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1995 Supreme(AP) 711
Andhra Pradesh High Court
Judges : S.PARVATHA RAO, S.V.MARUTHI
Sivashankar Granites Pvt.Ltd. - Appellant
Versus
Assistant Commissioner of Central Excise, Warangal - Respondent
Decided On : 10-24-95
The principles of natural justice and fair play require that a person should be given a reasonable opportunity of being heard before an order is made which would have adverse civil consequences for the person affected.
Headnote:
CENTRAL EXCISE - EXEMPTION - VIOLATION OF CONDITIONS - DEMAND NOTICE - PRINCIPLES OF NATURAL JUSTICE - SHOW CAUSE NOTICE - OPPORTUNITY OF HEARING - CENTRAL EXCISES AND SALT ACT, 1944, SECTION 11A - CENTRAL EXCISE RULES, 1944, RULE 9B(5) - NOTIFICATION NO. 123/81-C. E. , DATED 2-6-1981.
Fact of the Case:
The petitioner, a company engaged in the mining and processing of granite, was granted exemption from excise duty on certain machinery imported under Notification No. 123/81-C. E. , dated 2-6-1981, subject to certain conditions. The Assistant Commissioner of Central Excise, Warangal Division, issued a demand notice to the petitioner to pay excise duty on the machinery, alleging that the petitioner had violated the conditions of the exemption. The petitioner challenged the demand notice, contending that it was issued without a show cause notice and an opportunity of hearing, in violation of the principles of natural justice.
Finding of the Court:
The court held that the demand notice was issued in violation of the principles of natural justice and fair play, as the petitioner was not given a show cause notice and an opportunity of hearing before the demand was made. The court also held that the Central Excise authorities are required to observe the principles of natural justice in taking actions resulting in civil consequences, and that arbitrariness is anathema to Article 14 of the Constitution.
Issues: 1. Whether the demand notice issued by the Assistant Commissioner of Central Excise, Warangal Division, was in violation of the principles of natural justice and fair play? 2. Whether the Central Excise authorities are required to observe the principles of natural justice in taking actions resulting in civil consequences?
Ratio Decidendi: 1. The principles of natural justice and audi alteram partem are part of Article 14 of the Constitution of India and apply to administrative orders affecting the rights of citizens. 2. The principles of natural justice require that a person should be given a reasonable opportunity of being heard before an order is made which would have adverse civil consequences for the person affected. 3. The Central Excise authorities are required to observe the principles of natural justice in taking actions resulting in civil consequences, and arbitrariness is anathema to Article 14 of the Constitution.
Final Decision: The court allowed the writ petition and set aside the demand notice issued by the Assistant Commissioner of Central Excise, Warangal Division. The court also directed the Assistant Commissioner to take appropriate action in accordance with law after giving notice and reasonable opportunity to the petitioner and following the principles of fair play.
( 1 ) IN this writ petition the petitioner questions notice in D. O. R. No. 11/93-C. E. , dated 29-9-1995 issued by the Assistant Commissioner of Central Excise, Warangal Division asking it to pay the Central Excise duty amounting to Rs. 13,12,799. 43 ps. within 15 days failing which the terms of the bonds would be enforced to realise the said amount. The grievance of the petitioner is that no show cause notice and opportunity were given to the petitioner before making the said demand.
( 2 ) THE learned Standing Counsel for the Central Government, Mr. P. Innayya Reddy, took notice when this writ petition came up for admission on 19-10-1995 and took time for filing counter. Subsequently he filed the counter-affidavit of the Assistant Commissioner of Central Excise, Warangal Division, i. e. the first respondent herein, dated 18-10-1995.
( 3 ) BOTH Counsel agree that the writ petition itself can be disposed of at the admission stage and accordingly they are heard.
( 4 ) THE question is whether the petitioner had violated the conditions regarding the use of the machinery subject to which they were exempted from the whole of the excise duty leviable on them, under Notification No. 123/81-C. E. , dated 2-6-1981. It is not in dispute that the first respondent granted exemption under that notification in respect of that machinery under his orders dated 25-3-1991, 3-1-1992 and 13-1-1993. It is the petitioner s case that after acquiring the said machinery it has been putting them to use in its premises either at the factory or at the mines only in connection with the manufacturing and in total accordance with the terms and conditions of the exemption granted in respect of them under the said notification. The petitioner submits that on or about 16-7-1993 the first and second respondents visited the quarries and factory of the petitioner and effected seizure of nine items of the machinery on the ground that the same had been put to such use and at such places not specifically approved or permitted by the first respondent while granting exemption under the said notification. Representations made by the petitioner to the third respondent seeking release of the seized machinery were of no avail. The petitioner then moved this Court by way of Writ Petition No. 4315 of 1994 and this Court by order dated 23-3-1994 directed the Collector of Central Excise to dispose of the representation of the petitioner for the release of the seized machinery within four weeks from the date of receipt of a copy of the said order. The petitioner states that the said order of this Court has not been complied with as yet. The petitioner states that even before its representation was disposed of as directed, the first respondent issued notice D. O. R. No. 11/93-C. E. , dated 9-8-1995 to pay the excise duty on the seized machinery within one week from the date of receipt of that notice. The petitioner objected by its letter dated 21-8-1995 stating that it had not violated the conditions subject to which excise duty exemption was granted in respect of the machinery seized, The petitioner once again approached this Court by way of Writ Petition No. 18788 of 1995 questioning the said demand and this Court disposed of the writ petition by its order dated 25-8-1995 with a direction to the third respondent to dispose of the petitioner s representation, if not already disposed of, within one week from the date of receipt of a copy of the order of this Court and that meanwhile no coercive steps for recovery of tax should be taken by the authorities. Thereafter the third respondent replied to the petitioner by his letter dated 18-9-1995 stating as follows :"it is seen from the records that the Assistant Commissioner of Customs and Central Excise, Warangal has already been directed to release the goods seized on 16-7-1993. However, the Assistant Commissioner is again being directed to release the goods, if not already done. You are advised to approach hi
