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TMI Blog1991 (7) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... on and appeal before us are directed against the said Order-in-Appeal passed by the Collector (Appeals), the petitioner has stated in his stay application that the impugned order was indiscreet as such an order was passed ex parte without giving any reasonable opportunity of being heard which, being the essence of justice, gross injustice had been done. The onus being on the department that he is a manufacturer required to take L 4 Licence, such an order without any legal evidence was, ex facie, bad and liable to be set aside. In the circumstances, the Stay Petition seeks the stay of the impugned order. 2. On a perusal of the Order-in-Appeal against which the present appeal and the connected Stay Petition have been filed, we find that the appellant was, in fact, granted personal hearing by the Collector (Appeals). They had also made a written submission to him on 7-9-1990. Hence, we find that the submission in the present Stay Petition about reasonable opportunity of being heard not having been given does not apply to the impugned Order-in-Appeal, but apparently goes back to the earlier communication of the Assistant Collector of Central Excise. 3. The Stay Petition was heard b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formalities is not a final order. An appeal can lie only against a final adjudication order. He submitted a copy of the Trade Notice No. 87/GL-41/1986 dated 2nd June, 1986 issued by the Calcutta-1 Central Excise Collectorate regarding the simplified procedure to be followed by small scale units in the matter of taking licence and maintenance of records and documents. He urged that as the petitioner appeared to have exceeded the value limits for licensing and exemption from duty they should have followed the procedure prescribed in the said Trade Notice. As regards the contention raised by Shri Mukherjee the learned Counsel for the applicants, that there was denial of natural justice as no show cause notice was issued to them before the Assistant Collector directed them to take licence and pay duty on their clearances of goods, Shri Biswas referred to an unreported judgment of the Calcutta High Court in the case of M/s. Thinners Lacquers v. Superintendent (Preventive), Central Excise, Calcutta-I. He contended that the ratio of the said decision would apply to the present case also. He submitted photocopies of the said judgment to the Bench and to Shri Mukherjee. He read out the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case. He gave a note of submissions and reiterated his argument that there was denial of natural justice as the principle of audi alteram partem was not observed by the Assistant Collector. The following cases were cited by him :- 1988 (37) E.L.T. 31 - Prakash Fabricators Galvanisers v. Collector of Central Excise 1969 AIR SC 430 1987 (31) E.L.T. 135 1987 (31) E.L.T. 558 He contended that the ratio of the Calcutta High Court judgment cited by Shri Biswas is not applicable in the present case. He wound up his arguments with the observation that the Tribunal has incidental and ancillary powers to grant stay in a case of this type and opposed the contention of Shri Biswas that no stay can be considered in this case where no duty demand has been quantified. He, therefore, strongly pleaded that the Assistant Collector s order be stayed. 9. We have given careful consideration to the arguments advanced by both the sides. We have perused the record and also gone through the judgment of the Calcutta High Court. We have taken note of the arguments advanced by Shri Mukherjee as to why the same is felt by him to be not applicable to the present case. Our findings are as under. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of that case it was held that there was no denial of natural justice in passing the order of suspension without the issue of a show cause notice. But there the decision was on the basis of a single transaction which was also admitted by the petitioners. They were also caught red handed. Here there is no admission. On the contrary the applicant has taken a firm stand that he is not liable to take licence and to pay duty. In the circumstances, a laconic direction of the type issued by the Assistant Collector would not be adequate. In the Thinners Lacquers case decided by the Honourable Calcutta High Court, the order of suspension contained detailed reasons. Such is not the case in the present matter. Though we do not accept the plea of the petitioners that show cause notice should have been issued before the Assistant Collector passed his order, as it was not a final order but an interlocutory one, as observed by the Honourable Judge of the Calcutta High Court in the Thinners and Lacquers case, the petitioner could demonstrate to the proper authority that the grounds were not proper and could have asked for revocation of that order. In the present case the applicant d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the department and if he does not want to comply with the direction a stalemate situation would develop as has happened here which will be resolved only when the case is formally adjudicated after due process of law. In the circumstances, we are of the view that the stay prayed for by the applicant cannot be granted since what has been sought to be stayed is not a final adjudication order which cannot be reconsidered by the Assistant Collector but only an interlocutory order. At the same time we also find the departmental Officers have taken a long time to complete their