Gauhati High Court
M/S Dharampal Satyapal Ltd vs Deputy Commissioner Of Central Excise & ... on 1 December, 2011
Author: Ujjal Bhuyan
Bench: Ujjal Bhuyan
IN THE GAUHATI HIGH COURT
( THE HIGH COURT OF ASSAM, NAGALAND,
MEGHALAYA,MIZORAM, MANIPUR, TRIPURA AND
ARUNACHAL PRADESH )
-PRESENT -
HON'BLE THE CHIEF JUSTICE(ACTG.) MR A.K.GOEL
HON'BLE MR JUSTICE UJJAL BHUYAN
C. EX. TAX REF. NO. 1/2008
APPELLANT :
M/s Dharampal Satyapal Ltd.,(Unit at
Guwahati and Silchar, Assam) a company
incorporated under the provisions of the
Companies Act, 1956 and having its
Registered Office at 1711, S.P. Mukherjee
Marg,
Delhi-110 006
Through its Territorial Head,
Brig M Kumar.
BY ADVOCATES :
Mr A. Kashyap, Advocate,
Mr SK Medhi, Advocate
Mr S. Kashyap, Advocate
RESPONDNTS :
1. Deputy Commissioner,
Central Excise, Guwahati.
District Kamrup.
2. Assistant Commissioner,
Central Excise, Silchar,
District Cachar.
C.Ex. Appeal 3/2008 page 1 of 9
3. Commissioner of Central Excise,
Morello Compound,
M.G. Road, Shillong.
BY ADVOCATES:
Mr D Choudhury,
SC, Central Excise Deptt.
Date of hearing & Judgment : 1.12.2011.
JUDGMENT AND ORDER(ORAL)
[Goel,C J(Actg.)] :-
This appeal has been preferred by the assessee under
Section 35G of the Central Excise Act, 1944, ('the Act'), against the
Customs, Excise & Service Tax Appellate Tribunal (hereafter
referred to as 'CESTAT'), upholding the demand of the Revenue
with reference to Section 154 of the Finance Act,2003,
retrospectively withdrawing the exemption granted under
Section 5-A of the Act read with sub section(3) of Section 3 of the
Additional Duties of Excise Goods of Special Importance Act, 1957
and sub-section(3) of Section 3 of the Additional Duties of Excise
(Textiles and Textile articles) Act, 1978. The appellant has claimed
the following substantial questions of law :
"I. Whether the decision in the R.C. Tabacco case leaves open
the question as to whether a Show Cause Notice is
required under law to be issued before recovery of excise
duty refunds under Section 154 of the Finance Act, 2003 ?
II. Whether the Hon'ble CESTAT has wrongly considered itself
bound by the decision in the R.C. Tabacco case to reject the
Appellant's contention that a Show Cause Notice must
C. Ex. Appeal 1/2008 Page 2 of 13
mandatorily be issued prior to recovery of excise duty
refunds under Section 164 of the Finance Act, 2003?
III. Whether Section 154 of the Finance Act, 2003 could only
have validated actions already taken prior to the passing of
the Finance Act, 2003 for the recovery of excise duty
refunds, and whether therefore no subsequent action for
recovery of the said refunds from the Appellants could stand
validated?
IV. Whether Section 154(3) of the Finance Act, 2003 only bars
the maintenance or continuance of any suit or proceedings
for any action taken or anything done or omitted to be done
in respect of any goods covered by Excise Notifications Nos
32/99-CE and 33/99-CE dated 08.07.1999, and does not
apply to appeals, or to proceedings against actions taken or
anything done or omitted to be done in respect of such
goods?
V. Whether interest ought to have been levied for periods for
which payment was not made in view of the then valid and
subsisting Order-in-Appeal No.40/CE(A)/Ghy/05 dated
125.06.2005 passed by the Commissioner, Customs Central
Excise(Appeals)?
VI. Whether the subsequent notifications issued by the
department, passed which excluded the Appellant and other
similarly placed industries in the region outside the purview
of Section 154 of the Finance Act, 2003.
