Allahabad High Court
Modipon Ltd. vs Collector Of C. Excise, Meerut on 19 August, 1996
Equivalent citations: 2002(144)ELT267(ALL)
JUDGMENT
1. By this petition under Article 226 of the Constitution, petitioner M/s. Modipon Ltd. which is a public limited company carrying on the business of manufacturing Nylon-6 filament yarn in its factory located at Modinagar, seeks an order, direction or writ in the nature of Certiorari quashing the order of the Collector of Central Excise, dated 30-12-82 (Annexure M) and the show cause notice dated 26-6-76 (Annexure B) and the proceedings emanating therefrom.
2. The short facts leading to this petition are as under:
3. Petitioners manufacture Nylon Yarn falling under Central Excise Tariff Item No. 18. It is averred that during the period commencing 1-1-68 and ending 28-2-75, petitioners utilised certain raw materials as entered and recorded by them in their records and returns. The respondents found that the petitioners did not maintain proper records and entered incorrect figures of production in the statutory records consequently a show cause notice dated 26-6-76 was issued to the petitioners to show cause as to why on 18,37,976 Kgs. nylon yarn alleged to have been manufactured and cleared surreptitiously in a manner other than as provided under the Central Excise Rules, 1944 (for short the Rules) excise duty should not be demanded under Rule 9(2) and 173-Q of the Rules at the rates applicable to the lowest denier attracting the highest rate of duty. The amount of duty thus demanded works out to Rs. 6,25,70,000.50 (Rupees six crores, twenty five lacs, seventy thousand and paise fifty only) and further as to why a penalty should not be imposed on them under Rules 9(2), 52A and 173Q of the Rules and also as to why the land, building, plant and machinery used in the manufacture and production of nylon yarn should not be confiscated under Rule 173Q of the Rules. Copies of all documents which were proposed to be taken into account in the matter were supplied to the petitioner. Instead of filing reply to the show cause notice, petitioners sought repeated extensions for submission of reply and demanded informations and documents etc. which had no relevance with the issues involved in the show cause notice.
4. Ultimately petitioners filed reply to the show cause notice on 29-9-76 and demanded personal hearing. Accordingly 8-12-77 was fixed. On 2-12-77 Administrative Manager of the factory Shri V.K. Singhal appeared for personal hearing and made written submissions and asked for further opportunity. On his instance 2-2-78 was fixed for personal hearing. However, again on 2-1-78, petitioners further requested for any other opportunity of personal hearing and therefore the case was adjourned and fixed for 27-1-78. Again petitioners submitted written submissions. In between the petitioner filed writ petition No. 1039 of 1978 challenging the validity of the show cause notice and contending that the proceedings under the show cause notice were time barred and the petitioners were not served with the copy of the report of the Deputy Chief Chemist and they were not supplied relevant documents upon which the show cause notice was based and the procedure prescribed by Rule 173Q was not followed, as such the proceeding initiated on the basis of show cause notice were vitiated.
5. On behalf of respondents a statement before the Court was made that as a preliminary issue the question of time barred will be decided and the copy of the report of the Deputy Chief Chemist for the year 1975 will also be supplied to the petitioner and that the respondents have been instructed by the producers concerned not to disclose their figures of production as such the respondents are not in a position to give copies of those reports and figures. It was also stated on behalf of respondents that they will issue summons for the production of such documents as may be specified by the petitioners to the persons concerned if an application is made by the petitioners in this behalf. In regard to the submission that the procedure prescribed by Section 173E has not been complied with therefore, the proceedings vitiated, in that petition this Court observed that petition cannot be entertained at this stage. However, it was made clear that it would be open to the petitioner to raise this point before the respondents and if the point is raised it will be decided by the respondents. Thus, on the basis of the statement made by the petitioner's counsel for seeking withdrawal of the petition the same was permitted and the petition was disposed of as withdrawn on 16-8-78.
6. Thereafter on 7-11-78 a copy of the inspection report of the Deputy Chief Chemist was supplied to the petitioners and on 18-8-82 petitioners were served with a notice that the case will be taken up on 8-9-82 before the respondent No. 1 and if the petitioners want to add to their submissions made earlier, they may appear in person before the respondent No. 1 on 8-9-82. It was also made clear in that notice that if petitioners failed to appear on 8-9-82, the case will be decided on merits.
7. On 7-9-82 on behalf of petitioners it was informed that their advocate looking after their case was not in India and had gone abroad therefore, adjournment of the case for the next month was sought. The respondent No. 1 refusing the prayer of adjournment proceeded with this case holding that this case relates to the year 1976 and number of opportunities have already been afforded to the petitioners to put up their case, all the relevant documents have been supplied to the petitioners and their detailed submissions are already on the record and the case involves huge revenue to the tune of more than Rs. six crores and having afforded full opportunity of being heard to the petitioner the case cannot be adjourned any longer and therefore the respondent No. 1 proceeded to decide the case on merits on the basis of evidence and material on record. Hence this petition.
