Calcutta High Court (Appellete Side)
M/S. Super Iron Foundry Pvt. Ltd. & Anr vs Union Of India & Ors on 4 July, 2017
Author: Debangsu Basak
Bench: Debangsu Basak
1
4.07.2017
. No.80
BM
W. P. 4848 (W) of 2017
M/s. Super Iron Foundry Pvt. Ltd. & Anr.
Vs.
Union of India & Ors.
Mr. Pranab Kumar Datta, Sr. Adv.
Mr. N. K. Chowdhury
Mr. Arijit Chakrabarti
Mr. Nilotpal Chowdhury ... for the petitioners
Mr. Uday Sankar Bhattacharya
Mr. Bhaskar Prosad Banerjee ... for the respondents
An order dated February 9, 2017 passed by the Chief Commissioner, Central Excise, Kolkata Zone is under challenge in the present writ petition.
Learned senior advocate for the petitioners submit that, the authorities are required to follow the procedure prescribed under the notification issued in respect of Excise Rule 12 CCC. He submits that, the impugned order records that, the last hearing took place on December 29, 2016. Nonetheless the impugned order relies upon a reported dated February 2, 2017. In addition to such report, the impugned order records that, there are two other reports dated December 20, 2016 and December 21, 2016. He submits that, copies of the three reports were not made available to the petitioner at the time of hearing. He further submits that, not having made over copies of such reports the adjudicating authority had acted in breach of the principles of natural justice and that, the proceedings are vitiated by reason therein. He submits that, the procedure prescribed by the notification has also not been followed. 2 Learned senior advocate for the petitioners relies upon 2009 (233) Excise Law Time 289(S.C) (Kothari Filaments v. Commissioner of Customs (Port), Kolkata and submits that, when the copies of documents relied upon by the prosecution are not made available, the proceeding stands vitiated by reason of the breach of principles of natural justice.
Learned advocate appearing for the respondents submits that, the writ petition is premature. The impugned order seeks to put in the restrictions as noted therein. The final proceedings have not been undertaken. He submits that, the respondents will be entitled to copies of such documents as are relied upon by the department once the show cause notice is issued. Since the department is yet to issue any show cause notice, the question of supply of such documents does not arise. He further submits that, in the event, documents relied are made available to the petitioner then, there is a possibility of the petitioner taking steps so as to render the entire proceedings infractuous.
Learned advocate for the department distinguishes Kothari Filaments(Supra) by submitting that, the writ petition before the Supreme Court was in respect of a notice under Section 124 of the Customs Act, 1962. The fact scenario is different in the present matter. Therefore, such ratio is not applicable in the facts of the proceeding of the present case.
I have heard the rival contentions of the parties and the materials made available on record.
A proceeding under Rule 12CCC of the Central Excise Rule, 2002 read with Section 12AA of the CENVAT Credit Rule was sought to be undertaken against 3 the petitioner. It is alleged that, the petitioner had availed of CENVAT Credit on the strength of invoices which are doubtful.
The procedure to be followed in such proceeding is guided by the notification under Central Excise Rule 12CCC. The procedure is as follows:-
"4. Procedure. (1) The [Principal Commissioner of Central Excise or Commissioner of Central Excise, as the case may be] or Additional Director General of Central Excise Intelligence, as the case may be, after examination of records and other evidence, and after satisfying himself that the person has knowingly committed the offence as specified in para 1, may forward a proposal to the [Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise, as the case may be], to withdraw the facilities and impose restriction during or for such period, within 30 days of the detection of the case, as far as possible.
(2) The [Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise, as the case may be] shall examine the said proposal and after satisfying himself that the records and evidence relied upon in the said proposal are sufficient to form a reasonable belief that the person has knowingly done or contravened anything specified in para 1, may issue an order specifying the type of facilities to be withdrawn or type of restrictions to be imposed, along with the period for which the said facilities will not be available or period for which restrictions shall be operative:
Provided that [Principal Chief Commissioner of Central Excise or Chief Commissioner of Central Excise, as the case may be], before issuing the order, shall give an opportunity of being heard to the person against whom the proceedings have been initiated and shall take into account any representation made by such person before he issues the order."4
The procedure require an adjudicating authority to satisfy that the records and relevant documents are sufficient to arrive at a reasonable belief so as to take a measure. It also allows the delinquent an opportunity of hearing. To my mind, an opportunity of hearing to a delinquent would encompass within its wake the materials sought to be relied upon against him in the proceeding to be made over to him so that the delinquent is in a position to make an effective representation on the charges levelled against him. In Kothari Filaments (supra) although a notice under Section 124 of the Customs Act, 1962 was issued, the requirement of the adjudicating authority to make available the materials on the basis of which the charges were made against the delinquent has been stated. That being the position in law, in the facts of the present case, admittedly copies of the report dated December 20, 2016 and December 21, 2016 have not been made over to the petitioner in the proceedings resulting in the impugned order.
Learned advocate for the department submits that, the report dated February 2, 2017 may be a typographical error. However, without pronouncing upon on whether or not the impugned order contains a typographical error with regard to the report dated February 2, 2017, since admittedly, the investigation reports dated December 20, 2016 and December 21, 2016 have not been made over to the petitioner for an effective representation, I am of the view that, the adjudicating authority did not comply with the requirement of the adherence of the principles of natural justice as prescribed by the notification.
The contention of the department that, subsequently if and when, a show cause notice will be issued, the petitioner will be made available the copies of the 5 reports spoken of, does not cure a violation of the principles of natural justice already occurring. The impugned order stand vitiated since the procedure prescribed has not been followed. The impugned order stands vitiated by the non-adherence of the principles of natural justice. A post facto so called compliance thereof will not cure the proceedings which stands already vitiated. The petitioner should have been afforded the copies of the investigation report in the proceeding which has resulted in the impugned order. A subsequent making over of such document will not cure the illegality.
In such circumstances, the impugned order is set aside. This, however, will not prevent the authority from proceeding against the petitioner in accordance with law on the basis of the self-same materials.
W. P No.4848 (W) of 2017 is disposed of.
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of the requisite formalities.
( DEBANGSU BASAK, J. )