C. Ex. Appeal 1/2008 Page 3 of 13
VII. Whether the subsequent notifications treated the Appellant
and other similarly placed industries in the region as a
separate category by restoring benefits that allegedly were
withdrawn by the issuance of notification 6 of 2001, dated
01.03.2001 under the provisions of section 154 Finance
Act,2003. "
2. The appellant is a manufacturer of Pan Masala containing
tobacco falling under Chapter 24 of the Central Excise (Tariff )Act,
1985. The impugned notification dated 8.9.1999 was issued under
Section 5-A of the Act, subject to certain conditions. The
exemption continued upto 21.2.2001. The appellant filed writ
petition in this Court challenging withdrawal of the exemption
notification. The writ petition was allowed and the notification
dated 1.3.2001 was quashed. However, on appeal, the Division
Bench of this Court vide judgment dated 3.12.2002 held, that
withdrawal of exemption was violative of principle of 'promissory
estoppel'. The said judgment was challenged by the Revenue
before the Hon'ble Supreme Court. During the pendency of the
said appeal, the Finance Act, 2003 was passed whereby the
exemption was withdrawn with retrospective effect. In pursuance
thereof, order in original dated 6.6.2003 was issued for recovery of
the amount of exemption availed by the appellant. The appellant
filed departmental appeal and also sought waiver of predeposit
which was declined. The appellant filed writ petition in this Court
challenging refusal to waive predeposit and also the order dated
6.6.2003. The writ petition was considered on merits and was
C. Ex. Appeal 1/2008 Page 4 of 13
dismissed by Single Bench of this Court on 18.5.2004 holding that
order dated 6.6.2003 was not vitiated on account of absence of
notice to the appellant before the said order. Judgment of the
Hon'ble Supreme Court in J.K. Cotton Spinning and Weaving
Mills Ltd and Another vs. Union fo India and others, 1987(Supp)
SCC 35 was held to be distinguishable. This Court held that no
prejudice was caused to the appellant by absence of show cause
notice. The relevant finding is as under :
" It is in the above backdrop that the petitioners have
approached this Court invoking its writ jurisdiction
challenging the legality and validity of the aforementioned
impugned orders. The basic thrust of argument made by Mr.
Sridharan was that on the face of it the appellate authority
having admitted that no notice was issued to the petitioners
giving an opportunity of hearing and it also having noticed
that the purported supersession of the earlier notification dated
8.8.2003 by subsequent notifications could not be placed on
records and thus the earlier notification dated 8.8.2003 by
which the decision to keep in abeyance the show cause notices
and/or recoveries was conveyed held that field, could not have
ordered for depositing the amount in question within 30 days
of receipt of the order by way of rejecting the stay application.
Placing reliance on the decision of the Apex Court in JK
C. Ex. Appeal 1/2008 Page 5 of 13
Spinning & Weaving Mills Ltd.-vs- Union of India as reported
in 1987(32) ELT 234 (SC), it was argued by Mr. Sridharana
that amendment to Section 154 of the Finance Act, 2003
retrospectively will always be subject to Section 11 A of the
Central Excise Act, 1944 under which a notice is required to
be issued on person chargeable within the duty. Referring to
paragraph 31 of the judgment, he submitted that the provisos
of Section 51 of the Finance Act, 1982 by which retrospective
effect to the amendments of Rules 9 and 49 of Central Excise
Rules, 1944 was brought about and which is pari materia to
the provisions of Section 154 of the Finance Act, 2003, such
retrospective operation cannot override the express provisions
of Section 11A and in the instant case the petitioners having
not been issued with any notice before passing the impugned
order dated 6.6.2003 and this position having been admitted by
the appellate authority in its order dated 31.3.2004 and yet
having ordered for deposing the entire amount in question, the
impugned orders are not sustainable."
