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2016 Supreme(Guj) 525
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Akil Abdul Hamid Kureshi and Mohinder Pal, JJ.
Waghbakriwal Rayons – Appellant
Vs.
Commissioner of Central Excise – Respondent
Special Civil Application No. 13839 of 2015
Decided On : 21-01-2016
For the Appellant :Dhaval Shah and S.S. Iyer, Advocates
For the Respondents:R.J. Oza, Advocate
The court interpreted Section 35C of the Central Excise Act, emphasizing the wide powers of the Tribunal and its discretion to impose suitable conditions during remand.
Headnote:
Natural Justice - Central Excise Act - Section 35C - 4, 5, 7 - The court discussed the violation of principles of natural justice and the imposition of conditions for remanding the matter back to the adjudicating authority. The key legal provisions interpreted were Section 35C of the Central Excise Act, which confers wide powers to the Appellate Tribunal, and the court's discretion to impose suitable conditions during remand.
Fact of the Case:
The petitioners challenged an order passed by the Customs, Excise and Service Tax Appellate Tribunal, which imposed a condition of depositing a sum of Rs. 50 lacs on the petitioners while remanding the proceedings back to the adjudicating authority. The petitioners' factory had shutdown, and the notices of hearing of the show cause notice returned unserved. The adjudicating authority proceeded ex parte and passed the final order confirming the duty demand with penalty and interest.
Finding of the Court:
The court set aside the condition imposed by the Tribunal of depositing Rs. 50 lacs, citing the violation of principles of natural justice and the petitioners' contribution to the ex parte order being passed. However, to avoid further delay, the court directed the petitioners to deposit a cost of Rs. 25,000 with the Department, subject to which the adjudicating authority shall grant hearing and dispose of the proceedings afresh.
Issues: Violation of principles of natural justice, imposition of conditions for remanding the matter, non-cooperation of the appellants, and delay in pursuing the appeal.
Ratio Decidendi: The court held that the Tribunal has wide powers under Section 35C of the Central Excise Act and may impose suitable conditions during remand. However, the court set aside the condition of pre-deposit of Rs. 50 lacs imposed by the Tribunal, directing the petitioners to deposit a cost of Rs. 25,000 instead.
Final Decision: The petitioners were directed to deposit a cost of Rs. 25,000 with the Department, and the adjudicating authority was instructed to grant hearing and dispose of the proceedings afresh.
Akil Abdul Hamid Kureshi, J.
1. Petitioners have challenged an order dated 6.2.2014 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT for short) under which while remanding the proceedings back to the adjudicating authority, Tribunal imposed a condition of depositing sum of Rs. 50 lacs on the petitioners. The petitioners were served with show cause notice dated 14.12.2004 why excise duty with interest and penalty not be recovered. It is not in dispute that after service of show cause notice, adjudicating authority kept the proceedings in abeyance and revived the hearing only in the year 2012. In the meantime, the petitioners' factory had shutdown. Notices of hearing of the show cause notice, therefore, returned unserved. The adjudicating authority, therefore, proceeded ex parte and passed the final order confirming the duty demand with penalty and interest. This order the petitioners challenged before the Tribunal and requested for remand of the proceedings since the order in original was passed ex parte. On the date of hearing on 6.2.2014, in fact, the petitioners requested for adjournment. However, the Tribunal on the ground that twice the proceedings were earlier adjourned, refused to grant any further time and while remanding the proceedings to the adjudicating authority imposed the said condition of depositing sum of Rs. 50 lacs on the petitioners. Tribunal made following observations:--
"4. On perusal of the record, it transpires that the demands have been confirmed on M/s. Waghbakriwala Rayons on the ground that they had removed the processed and dyed fabrics and waste fabrics illicitly and clandestinely. On perusal of the grounds of appeal taken by the appellant, the entire grounds of appeals revolves on the violation of principles of natural justice stating that they had not received the hearing notices and they could not file reply to the show cause notice. It is also claimed in the grounds of appeal that impugned order is issued ex parte, without giving a single hearing to the appellant and they were not given time for presenting their case. On perusal of the impugned order, we find that the adjudicating authority has recorded that he had granted personal hearing to the appellant and hearing notices were returned to the office of the adjudicating authority by the postal authority with remarks 'Left/Returned to sender'. We would have normally allowed these applications and remanded the matter back to the adjudicating authority on the ground of violation of principles of natural justice, but in the case in hand, we do not find reason to do so inasmuch as, the appellant herein neither filed any reply to the show cause notice which was issued to diem on 14.12.2004 nor represented before the adjudicating authority seeking time for filing reply to show cause notice. There is nothing on record to indicate that they had not received show cause notice. In view of this, we hold that appellants herein were non-cooperative with the adjudicating authority. At the same time, there being a claim of violation of principles of natural justice, in the interest, in our view, the appellants should be granted an opportunity for filing reply to the show cause notice and being heard by the adjudicating authority.
5. In view of the above, there being non-cooperation from the appellant even before us, which can be noticed from the fact that notes were filed for adjournments; appellant should be put to some conditions for remanding the matter back to the adjudicating authority. Appellants need to cooperate with the adjudicating authority and to do so, we direct M/s. Waghbakriwala Rayons, the main appellant herein to deposit an amount of Rs. 50,00,000/- (Rupees Fifty Lacs Only) within a period of eight weeks from today and report compliance to the adjudicating authority on 9.42014. All the appellants herein are also directed to file reply to the show cause notice within four weeks from today, stating their defence bef
