1967 (9) TMI 36 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the suspension order of the license.
2. Compliance with principles of natural justice.
3. Authority of the Assistant Collector and the role of the Collector of Central Excise.
4. Opportunity for the petitioner to make representations.
5. Validity of departmental instructions in quasi-judicial proceedings.
6. Availability of appeal mechanisms.

Detailed Analysis:

1. Legality of the Suspension Order of the License:
The petitioner, a licensee of a Match Factory, faced suspension of his license for six months due to the affixture of "cut banderols" on match boxes, which was considered a serious irregularity by the Department. The petitioner contended that the banderols were merely "torn" accidentally during pasting, not "cut" deliberately. The Assistant Collector of Central Excise did not accept this explanation and suspended the license, also confiscating 16 bundles of match boxes and imposing a penalty of Rs. 100/-.

2. Compliance with Principles of Natural Justice:
The petitioner argued that the suspension order violated principles of natural justice. The Assistant Collector sought prior approval from the Collector of Central Excise before passing the suspension order, which the petitioner claimed resulted in the surrender of the Assistant Collector's individual judgment to a superior officer without giving the petitioner an opportunity to be heard by the Collector.

3. Authority of the Assistant Collector and the Role of the Collector of Central Excise:
The Department referred to Instruction 21(b)(ii) and (iii) of the Basic Manual of Departmental Instructions, which suggested that prior approval from the Collector was intended as a protection for the licensee. However, the court observed that this procedure effectively transferred the responsibility of deciding the punishment to the superior officer, without the licensee having an opportunity to make representations before that officer.

4. Opportunity for the Petitioner to Make Representations:
The court emphasized that the petitioner was deprived of the opportunity to make representations before the Collector of Central Excise, which contravened the principles of natural justice. The court cited several precedents, including the Supreme Court's observations in Nageswara Rao v. A.P.S.R.T. Corporation and Mahadaval v. Commercial Tax Officer, which highlighted the necessity of hearing the affected party before making a decision.

5. Validity of Departmental Instructions in Quasi-Judicial Proceedings:
The court noted that the instructions in the Manual had no statutory force and should be ignored or struck down if they deprived an aggrieved party of the opportunity to comply with the principles of natural justice. The court found that the procedure adopted in this case, which involved seeking prior approval from the Collector, was clearly opposed to these principles.

6. Availability of Appeal Mechanisms:
The court also pointed out that the instructions in Para 21(b) of the Manual deprived the petitioner of the right to appeal to the Collector of Central Excise. Instead, the petitioner was forced to appeal to the Central Board of Revenue in Delhi, which was an undue burden.

Conclusion:
The court concluded that the orders in all four cases could not be supported due to the violation of principles of natural justice. The writ petitions were allowed, and the suspension orders were quashed. The Department was given the option to restore the cases and dispose of them on merits, considering the observations made by the court. The petitioner was awarded costs, with Advocate's fee set at Rs. 200/- to be included in Writ Petition No. 2115 of 1964.