Custom, Excise & Service Tax Tribunal
(1) Mohammed Hussein Abdul Sattar vs Commissioner Of Central Excise, Thane I on 1 June, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal Nos. C/803/07, C/277/06 & E/1136/06 (Arising out of Order-in-Original No. 26/SK-26/2005/Thane-I dated 31.10.2005 passed by Commissioner of Central Excise, Thane I.) For approval and signature: Honble Mr P.G. Chacko, Member (Judicial) Honble Mr. S.K.Gaule, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== (1) Mohammed Hussein Abdul Sattar (2) Shakir Mohammed Fareed (3) Mohammed Hussein Abdul Sattar Appellant (Represented by: Shri Anil Balani, Advocate for appellant at Sr.No. (1) & (3) and None for appellant at Sr. No (2) Vs Commissioner of Central Excise, Thane I Respondent (Represented by: Shri R.V. Desai, Sr Advocate with Shri R.B. Pardeshi, Consultant.) CORAM:
Honble Mr P.G. Chacko, Member (Judicial) Honble Mr. S.K.Gaule, Member (Technical) Date of Hearing : 01.06.2010 Date of Decision: 01.06.2010 ORDER NO..
Per: P.G. Chacko
1. These appeals are directed against the Commissioners order, wherein certain amounts of Customs duty and Central Excise duty were sought to be recovered from M/s Crystal Exports and penalties were imposed on several persons including the appellants. The duty demand on M/s Crystal Exports was sought to be enforced against Shri Mohammad Hussain Abdul Sattar (one of the appellants) and one Shri Naresh Govardhandas Bhatia. It appears, before the Development Commissioner, Shri Mohammad Hussain Abdul Sattar represented M/s Crystal Exports as a 100% EOU. He also presented himself as the authorized signatory of the EOU before the Customs authorities. Apparently, sometime in the year 2000, Shri Naresh G Bhatia became a partner alongwith Shri Mohammad Hussain Abdul Sattar in M/s Crystal Exports. The raw materials imported and indigenously procured by the EOU without payment of duty in terms of the relevant notifications during the period from May 2000 to September 2002 are the subject-matter of this case. Upon detailed investigations, the department found that the EOU had committed breach of the notifications by diverting the raw materials without using the same in the manufacture of finished goods for export. A case was, accordingly, framed against the EOU and the persons associated therewith, for recovery of duty of Customs on the imported raw materials and duty of Excise on the indigenously procured raw material, confiscation of the offending goods and also for imposing penalties on the offenders. It was in adjudication of this show-cause notice that the Commissioner passed the impugned order. In Appeal C/803/07, the appellant is aggrieved by the demand of Customs duty, as also by the penalty imposed on him under Section 112 of the Customs Act. In appeal E/1136/06, he challenges the demand of Excise duty as well as the penalty imposed on him under Section 11AC of the Central Excise Act. The remaining appeal is by the CHA who had handled the imports made in the name of M/s Crystal Exports and is aggrieved by the penalty imposed on him by the Commissioner.
2. There is no representation for the CHA despite notice, nor any request of his for adjournment. Shri Mohammad Hussain Abdul Sattar is represented by the learned Counsel. The department is represented by the learned Senior Advocate Shri R.V. Desai (the advocate on record is also with him).
3. In the appeals filed by Shri Mohammad Hussain Abdul Sattar, the main grievance raised against the adjudicating authority is that natural justice was denied to him. It is submitted that a reasonable opportunity of replying to the show-cause notice or of being personally heard was not granted. It is submitted that the appellants plea for cross-examination of witnesses was also not granted. According to the appellant, the Commissioners order has to be set aside on the sole ground of negation of natural justice. It is his grievance that not even an opportunity of being personally heard was offered by the Commissioner. In support of this case of Shri Mohammad Hussain Abdul Sattar, the learned Counsel Shri Anil Balani has given us a brief account of what transpired between the appellant and the department during the interregnum between the show-cause notice and the impugned order. The appellant, through his advocate, submitted a reply to the show-cause notice on 5.5.2005, wherein, apart from denying the allegations raised in the show-cause notice, he pleaded for an opportunity to cross-examine several persons (without naming them) whose statements had been recorded by the investigators and relied upon in the show-cause notice. There was also a plea for cross-examination of the investigators. The appellant stated that the list of witnesses whom he wanted to cross-examine would be given in due course. He also stated that a list of additional documents, which he wanted to produce in support of his defence, will also to be submitted in due course. In his reply dated 5.5.05, the appellant also requested that a minimum period of eight weeks be granted for filing detailed submissions after cross-examination of the witnesses. In his reply, the appellant also sought to make out a case that he was not in any way concerned with the affairs of M/s Crystal Exports and that one Shri Naresh G Bhatia was the proprietor of the concern during the material period. The appellant, in his reply, further pointed out that he was returning one copy of the show-cause notice which was addressed to M/s Crystal exports alongwith enclosures as if he had nothing to do with M/s Crystal Exports. Two other documents, which are relevant to the present context, are a letter dated 21.10.05 of the Superintendent of Central Excise, Thane-I addressed to Shri Kureshi M Aftab, Advocate for Shri Mohammad Hussain Abdul Sattar and a letter dated 25.10.2005 of the same Superintendent addressed to Shri Mohammad Hussain Abdul Sattar qua proprietor and authorized signatory of M/s Crystal Exports and to five others including M/s Crystal Exports, their CHA and Shri Naresh Kumar G Bhatia. The first letter appears to have been sent to the advocate by speed post and the second one was sent to the addressees by registered post. The text of the letter dated 21.10.05 reads thus:
Sub: Adjudication of Show Cause Notice F. No. V/Adj/SCN/15-10/Crystal/Th-I/2005 dated 3.03.2005- reg.
