturer defaults, the facility can be forfeited for two months. However, the court emphasized that the absence of an express stipulation for notice and hearing does not absolve the authority from complying with the rules of natural justice. The principles of natural justice, including audi alteram partem, are integral to fairness in State action. The court held that the rule of audi alteram partem must be read into Rules 49(1)(e) and 173G(1)(e) because the order of forfeiture adversely affects the petitioners.

2. Validity of the Orders Dated 8-2-2001 and 20-2-2001:
The petitioners challenged the orders dated 8-2-2001 and 20-2-2001 on the grounds of non-compliance with the rules of natural justice. The court found that the orders were passed without giving notice or an opportunity of hearing to the petitioners, violating the principles of natural justice. The court declared the order dated 8-2-2001, passed by the Deputy Commissioner, and the appellate order dated 20-2-2001, passed by the Commissioner, Customs and Central Excise (Appeals), as void due to the violation of natural justice. The court quashed both orders and directed the Deputy Commissioner to pass a fresh order after giving notice and an opportunity of hearing to the petitioners.

3. Applicability of Principles of Natural Justice:
The respondents contended that the scheme of Rules 49, 57AB, and 173G does not envisage giving notice and an opportunity of hearing to the defaulter. However, the court rejected this argument, stating that the principles of natural justice are fundamental to a just decision and must be complied with even in administrative matters involving civil consequences. The court cited several Supreme Court judgments emphasizing the importance of the rule of audi alteram partem in ensuring fairness and preventing arbitrary exercise of power by the State. The court concluded that the object of the amendments to the rules would not be defeated by insisting on compliance with the rule of audi alteram partem before issuing an order of forfeiture.

Conclusion:
The court allowed the writ petition, quashed the impugned orders, and directed the Deputy Commissioner to pass a fresh order after complying with the principles of natural justice. The period of forfeiture, if re-imposed, should deduct the period for which the facility had already been denied in pursuance of the impugned orders. The court also noted that the objection to the maintainability of the writ petition on the ground of alternative remedy was not seriously pressed by the respondents during the hearing.