8. While filing counter affidavit the respondents supported the impugned order and submitted that huge revenue is involved and impugned order has been passed considering the detailed submissions made by the petitioners which were already on record, therefore, no interference by this Court is called for.
9. Learned senior counsel appearing for the petitioners vehemently contended that the direction issued by this Court vide its order dated 16-8-78 has not been complied with in as much as the show cause notice having not been issued in accordance with the procedure prescribed by Rule 173E of the Rules, the impugned proceedings vitiated but this plea has not been decided as a preliminary issue.
10. Learned counsel further submitted that the copy of report and figures of production have not been supplied to the petitioners nor opportunity of being heard has been provided to them while passing the impugned order (Annexure M to the writ petition).
11. Learned counsel also submitted that petitioner's counsel was not available in India on the date fixed, therefore, an adjournment application was presented before the authority well in advance, as such the authority concerned (respondent No. 1) was legally bound to accommodate the petitioners by adjourning the case but the respondent No. 1 having not done so has committed patent error of law.
12. Having heard learned counsel for the parties there appears no scope for interference by this Court. As regards the first ground raised by learned counsel for petitioner that the validity of the show cause notice has not been decided as preliminary issue, a close scanning of Annexure M to the writ petition makes it crystal clear that the respondent No. 1 was fully aware of the order dated 16-8-78 passed by this Court. He was also fully aware of the fact that the validity of the show cause notice was to be decided as preliminary issue. Discussions to this effect find place at pages 19, 20 and 21 in the impugned order (Annexure M). The validity of show cause notice is questioned on the ground of limitation. According to the petitioners the show cause notice was barred by time under Rule 10. The respondent No. 1 has fully discussed and considered this aspect of the matter at page 20 and 21 of his judgment and arrived at the finding that the Rule 10 related to short levy and not to non-levy of duty due to clandestine removal of goods without payment of duty in contravention of Rules 9(1), 52A, 173G(2) and 173Q(a)(b) and (d) and accordingly he arrived at the conclusion that present show cause notice is not time barred under Rule 10 read with Rule 173-J of the Central Excise Rules, 1944. Thus, the preliminary issue has been decided by the respondent No. 1 on page 21 of his order. We see no infirmity in the reasons assigned and conclusion arrived at by the respondent No. 1. Accordingly first contention raised by learned counsel for petitioner is repelled.
13. As regards the second contention for petitioners that the copy of the report and figures of production have not been supplied to the petitioners, we would like to refer the order of this Court dated 16-8-78. In the order of this Court itself it was made clear that the respondent will issue summons for the production of such documents as may be specified by the petitioner by making an application in this behalf. Learned counsel for the petitioners failed to establish before this Court that any such application as referred in the order of this Court dated 16-8-78 was ever made by the petitioners before the respondent No. 1. Since the petitioners themselves did not make any such application how the respondent No. 1 is to be blamed for the same. The respondent No. 1 has recorded specific finding on page 19 of his order that all documents which have been relied upon by the petitioners have been made available to them and even the report of the Deputy Chief Chemist, although not relied upon, has been supplied to petitioners. Accordingly the second contention for petitioners is also repelled.
14. Learned counsel for the petitioners also contended that impugned notice having not been issued within 6 months which is the stipulated period under the Act, is without jurisdiction and therefore, all consequential proceedings have become Corum Nonjudice. According to learned counsel the limitation of 5 years applies only in cases where collusion, misrepresentation or suppression of facts or contravention of the provisions of the Act or Rules has been committed to evade the excise duty.
15. Suffice it to say, in the instant case impugned notice ex facie demonstrates that this case falls within the purview of proviso to Section 11A of the Act which provides the limitation of 5 years. In the opinion of this Court, making of incorrect entries in the statutory records or clearing of goods without making entries in the relevant records amounts to suppression of facts and contravention of the provisions of the Act and therefore, the limitation of 5 years has full application to the facts of instant case.