This is with reference to your letter dated 5.5.05, on the above subject. In this letter you have stated that I am hereby returning the copy of the show cause notice addressed to M/s Crystal Exports.. however there was no enclosure to your letter and no copy of the notice was returned.
2. It is seen that you have not filed any reply to the above said Show Cause Notice, in spite of the lapse of considerable time. I am directed to inform you that if the reply to the Show Cause Notice is not received within ten days of receipt of this letter, it will be presumed that you have nothing to say in the matter and the case will be decided on the basis of records available. You are also required to submit all the documents, upon which you intend to rely in support of your defense, along with your reply. In case, you want to ask for cross examination of any person, you are requested to make out proper grounds, assigning reasons so as to justify your request for cross-examination. The text of the letter dated 25.10.05 is as follows:
Sub: Adjudication of Show Cause Notice F.No. V/Adj/SCN/15-10/Crystal/Th-I/2005 dated 3.03.2005 reg.
This is with reference to the Show Cause Notice F. No. V/Adj/SCN/15-10/Crystal/Th-I/2005 dated 03.05.2005.
2. It is seen that you have not filed any reply to the above said Show Cause Notice. I am directed to inform you that if the reply to the Show Cause Notice is not received within Five days of receipt of this letter, it will be assumed that you have nothing to say in the matter and the case will be decided on the basis of records available. In case, you want to ask for cross examination of any person, you are requested to make out proper grounds, assigning reasons so as to justify your request for cross-examination.
4. According to Shri Mohammad Hussain Abdul Sattar, he received the second letter dated 25.10.05 on 1.11.05 and replied thereto on the same day. The full text of his letter dated 1.11.05 to the Commissioner is available on record. The contents of this letter appear to be in continuation or furtherance of the submissions made in the earlier letter dated 5.5.05. This letter, however, did not refer to the Superintendents first letter dated 21.10.05. In this letter, which is in the nature of a more detailed reply to the show-cause notice, Shri Mohammad Hussain Abdul Sattar reiterated inter alia the plea for opportunity to cross-examine the witnesses. However, the names of witnesses were not mentioned by the appellant. Interestingly, the appellant requested the Commissioner to inform him in- advance the persons who are being made available for cross-examination so that he could engage a counsel for the purpose of cross-examining them. The impugned order was passed on 31.10.05, obviously before the above reply dated 1.11.05 was received by him.
5. The learned Commissioner, in para 75 of his order, referred to the Superintendents letter dated21.10.05 as also to the reply letter dated 05.05.05 submitted by the advocate for Shri Mohammad Hussain Abdul Sattar. The Commissioner noted that no reply had been filed by Shri Mohammad Hussain Abdul Sattar within the period of ten days granted in the Superintendents letter dated 21.10.05. He also observed that no reply had been received from the main noticee, M/s Crystal Exports. The Commissioner also referred to the Superintendents letter dated 25.10.05, whereby five days time had been given to the noticees for filing reply to the show-cause notice. In this context also, he observed that no reply had been received within the stipulated time. In these circumstances, it appears, the learned Commissioner proceeded to adjudicate upon the show-cause notice without issuing any notice for personal hearing.
