2020 (12) TMI 909 - HC - Central Excise

Principles of Natural Justice - Exemption to goods cleared from a unit located in the state of Jammu and Kashmir - benefit of N/N. 01/2010-CE dated 06.02.2010 - opportunity of hearing not provided to the petitioner - HELD THAT - We have noticed the facts stated by the learned counsel for the parties, however, we are not dwelling on those for the reason that no findings, as such, are being recorded by this Court. The matter is being examined only with reference to violation of principles of natural justice. It is the admitted case of the parties that before passing the impugned order, the petitioner was not afforded opportunity of hearing by the authority concerned and the claim made by it, was rejected. It is a case in which the claim regarding exemption was made by the petitioner with reference to notification No. 01/2010-CE dated 06.02.2010, while it was already enjoying benefits as are available in terms of the notification No. 56 of 2002 dated 14.11.2002. The aforesaid claim of the petitioner was not accepted by the competent authority, in terms of the prayer of the petitioner, but without even issuing a show cause notice to it. In case, the competent authority was satisfied with the claim made by the petitioner, a notice may not be required to be issued. But if the authority was of the opinion that the claim made by the petitioner may not be tenable, a notice is certainly required to be issued so that the grounds on which the claim of the petitioner was sought to be rejected could be discussed. The matter is remitted back to the competent authority to be decided afresh after affording due opportunity of hearing to the petitioner - Petition allowed by way of remand.

Summary

Issues:
Challenge to order dated 29.05.2018 granting benefits under notification No. 01/2010-CE, violation of principles of natural justice, availability of alternate remedy, interpretation of notification provisions, absence of show cause notice.

Analysis:
The petitioner contested the order dated 29.05.2018, which granted benefits under notification No. 01/2010-CE from 01.05.2017 for ten years. The petitioner argued that overlapping benefits were available under notification No. 56/2002-CE and notification No. 01/2010-CE. The petitioner fulfilled the 25% investment criteria for expansion in 2013 and applied for benefits in 2017. However, the benefits were made effective from 06.02.2013, causing concurrent benefits under both notifications, contrary to their spirit. The petitioner was not given a hearing before the order, violating natural justice principles. The court noted that the authority failed to issue a show cause notice before rejecting the petitioner's claim, emphasizing the need for procedural fairness. The court cited a previous case where an order without proper notice was set aside, highlighting the importance of due process.

The respondents argued that the order was correct and that the petitioner received more benefits than deserved. They contended that investments for expansion should be made in one go, not piecemeal. The respondents suggested that the petitioner should pursue the statutory remedy of appeal and that the Act does not require a show cause notice in such cases. However, the court found no provision barring the petitioner from a hearing, emphasizing the significance of procedural fairness in such matters. The court clarified that the issue was not about the merits of the case but the violation of natural justice principles.

Regarding the availability of an alternate remedy, the petitioner invoked the court's extraordinary jurisdiction due to the breach of natural justice principles. The petitioner relied on a Supreme Court judgment to support their argument. The court agreed that where natural justice principles are violated, seeking an alternate remedy does not preclude approaching the court. Ultimately, the court allowed the petition, setting aside the impugned order and remitting the matter for reconsideration with proper opportunity for the petitioner to be heard. The judgment underscored the importance of affording parties a fair hearing and following due process in administrative decisions.