2017 (5) TMI 1195 - HC - Central Excise

Maintainability of petition - alternative remedy available u/s 35-B of CEA Act, 1944 - principles of natural justice - Held that - the Commissioner, while passing the adjudicating order impugned, acted in flagrant violation of principles of natural justice by refusing to cross examine the witnesses and that resulted into an order absolutely arbitrary. The violation of principles of natural justice is so apparent that the same is not even required to be established by adducing evidence. The doctrine of alternative remedy is not a rule of law but a policy and self-restraint and that can very well be waived in certain eventualities including the violation of principles of natural justice, however, it is not necessary that wherever and whenever such eventuality exists, the writ Court must entertain a petition for writ - we are having no hesitation in holding that an efficacious alternative remedy is available to the petitioners and no reason exists to entertain these petitions for writ without exhausting the same. Petition dismissed - the petitioners are having an effective alternative remedy - decided against petitioner.

Summary

Issues:
Exhaustion of alternative remedy under Section 35-B of the Central Excise Act, 1944 before approaching the writ Court.

Analysis:
The judgment by the High Court of Rajasthan addressed the issue of whether the petitioners were required to exhaust the alternative remedy available under Section 35-B of the Central Excise Act, 1944 before approaching the writ Court. The Commissioner of Central Excise had passed an order demanding duty, imposing penalties, and ordering the payment of interest. The respondents argued that the petitions for writ should be dismissed as the petitioners had not first appealed to the Central Excise and Service Tax Appellate Tribunal (CESTAT) as per Section 35-B. The petitioners, on the other hand, contended that the doctrine of exhausting remedies before approaching the writ Court could be relaxed in certain circumstances, especially when there was a violation of principles of natural justice.

The petitioners' counsel argued that the Commissioner's order was arbitrary and violated principles of natural justice by refusing to allow cross-examination of witnesses, which is a mandatory provision under Section 9-D of the Act of 1944. They cited instances where High Courts had entertained writ petitions against such orders without requiring the exhaustion of the statutory remedy of appeal. The High Court acknowledged that the doctrine of alternative remedy is a policy rather than a strict rule of law and can be waived in certain situations, particularly when there is a violation of natural justice. However, the Court emphasized that it has discretion in deciding whether to entertain a writ petition in such circumstances.

Ultimately, the High Court held that an efficacious alternative remedy was available to the petitioners through the CESTAT, which is a tribunal constituted by statute and equipped to adjudicate appeals fairly and expeditiously. The Court found no reason to entertain the writ petitions without exhausting this remedy. Therefore, the petitions for writ were dismissed, and the petitioners were given liberty to avail the remedy under Section 35-B by appealing to the CESTAT within 30 days. No costs were awarded in the judgment.