2023 (12) TMI 1143 - HC - Central Excise

Service of SCN - Whether the provision of rule 776 of the Manual was adhered to and any notice under section 74-A(1) was given before passing the order? - HELD THAT - Once the initiation of the proceedings itself is bad, the consequential proceedings automatically fails in the eyes of law. Matter requires consideration. Learned ACSC may file counter affidavit within a period of four weeks from today. Rejoinder affidavit, if any, may also be filed one week thereafter - List immediately thereafter.

Summary

Issues involved: Challenge to impugned orders u/s 74-A of Excise Act, compliance with rule 776 of U.P. Excise Manual, violation of principles of natural justice, hasty recovery of disputed amount, absence of show cause notice, failure to adhere to procedural requirements.

Compliance with Rule 776 of U.P. Excise Manual:
The petitioner's counsel argued that the samples were drawn without compliance with rule 776 of the U.P. Excise Manual as required personnel were not present during the sampling process. The ACSC acknowledged that rule 776 was not adhered to and admitted that no notice under section 74-A(1) was issued before passing the order. This non-compliance raises concerns about the validity of the proceedings and subsequent actions taken.

Violation of Principles of Natural Justice:
The petitioner contended that the order u/s 74-A was issued without a show cause notice and penalty was imposed without providing an opportunity to respond, thus violating the principles of natural justice. The failure to give the petitioner a chance to present its case before imposing penalties undermines the fairness and legality of the proceedings.

Hasty Recovery of Disputed Amount:
It was highlighted that the disputed amount was swiftly withdrawn from the advance duty register after the impugned order was passed, leaving insufficient time for the petitioner to exercise its right to file a revision. This rushed action potentially obstructed the petitioner's ability to seek redress through the proper legal channels, rendering the revision process ineffective.

Absence of Show Cause Notice:
The petitioner raised a crucial point regarding the absence of a show cause notice before the order was passed. This procedural requirement is essential to ensure that the affected party is informed of the allegations against them and given an opportunity to respond. The failure to provide a show cause notice undermines the transparency and fairness of the decision-making process.

Conclusion:
Considering the arguments presented, the court found merit in the petitioner's contentions regarding the procedural irregularities and violations of natural justice. The matter was deemed to require further examination, and the ACSC was directed to file a counter affidavit within four weeks. Additionally, specific instructions were issued regarding the handling of the disputed amount pending the final outcome of the writ petition. The Commissioner of Excise Tax was also directed to submit a personal affidavit regarding compliance with the court's orders within a specified timeframe.