6. We have heard both sides in extenso on the limited question whether the rule of natural justice as understood and propounded by courts of plenary jurisdiction can be said to have been followed in this case. In this connection, the learned Counsel for the appellant has referred to the provisions of Section 124 of the Customs Act and the corresponding provisions of the Central Excise Act. It is submitted that an opportunity of making a representation in writing vis-`-vis the allegations raised in the show-cause notice and also a reasonable opportunity of being personally heard have got to be mandatorily given to the person to whom show-cause notice for confiscation of goods and imposition of penalty has been issued under Section 124 of the Act. It is argued that this is an inviolable legal right available to the person, and that any authority which denies this right to the noticee is committing breach of natural justice. In this connection, the learned Counsel has relied upon case law such as the following:
(i) P.K. Goel, New Delhi vs Collector of Customs, Delhi 1983 (12) ELT 648 (CEGAT);
(ii) Mubarakdin Bidi Factory vs Collector 1987 (27) ELT 474 (Tribunal);
(iii) Pundalik R. More vs Collector 1989 (41) ELT 436 (Tribunal);
(iv) A.F. Gani vs Commissioner 1997 (89) ELT 219 (Tribunal).
7. The learned Senior Counsels counter to the above arguments of the appellants Counsel is that no opportunity of being heard should be given to any person unless asked for. This submission is based on Section 122A of the Customs Act and the similar provisions of Section 33A of the Central Excise Act. Both these provisions were brought on the statute books with effect from 10.09.04. Sub-section (1) of Section 122A ibid, which is pari materia with sub-section (1) of Section 33A ibid, reads thus:-
(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires. The learned Senior Counsel has laid emphasis on the underlined words. It has been argued that the provisions of Section 124 of the Customs Act must not be read in isolation and the same should be read with the provisions of Section 122A of the Act. According to the learned Senior Counsel, the requirement of reasonable opportunity of being heard under Section 124 is circumscribed by the limiting factor laid down under Section 122A. This is the reason why the provisions of both the Sections should be read together so as to arrive at the scope and ambit of personal hearing to be given to a person show-caused under Section 124. The learned Senior Counsel has also relied upon case law in his endeavour to show that the opportunity of being heard under Section 124 of the Customs Act is not without any limit. He has mainly relied upon the Supreme Courts judgment in the case of S.K. Singh vs Union of India AIR 1960 (47) SC 493. In the said case, in the context of considering the question whether natural justice had been done to the petitioner under Rule 55 of the Civil Service (Classification, Control and Appeal) Rules, their Lordships held that an opportunity of making an oral representation was not a necessary postulate of an opportunity of showing cause within the meaning of Art. 311 of the Constitution.
8. The learned Senior Counsel has also claimed support from the judgment in Madhya Pradesh Industries Ltd vs Union of India and Others AIR 1966 (53) SC 671, wherein, in a separate judgment but concurring with the majority view, His Lordship Justice Subba Rao had observed as follows:
I do not think that the appellant is entitled as of right to a personal hearing. It is no doubt a principle of natural justice that a quasi judicial tribunal cannot make any decision adverse to a party without giving him an effective opportunity of meeting any relevant allegations against him Indeed rule 55 of the Rules, quoted supra, recognizes the said principle and states that no order shall be passed against any applicant unless he has been given an opportunity to make his representations against the comments, if any, received from the State Government or other authority. The said opportunity need not necessarily be by personal hearing. It can be by written representation. Whether the said opportunity should be by written representation or by personal hearing depends upon the facts of each case and ordinarily it is in the discretion of the Tribunal. The facts of the present case disclose that a written representation would effectively meet the requirements of the principles of natural justice
9. Relying upon the cited case law, the learned Senior Advocate submits that, in the facts and circumstances of this case, the requirement of natural justice has been substantially complied with by the adjudicating authority by giving the appellant a reasonable opportunity of replying to the show-cause notice. It is submitted that the submissions made by the party in their reply dated 5.5.05 were considered by the Commissioner. Though, in that letter, the party proposed to file a list of witnesses for cross-examination as also to produce additional documents in due course, nothing was done in this regard. It is submitted that the Superintendent had, in fact, reminded the party through a letter about any further representation in the case but that opportunity was also not availed of. The learned Counsel has referred to the show-cause notice and has pointed out that the notice also had stipulated a reasonable period for filing of reply. The notice also required the party to produce any evidence upon which they might rely upon in support of the defence. It also gave them an opportunity to inspect any records in the custody of the department. The show-cause notice had specifically queried as to whether the noticees would like to be heard in person. According to the learned Senior Counsel, this show-cause notice very much honoured the rule of natural justice as incorporated under Section 124 read with Section 122A of the Customs Act. Nevertheless, the appellant did not choose to avail himself of the opportunity. Even in his reply dated 5.5.05, the appellant did not disclose his intention to be personally heard. Therefore, according to the learned Senior Counsel, the adjudicating authority was not liable to give the appellant any opportunity of being personally heard. Such opportunity is given only when asked for.
