2013 (10) TMI 353 - HC - Central Excise

Opportunity of being heard personal hearing before Settlement Commission - Held that - Section 32F(1) of the Act provides for seeking an explanation in writing from the applicants as to why the applications should be proceeded with while Section 32F(5) of the Act mandates giving of personal hearing while disposing of the application at the final hearing - Section 32F(1) does not prohibit the Settlement Commission from granting a personal hearing in respect of explanation offered by the applicant if the context so requires - This would be so even if one does not read the necessity of giving a personal hearing into Section 32F(1) of the Act as applicable in all cases - At the personal hearing they could have explained the manner in which the earlier order dated 12 October 2007 of the Settlement Commission is applicable to their case - In this case the granting of personal hearing was in the context of the facts not an empty formality but required so as to do complete justice in the matter Order set aside and the matter remanded back to the Settlement Commission to decide the matter afresh after giving an opportunity of personal hearing to the petitioners Decided in favour of Petitioner.

Issues:
Challenge to Settlement Commission's order under Article 226 of the Constitution of India.

Analysis:
The High Court of Bombay considered two petitions challenging a common order dated 12 December 2011 of the Settlement Commission under Section 32F of the Central Excise Act, 1944. The petitioners argued that they were not granted a personal hearing by the Settlement Commission, leading to a failure to fully appreciate their submissions. They contended that they were at the trial production stage and not required to file returns showing production and clearance of goods. The petitioners relied on legal provisions and a Supreme Court decision emphasizing procedural fairness and natural justice. The respondent department argued that the petitioners did not fulfill the condition precedent of filing returns as required by law. The High Court observed that while the statutory requirements for making an application for settlement are crucial, rejecting the applications solely on this basis without considering the context would lead to injustice. The court noted that a personal hearing was necessary before the Settlement Commission could make a final decision on the applications.

The High Court highlighted that Section 32F(1) of the Act allows seeking a written explanation from applicants and Section 32F(5) mandates a personal hearing while disposing of the application. However, the court emphasized that not granting a personal hearing in this case caused prejudice to the petitioners. The court stated that a personal hearing was essential for complete justice in the matter, especially considering the unique facts of the case. The court found that the case law cited by the respondent department did not address the specific issue of the Settlement Commission dismissing applications without hearing the applicants. Consequently, the High Court set aside the impugned order and directed the Settlement Commission to reconsider the matter after providing a personal hearing to the petitioners. The court clarified that it had not expressed any opinion on the merits or maintainability of the applications, leaving it to the Settlement Commission to decide in accordance with the law.

In conclusion, the High Court held that the Settlement Commission must grant a personal hearing to the petitioners before making a decision on their applications. The court emphasized the importance of procedural fairness and natural justice in such proceedings, ensuring that all parties have an opportunity to present their case effectively.

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