" The Deputy Commissioner while passing the impugned
order dated 6.6.2003 elaborately dealt with the materials on
record and the judgments of this Court and their effect. It also
recorded as to how the petitioners have been discharging their
duty liability by way of adjustments as was provided for by the
Division Bench of this Court in writ appeals and have been
claiming refund of the amount so adjusted inn terms of the
earlier notification dated 8.7.99. It also noticed as to how the
notification dated 8.7.99 stood amended retrospectively in
terms of Section 154 of the Finance Act, 2003 and the
stipulations therein. There was question of entertaining the
C. Ex. Appeal 1/2008 Page 6 of 13
refund claim after the retrospective amendment brought about
by the Finance Act,2003 for the period from March, 2001 to
April,2003 which stood at Rs.85,31,17,836/-. The Deputy
Commissioner also found that the petitioner cleared their
finished goods without payment of appropriate duty since 2nd
fortnight of November,2002 amounting to Rs.25,46,34,087/-
calculated upto 31st May,2003 and kept informing the
department from time to time by their various correspondences
that in defiance of the judgment and order of this Court dated
3.12.2002 passed in the writ appeals, the duty payable on
clearance may be adjusted from the amount of pending refund
which the department never exceeded to. Having regard to the
provisions of Section 154(3) of the Finance Act,2003, he
observed that the said judgment and order dated 3.12.2002 is
not enforceable and consequently the duty not paid by the
petitioners during the period from 2nd fortnight of
Noovember,2002 till 30th April, 2003 is liable to be recovered.
It is on this basis recovery of the amount of Rs.25,46,34,087/-
has been ordered as duty not paid against the goods cleared
during the aforesaid period along with interest payable."
" In the impugned order dated 31.3.2004 although the
appellate authority prima facie found fault with non-issuance
of show cause notice to the petitioners before passing the order
dated 6.6.2003 and it also recorded that the stand of the
department that the earlier notification dated 8.8.2003 has
already been superseded could not be substantiated, but dealing
with the moot point that the Division Bench judgment of this
Court dated 3.12.2002 quashing the notification dated
1.3.2001 is pending consideration before the Apex Court, it
C. Ex. Appeal 1/2008 Page 7 of 13
has referred to the stay order dated 12.1.2004 passed by the
Apex Court staying operation of the said judgment and order
dated 3.12.2002. It also noticed the observation of the Apex
Court that if the Government has taken any decision
independent of the judgment of this Court, the stay order
would not come in the way thereof. Referring to the impugned
order dated 6.6.2003 passed by the Deputy Commissioner in
terms of Section 154 of the Finance Act,2003, it found that the
relief granted in writ appeal was no longer available to the
petitioner in view of the stay order passed by the Apex Court.
It is in this context the appellate authority has held that the
petitioners does not have a strong prima facie case on merit.
Accordingly the stay application has been rejected by the
impugned order dated 31.3.2004 with a direction to the
petitioners to deposit the entire amount before the appeal could
be heard. "
" The concept of natural justice has undergone a great deal of
change in recent years. Over the years by a process of judicial
interpretation two rules have been evolved as representing the
principle of natural justice to judicial process including
therein quashi judicial and administrative process. What is
known as "useless formality theory" received consideration of
the Apex Court in the case of M.C. Mehta- vs. Union of India
as reported in (1999) 6 SCC 237. The Apex Court while not
expressing any opinion on the correctness or otherwise of the
"useless formality theory" left the matter for decision in an
appropriate case having found from admitted and indisputable
facts of that case that grant of a writ will be in vain. The Apex
Court in the case of Canara Bank -vs- Debasis Das as reported
C. Ex. Appeal 1/2008 Page 8 of 13
in (2003) 4 SCC 557 while discussing in detail the concept,
meaning, object, scope and applicability of "natural justice"
held that, unless failure of justice is occasional or that it would
not be in public interest to dismiss a petition on the fact
situation of a case, the Court may refuse to exercise the
jurisdiction. It further held that legal formulations cannot be
divorced from the fact situation of the case. Likewise in the case
of Escorts Farms-vs-Commissioner , as reported in (2004) 4
SCC 281, the Apex Court observed , reiterating the same
position that rules of natural justice are to be followed for
doing substantial justice and not for completing a mere ritual
of hearing without possibility of any change in the decision of
the case on merits.
