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SUPREME COURT OF INDIA
S.P. Bharucha and S.C. Sen, JJ.
Kaur & Singh - Petitioner
Versus
Collector of Central Excise, New Delhi - Respondent
Civil Appeal No. 140 of 1986
Decided On : 27-11-1996
Show Cause Notice - Central Excise Rules - The court held that the party to whom a show cause notice is issued must be made aware of the allegation against it, as a requirement of natural justice. The notice must specify the grounds alleged against the assessee, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice.
Fact of the Case:
The assessee was issued a notice to show cause why a penalty should not be imposed upon it under Rule 9(2) of the Central Excise Rules, 1944, and why Central Excise duty should not be collected from it on goods cleared without payment of the same during the year 1980-81. The notice was issued after the expiration of the period of six months without specifying any particulars in respect of fraud or contravention.
Finding of the Court:
The court found that the show cause notice did not specify any particulars in respect of fraud or contravention, and therefore, the assessee was not made aware of the allegation against it, violating the requirement of natural justice. The appeal was allowed, and the order of the Tribunal under appeal was set aside.
Issues: The issue was whether the show cause notice issued to the assessee complied with the requirement of natural justice by specifying the grounds alleged against the assessee.
Ratio Decidendi: The court held that the party to whom a show cause notice is issued must be made aware of the allegation against it, and the notice must specify the grounds alleged against the assessee, as a requirement of natural justice.
Final Decision: The appeal was allowed, the order of the Tribunal under appeal was set aside, and the bank guarantee given by the appellant pursuant to the order was discharged, with any payment or deposit made by the appellant pursuant to these orders to be refunded. There was no order as to costs.
JUDGMENT :
1. This appeal by the assessee against the judgment and order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, can be disposed of in favour of the appellant on a very short ground.
2. The assessee was issued a notice dated 10th December, 1981, to show cause why a penalty should not be imposed upon it under Rule 9(2) of the Central Excise Rules, 1944, and why Central Excise duty should not be collected from it on goods cleared without payment of the same during the year 1980-81. The notice, it is common ground, was issued after the expiration of the period of six months. It could, therefore, have been issued only upon the basis that the assessee was guilty of fraud or of collusion or of wilful mis-statement or suppression of facts or of contravention of the provisions of the Act or the Rules with intent to evade payment of Excise duty; this because, by the time the show cause notice was issued, Rule 9(2) had been amended to incorporate therein the period specified in Section 11A of the Act. The show cause notice does not set out any particulars in respect of fraud or collusion or wilful mis-statement or suppression of facts or contravention with intention to evade the payment of Excise duty. Not only does it not give any such particulars, it does not even make a bare allegation.
3. This Court has held that the party to whom a show cause notice of this kind is issued must be made aware of the allegation against it. This is a requirement of natural justice. Unless the assessee is put to such notice, he has no opportunity to meet the case against him. This is all the more so when a larger period of limitation can be invoked on a variety of grounds. Which ground is alleged against the assessee must be made known to him, and there is no scope for assuming that the ground is implicit in the issuance of the show cause notice. [See Collector of Central Excise v. H.M.M. Limited, 1995 (76) E.L.T. 497 and Raj Bahadur Narayan Singh Sugar Mills Limited v. Union of India, 1996 (88) E.L.T. 24].
4. The appeal is allowed and the order of the Tribunal under appeal is set aside. The bank guarantee given by the appellant pursuant to the order dated 4th April, 1986, as varied by the order dated 1st September, 1986, shall stand discharged. Any payment or deposit made by the appellant pursuant to these orders shall be refunded.
5. There shall be no order as to costs.
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