investigation and are yet to issue the show cause notice. If the preliminary scrutiny pointed to the applicant having exceeded the exemption limits and there was a prima facie case, they should have completed the investigations with a greater sense of purpose and urgency, particularly in a case like this where their interim direction had been contested and not complied with. Though the non-issue of the show cause cannot by itself invalidate the interim direction, we want the department to finalise the investigations promptly and decide whether the case is to be dropped or pursued further by issue of a show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the aggregate value of cosmetics have not exceeded Rupees Five Lakhs during the financial year 1990-91 covering the period from 1-4-1990 to 6-6-1990. This letter of the Assistant Collector has got all the trappings of an order. The reason is that the applicants were directed to take out Central Excise licence in Form L4 for carrying on with their manufacturing at two factories and to clear the cosmetics so manufactured on payment of proper Central Excise duty payable on such cosmetics and on observance of necessary Central Excise formalities. The case of the applicants is that they have not exceeded the clearance for home consumption more than Rupees Five Lakhs during the above said period. There is nothing to show as to what is the basis on which the Assistant Collector has come to his conclusion except a bare statement that on scrutiny of the records and documents pertaining to the removal it appeared to them that the applicants had exceeded the limit of Rupees Five Lakhs for the first clearance of home consumption. This order was given without granting the applicants an opportunity of showing that they have not cleared more than Rupees Five Lakhs during the relevant per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re an order of suspension was issued, a notice to show cause need not be given as the petitioner has been given a show cause notice for cancellation of the licence. Therefore, on the facts and circumstances of that case, it was held that it was not necessary to give the petitioner a show cause notice even before the issue of the order of suspension. The facts in that case are not similar to the facts of this case. In this case, it is not an order of suspension. Here, the order requires the petitioner to take out L4 licences and to remove the goods after payment of Central Excise duty and observance of Central Excise formalities. This visits the petitioner with civil consequences which could not have been done without setting out the actual material on which the department had come to such conclusion that the applicants had exceeded the statutory limit, without giving a reasonable opportunity to the petitioner to show that his clearance value for the relevant period had in fact been exceeded Rupees Five Lakh. The petitioners have thus made out a prima facie case and the balance of convenience is in favour of granting a stay. 16. In such circumstances, I am of the view that the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial Member granted the prayer and it was in view of this difference of opinion that the aforesaid matter was referred to me. 27. I observe that the communication of the Assistant Collector is admittedly in the nature of a direction to the appellants to take out a licence and follow other Central Excise formalities. 28. This direction has been given pursuant to seizure of some goods and documents and indicates that on scrutiny of the records it appeared to the Assistant Collector that the aggregated value of first clearances for home consumption of excisable cosmetics had exceeded Rs. 5,00,000/- (Rupees five lakhs) during the financial year 1990-91 and further that subject to the clearance value for 1989-90, the appellants were not entitled to full exemption, 29. This by itself shows that (i) .The Assistant Collector took a decision to issue the impugned direction; (ii) That this decision was based on the consideration of the above factors; (iii) That this decision by its very nature affects the rights and liabilities of the parties; and (iv) That the basis adopted was apparently open to challenge. 30. And yet admittedly no show cause notice was served on the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefrom to the Tribunal in terms ;. of Section 35(B), CEA. ; 40. However since the amount of duty if any, due is yet to be quantified and the liability is yet to be finally determined therefore Section 35F as such does not come into picture at this stage and the stay of the operation of the order could be granted only in exercise of the powers inherent in a Court to intervene in the interest of justice. 41. That since the rights and liabilities of the parties are affected by the impugned direction and the same has been issued without finally determining as to whether they were really required to take out a Central Excise licence under the Act and the Rules and without observing the principles of natural justice, I consider that it is a fit case for intervention in the interest of justice. 42. The department s anxiety regarding production and removal of the goods in the meantime is understandable but the remedy does not lie in following a short-cut method not permissible in law. 43. Further, I believe a judicial notice could be taken of the learned counsel s assurance in the open Court that the appellant shall undertake to keep a proper account of production and clearance i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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