" In the instant case the petitioners, to show that they have
been prejudiced by the impugned action having placed to
material. In the aforesaid case of Canara Bank(supra) the Apex
Court also observed that though in all cases post decisional
hearing cannot be a substitute for pre-decisional hearing, in a
given case the position might be different. In the present case,
the petitioners apart from attacking the impugned order dated
6.6.2003 more emboldened by the observation made by the
appellate authority have not stated anything as to what
material they could have placed before the Deputy
Commissioner, had they been issued with a notice. The entire
action on the part of the Deputy Commissioner was upon
assessing the situation that had arisen pursuant to the
judgment in writ appeals and the effect and retrospective
operation of Section 154 of the Finance Act,2003 coupled with
the stay order passed by the Apex Court. Undisputed facts for
C. Ex. Appeal 1/2008 Page 9 of 13
which there is no plausible explanation from the petitioners
dilute the plea of non-issuance of notice to the petitioners. The
principle that in addition to breach of natural justice, prejudice
must also be proved has been developed in several cases. The
Apex Court have also emphasized that not mere violation of
natural justice but de-factor of K.L. Tripathi-vs-State Bank of
India as reported in (1984) 1 SCC 43, the Apex Court quoting
Wade's Administrative Law observed as follows :
" It is not possible to lay down rigid
rules as to when the principles of natural justice are
to apply, nor as to their scope and extent. There such
thing as a merely technical infringement of natural
justice. The requirements of natural justice must
depend on the facts and circumstances of the case, the
nature of the inquiry, the rules under which the
tribunal is acting, the subject matter to be dealt with,
and so forth."
" The Apex Court has consistently applied the principle of
prejudice in several cases. In absence of any prejudice shown,
the absence of a notice to show cause does not make any
difference."
Thereafter, the appellant agitated the same issue before the
departmental appellate authority and vide order dated 24.6.2005,
the appellate authority set aside the order in original dated
6.6.2003 and remanded the matter for fresh consideration,
ignoring the judgment of this Court dated 18.4.2004. However,
on further appeal by the Revenue, the CESTAT set aside the
said order holding that the appeal itself was not maintainable
C. Ex. Appeal 1/2008 Page 10 of 13
and objection to the recovery proceeding was not open to the
appellant in view of judgment of the Hon'ble Supreme Court in
R.C.Tabacco (P) Ltd. and another vs. Union of India and
another, (2005) 7 SCC 725. The CESTAT noticed the stand of the
learned counsel appearing for the appellant as follows :
" Shri A. Madhav Rao, learned Advocate appearing
for the respondents and vice versa, does not challenge the
duty-liability, but states that interest is not payable for the entire period in view of the Order-in-Appeal subsisting in favour of the appellants. He also states that where the refunds have been granted after finalization of assessment, the same is not required to be paid back as no appeals have been preferred by the Department against the same."
The CESTAT concluded as follows :
" In view of our findings above, we are of the view that the lower Appellate Authority was not justified in allowing the appeals and setting aside the Order-in- Original , particularly in the light of the specific provision regarding non-maintainability of appeal contained in Section 154(3) of the Finance Act, 2003 and the Hon'ble Supreme Court's decision in the case of R.C. Tabacco (cited supra). "
3. We have heard the learned counsel for the parties.
4. Learned counsel for the appellant submitted that R.C. Tabacoo (supra) was wrongly applied to the case of the appellant and the appellant had not been given any opportunity of being C. Ex. Appeal 1/2008 Page 11 of 13 heard as required under Section 11A of the Act and even if Section 154 of the Finance Act, 2003 was valid, the same could not affect the procedure for recovery of the amount due, in accordance with Section 11A of the Act.
5. We are unable to accept this submission. The correctness and validity of the order 6.6.2003 has already been put in issue by the appellant in a writ petition before this Court and it was held that absence of show cause notice under Section 11A did not affect the validity of the order dated 6.6.2003. The said judgment has admittedly become final and the finding recorded therein is res- judicata. The same, therefore, cannot be allowed to be re- agitated. It appears that for this reason, the learned counsel for the appellant fairly stated before the CESTAT that the appellant did not dispute the liability and limited himself to the issue of interest. No argument whatsoever has been raised by the learned counsel for the appellant on the issue of interest. Only contention relates to validity of order dated 6.6.2003 on the ground that no notice was given which issue already stands concluded against the appellant.
6. In view of above, the questions raised before us have to be decided against the assessee. The appeal is dismissed. No costs.
JUDGE CHIEF JUSTICE(ACTG.) C. Ex. Appeal 1/2008 Page 12 of 13 BARUAH C. Ex. Appeal 1/2008 Page 13 of 13