10. The learned Senior Counsel has also argued that the conduct of the party is also relevant. A person who approaches the adjudicating authority with clean hands may legitimately claim discretionary reliefs, whereas a person who approaches the authority otherwise may not necessarily get such relief. After referring to the facts of this case, the learned Senior Counsel submits that this appellant has never been honest in his approach inasmuch as what he has pleaded in the memo of appeal regarding his relation to M/s Crystal Exports is just contradictory to what he confessed to the department under Section 108 of the Customs Act. It is submitted that the confessional statements were not validly retracted. In this scenario, apart from contesting the appellants plea of prima facie case against the Commissioners order, the learned Senior Counsel has urged that the Commissioners order be upheld on merits on the basis of the facts admitted by the appellant under Section 108 of the Customs Act.
11. We have given careful consideration to the submissions made by the Counsel. It is not in dispute that the show-cause notice was issued under various provisions of the Customs Act and the Central Excise Act and the relevant Rules framed thereunder. In the present appeals, the penalties on the appellants are under challenge. These penalties arise in the context of confiscation of the goods with which the appellants were associated in one way or the other. In this context, certainly, the provisions of Section 124 of the Customs Act would be central to the dispute, being one of the main provisions of law invoked in the show-cause notice for confiscation of the goods imported by M/s Crystal Exports. Section 124 reads as under:
SECTION 124.?Issue of show cause notice before confiscation of goods, etc. No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person -
(a) is given a notice in [writing with the prior approval of the officer of Customs not below the rank of a Deputy Commissioner of Customs, informing] him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter :
Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral.
12. The learned Senior Advocate has urged that the above provisions be always read with Section 122A, which is reproduced below:
SECTION [122A.?Adjudication Procedure. (1)?The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires.
(2)?The adjudicating authority may, if sufficient cause is shown at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing :
Provided that no such adjournment shall be granted more than three times to a party during the proceeding.]
13. Under Section 124 ibid, the Commissioner cannot pass an order confiscating any goods or imposing any penalty on any person without giving such person or the owner of the goods a notice in writing of the grounds on which it is proposed to confiscate the goods or to impose penalty, without giving an opportunity of making a representation in writing within a reasonable time against the grounds of confiscation/penalty and without giving the noticee a reasonable opportunity of being heard in the matter. The proviso to Section 124 says that the notice and representation referred to above may be oral, if so desired by the noticee. In other words, the proviso permits a person to waive written show-cause notice and also gives him the option for making oral submissions instead of written representation. Significantly, this proviso does not authorize the adjudicating authority to deny to him an opportunity of being personally heard. Indeed, there is hardly any difference between oral submissions and being personally heard. In other words, the obligation to grant an opportunity of being personally heard is an inextricable part of Section 124. The question now arises as to whether this requirement can, in any way, be curtailed or abridged by the provisions of Section 122A. We agree with the learned Senior Counsel when he submits that Sections 124 and 122A should be read together, and we do read them together. Section 124 is a pre-existing provision vis-`-vis Section 122A which was inserted with effect from 10.9.2004. The latter provision appears to say that in any proceeding under this chapter or any other provision of this Act it is open to a person to seek an opportunity of being personally heard, in which event the adjudicating authority would grant such opportunity. On the other hand, Section 124 specifically provides that a reasonable opportunity of being heard shall be given before confiscation of goods and imposition of penalty. The specific provisions of Section 124 would override the general provisions of Section 122A in the event of any conflict between the two.
14. We have already noted that the right to be personally heard is a facility to be mandatorily given to the person show-caused under Section 124. By no stretch of imagination can it be argued that this right is curtailed by anything contained in Section 122A. Indeed, the right to be heard before being condemned inheres in every person and the same is a part of the law of nature, and what is provided by the law of nature cannot be taken away by human agencies including the legislature. One has got to bear this in mind while considering the effect of Section 122A (1) on Section 124 (c). The two provisions call for harmonious construction.