16. Now coming to the third contention of learned counsel for petitioner that the respondent No. 1 failed to afford reasonable opportunity of being heard to the petitioners as he refused the adjournment sought on the ground of non-availability of their counsel, it may be stated that normally whenever an adjournment is sought on the ground of non-availability of the counsel, the adjournments are allowed so as to comply with the principles of Audi Alteram Partem but the grant of adjournments always depends on the circumstances of each case. The circumstances of instant case have been fully narrated by the respondent No. 1 in the impugned order. The matter related to the year 1976. The case involved huge revenue. On a number of occasions opportunities were already afforded to the petitioners. The petitioners filed detailed submissions to the show cause notice by their letter dated 20-9-76. Thereafter they requested for personal hearing. Thereafter 2-12-77 was fixed for personal hearing. On 2-12-1977 Sri V.K. Singhal, Administrative Manager of the factory appeared for personal hearing and submitted written submissions. 8-12-77 was also fixed for personal hearing. Petitioners wanted further opportunity then 2-1-78 was fixed for personal hearing, when written submissions were filed with further request to give them another opportunity. Thereafter again 27-1-78 was fixed when the petitioners submitted written submissions. Thereafter petitioners were requested as to whether they wanted to add anything to their submissions already made and if yes, to do so before 8-9-82 and 8-9-82 was fixed for personal hearing. By a letter dated 18-8-82 it was made clear that if the petitioners failed to appear on 8-9-82 the case will be decided on merits ex parte. The petitioners did not say anything about adding to their submissions already made. However, by their letter dated 7-9-82 they sought adjournment on the ground of non-availability of their counsel. It was under these circumstances of instant case that the adjournment was refused, assigning cogent reasons that having received the notice for hearing about a month before the date of hearing, the petitioners moved the adjournment application just a day before the date of hearing i.e. on 7-9-82. Thus, we feel that under the circumstances of instant case it cannot be said that principles of Audi Alteram Partem have not been observed in the instant case.
17. In support of aforesaid contention learned counsel for the petitioners placed reliance on Union of India and Ors. v. Arebee and Company [1987 (31) E.L.T. 636] wherein it is ruled that having waited for 7 years, the adjudicating authority should have acceded to the short request for an adjournment made by the respondents. But this decision is of no avail for the present petitioners as in this decision itself it has been made clear that if the authorities did not want to wait, the respondents should have been so intimated before passing of the impugned order. In the case before us, petitioners were duly intimated before passing of the impugned order by a latter dated 18-8-82 that if they failed to appear on 8-9-82 the case will be decided ex parte on merits. Not only this, petitioners were also asked whether they wanted to add to their submissions already made and if so, they may do so before 8-9-82. But they did not intimate the respondent No. 1 about their intention to add anything to their submissions made earlier.
18. Developing above contention learned counsel for petitioner argued that hearing includes not only written submissions but also personal hearing and the petitioners having not been afforded personal hearing the principles of natural justice stand violated in the instant case.
19. No doubt hearing includes written submissions and personal hearing as well but the principle of Audi Alteram Partem does not make it imperative for the authorities to compel physical presence of the party concerned for hearing and go on adjourning the proceeding so long the party concerned does not appear before them. What is imperative for the authorities is to afford the opportunity. It is for the party concerned to avail the opportunity or not. If the opportunity afforded is not availed of by the party concerned, there is no violation of the principles of natural justice. The fundamental principles of natural justice and fair play are safeguards for the flow of justice and not the instruments for delaying the proceedings and thereby obstructing the flow of justice. In the instant case as stated in detail in preceding paragraphs, repeated adjournments were granted to the petitioners, dates after dates were fixed for personal hearing, petitioners filed written submissions, the administrative officer of the factory appeared for personal hearing and filed written submissions, therefore, in the opinion of this Court there is sufficient compliance of the principles of natural justice as adequate opportunity of hearing was afforded to the petitioners.
20. For the sake of arguments it was asked by this Court during the course of arguments as to what submissions the petitioners would have made at the time of personal hearing but nothing substantial was suggested by the learned counsel for the petitioners in this regard.
21. It may be recalled here that the requirement of natural justice varies from cases to cases and situations to situations. Courts cannot insist that under all circumstances personal hearing has to be afforded. Quasi-judicial authorities are expected to apply their judicial mind over the grievances made by the persons concerned but it cannot be held that before dismissing such applications in all events the quasi-judicial authorities must hear the applicants personally. When principles of natural justice require an opportunity before an adverse order is passed, it does not in all circumstances mean a personal hearing. The requirement is complied with if the person concerned is afforded an opportunity to present his case before the authority. Any order passed after taking into consideration the points raised in such applications shall not be held to be invalid merely on the ground that no personal hearing had been afforded. This is all the more important in the context of taxation and revenue matters. See Union of India and Anr. v. Jesus Sales Corporation [1996 (83) E.L.T. 486 (S.C.) = J.T. 1996 (3) SC 597].
22. Besides providing for a post facto hearing, a concept which is not unknown to the principles of natural justice is the speaking order, which can also be subjected to judicial review. The passing of speaking order, however, does not mean that before the authority concerned comes to the conclusion, an opportunity of hearing must be given to him. Consideration of all materials before taking the decision is sufficient compliance of the requirement. [See Haryana Warehousing Corporation v. Ramavtar and Anr. (1996 2 SCC 98)].
23. In view of the discussions made above, in the considered opinion of this Court no case for interference is made out, therefore, writ petition fails and is dismissed.