15. In the present case, in his reply dated 5.5.05, the appellant did not waive his right to be personally heard. On the other hand, by proposing to file detailed submissions, he was virtually asserting his right to be so heard. This is the context to consider his Lordship, Justice Subba Raos view that an opportunity of being personally heard is inbuilt in a written representation also. The Superintendent of Central Excises letter dated 21.10.05 granted to the appellant ten days time for filing a reply to the show-cause notice. This letter indicates that the Superintendent was under the Commissioners instructions to grant such time for reply to the show-cause notice. The learned Senior Counsel has, with reference to this letter of the Superintendent, made an endeavour to show that the time was granted not to this appellant, but to M/s Crystal Exports. According to the learned Senior Counsel, the appellants reply dated 5.5.05 was taken into reckoning and, therefore, he was not considered to be in the category of persons who failed to reply to the show-cause notice. The point sought to be made by the learned Senior Counsel, however, does not appear to be supported by what is contained in para 75 of the Commissioners order, wherein the Commissioner noted thus:
Shri Aftab was informed vide letter bearing F.No. V/Adj/SCN/15-10/Crystal/Th-I/2005 dated 21,10,2005 that there was no enclosure to his letter dated 5.5.05 (received on 25.7.05) and he was requested to file the reply within ten days of receipt of the letter. However, no reply was filed till passing of this order.
16. We have already reproduced the text of the said letter dated 21.10.05 in an earlier part of this order. This letter was addressed to the appellants advocate and had categorically stated that You have not filed any reply to the show-cause notice in spite of the lapse of considerable time. The letter further stated I am directed to inform you that if the reply to the show-cause notice is not received within ten days, it will be presumed that you have nothing to say in the matter and the case will be decided on the basis of records available. This letter further required the appellants advocate to submit all the documents to be relied upon in support of defence. It also required the appellants advocate to make out proper grounds/reasons in support of his request for cross-examination. Therefore, it does not appear to be correct to say that the Superintendents letter dated 21.10.05 was addressed to Mr Qureshi M Aftab and not to Shri Mohammad Hussain Abdul Sattar (appellant). This letter was sent by registered speed post and the same might have been received on the next day or shortly thereafter. If it be assumed that the letter was received on 22.10.05, the period of ten days granted by the Commissioner to the appellant for replying to the show-cause notice was available to the party upto 02.11.05. But the Commissioner had already passed his order on 31.10.05. We have also noted that the Superintendents second letter dated 25.10.05, which was sent by registered post, was received by the appellant on 1.11.05 and that, with reference to this letter, they prepared a detailed reply to the show-cause notice on 1.11.05 itself but before this reply could be submitted, the learned Commissioner passed the impugned order, overlooking the fact that five days time from 1.11.05 was available to the party for reply to the show-cause notice in terms of the Superintendents second letter. The learned Commissioners action amounted to denial of opportunity of being heard, to the party. Yet another glaring fact is that no notice of personal hearing was issued in this case. Considering all these facts and circumstances of the case, we take the view that the rule of natural justice inbuilt in the provisions of Section 124 of the Act and similar provisions of the Central excise Act was not followed in letter and spirit by the Commissioner. Therefore, his order is liable to be set aside on the sole ground of breach of natural justice.
17. Before concluding this order, we may also observe that, given an opportunity of effectively replying to the show-cause notice and of being personally heard, it will be open to the appellant to contest the show-cause notice and also to demonstrate that he is before the adjudicating authority with clean hands. It is for the learned Commissioner to sit in judgment over the conduct of the party. But there shall be no such judgment without personal hearing.
18. We have arrived at the above view after applying our mind to the conspectus of case law placed before us. As rightly pointed out by both the counsel, the facts of the case would largely determine the extent to which natural justice was denied to the party. In each of the various cases cited before us, the facts and circumstances of the particular case were considered and a view taken on the question whether natural justice was denied or not. We have carefully considered the facts and circumstances of this case and have taken a view, in the light of the provisions of Section 124 of the Customs Act and similar provisions of the Central Excise Act. The learned Senior Counsel referred to various provisions of both the statutes in his bid to show that none of such provisions provided for personal hearing to be claimed as a matter of right. One of those provisions cited by the learned Senior Counsel is Section 122A of the Customs Act and we have already dealt with the impact of this provision of law on Section 124 of the Customs Act.
19. In the result, we set aside that part of the Commissioners order which is directly against these appellants (CHA included) and allow these appeals by way of remand with a direction to the learned Commissioner to undertake de novo adjudication of the show-cause notice in accordance with law after giving the appellants another opportunity of replying to the show-cause notice as well as a reasonable opportunity of being personally heard. Needless to say that a speaking order should be passed on all issues. Considering the peculiar nature of this case, we would also request the learned Commissioner to conclude his proceedings without unreasonable delay, at any rate, within a period of three months from the date of receipt of a certified copy of this order. The appellant should co-operate with the Commissioner by replying to the show-cause notice, adducing evidence etc within such reasonable time as may be granted by the Commissioner.
(Dictated in Court.) (S.K.Gaule) Member (Technical) (P.G. Chacko) Member (Judicial) rk 19