Hearing in adjudication
Section 33A of Central Excise Act, 1944 (‘Act’ for short) provides that 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 Adjudicating Authority may, if sufficient cause is shown, at any state of proceeding grant time, from time to time, the parties or any of them and adjourn the hearing for reasons to be recorded in writing. No such adjournment shall be granted more than three times to a party during the proceedings.
Issue of notice
Section 37C of the Act provides that any notice issued under this Act or the rules made there under shall be served by tendering the notice or sending it by registered post with acknowledgement due or by speed post with proof of delivery or by courier approved by the Board to the person for whom it is intended or his authorized agent, if any. If the notice cannot be served in the manner aforesaid, a copy of the notice shall be affixed to some conspicuous part of the factory or the warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended. If the notice cannot be served aforesaid methods a copy of the notice thereof shall be affixed on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice.
Every notice issued under this Act or the rules made there under, shall be deemed to have been served on the date on which the notice is tendered or delivered by post or courier or a copy thereof is affixed in the manner discussed as above.
Section 33A deals with the adjourning the case not more than three times in an adjudication. Section 37C deals with the procedure for delivery of notice. The issue to be discussed in this article whether the notice issued by the authority in which he gives three dates of hearing directing the party concerned to appear before him on the date opted by him, with reference to decided case law.
In ‘Afloat Textiles (P) Limited V. Commissioner of Central Excise, Vapi’ – 2007 (7) TMI 444 - CESTAT, AHMEDABAD the Tribunal has noted that the adjudicating authority had observed that in terms of the proviso to Section 33A of the Act, adjournments cannot be granted more than three times and that in view of the fact that the letter of hearing mentioned three dates viz., 10.10.2006, 17.10.2006 and 31.10.2006, it considered the appellant’s request that the matter be adjourned for a month as amounting to three adjournments have been sought. The Tribunal held that giving a choice of three dates for personal hearing in one letter and seeking one month’s adjournment by the appellant, would not amount to three adjournments having been sought. The approach of adjudicating authority was not in accordance with the principles of Natural justice.
In ‘Regent Overseas Private Limited and others V. Union of India and others’ – 2017 (3) TMI 557 – Gujarat High Court, the first petitioner is a 100% EOU engaged in the manufacture of processed/dyed and/or printed fabrics/sarees/dress materials and other fabrics and the second petitioner is a Director of the first company. The officers of the Revenue visited the premises of the petitioners and further issued a show cause notice for recovery of duty. The adjudicating authority passed an order confirming the demand. The said order was challenged before the Tribunal on the ground of violation of the principles of Natural justice, as the panchnama was tampered with and no cross examination was granted. The Tribunal allowed the appeal and remand the case to the Adjudicating authority to allow cross examination. In the remand proceeding after cross examination of the two witnesses, the Adjudicating Authority issued notice fixing the matter for final hearing on 22.09.2015 or 29.09.2015 or 06.10.2015. The petitioners did not receive the said communication and could not attend the hearing. An ex-parte order was passed confirming the duty liability.
Against this order the petitioners filed the present petition. The petitioners contended the following-
- On earlier occasions the notices were also marked to their Advocate which was not marked in the present case;
- On account of non receipt of notice for personal hearing the petitioners could not attend the hearing and after a period of four months, the adjudicating authority passed an ex parte order;
- When the notice is sent by speed post it has to be with proof of delivery, whereas in the present case, there is no proof of delivery and therefore there is no due service of notice of personal hearing in accordance with the provisions of law;
- The adjudicating authority has stated three dates in one notice and has considered the same to amount to three adjournments and accordingly, has decided the matter ex parte which is not permissible in law;
- The impugned order passed by the adjudicating authority is clearly in breach of the principles of natural justice and hence the same is required to be quashed and set aside and the matter is required to be remanded to the adjudicating authority to decide the same afresh, after affording the petitioners an opportunity of hearing in accordance with law.
The Revenue submitted the following-
- The petitioner is not maintainable since there is an alternative remedy of filing appeal;
- It is mandatory for the assessee to deposit an amount of 7.5% of the duty confirmed and demanded and that it is only with a view to escape the liability of pre deposit that the petitioners have approached the High Court invoking its extra ordinary jurisdiction under Article 226 of the Constitution;
- The petitioners have been given adequate and ample opportunity and have been granted personal hearing by the adjudicating authority and it is only thereafter, that the impugned order has been passed;
- The contention that the order has been passed ex parte in breach of the principles of natural justice does not merit acceptance;
- The dates of personal hearing had been communicated to the petitioners in advance;
- While one notice addressed to one Ramachandra M. Tandel, one of the Directors of the petitioner company came to be returned ‘undelivered’, notices to the petitioner were served upon the petitioner company duly served;
- None of the petitioners approached before the adjudicating authority on the personal hearing dates;
- It was the duty of the petitioners to prove any change of address during the course of proceedings and that merely because the petitioners failed to notify the authorities about change of address or shifting of premises, the adjudicating authority cannot be blamed and, therefore, it cannot be said that there is any breach of principles of natural justice;
- The notices have been served through speed post;
- While there is no material with the Revenue to show proof of delivery to the petitioners the outward registered maintained by the Revenue contains details such as date of dispatch, speed post consignment, name of party etc., which indicate that notices for personal hearing have, in fact, been dispatched to the petitioners;
- There is substantial compliance with the provisions of Section 37C of the Act and hence, it cannot be said that notice has not been duly served in accordance with the provisions of law.
The High Court held that it is an admitted position that the letter of personal hearing was sent to the petitioners through speed post. In the absence of any proof of delivery, it cannot be said that there is effective service of notice, as contemplated under Section 37C of the Act. In the absence of service of notice of personal hearing, the petitioners or their representatives could not remain present before the adjudicating authority during the course of personal hearing and the impugned order is clearly in breach of principles of natural justice.
The High Court further held that when a personal hearing is fixed, it is open to a party to seek time by showing sufficient cause and in such a case, the adjudicating authority may grant time and adjourn the hearing by recording the reasons in writing. Not more than three such adjournments can be granted. On a plain reading of Section 33A (2) and the proviso thereto, what the same envisages is fixing a date of hearing and in case if a party asks for time and makes out sufficient cause, then to adjourn the hearing. Since such adjournments are limited to three, the hearing would be required to be fixed on each such occasion and on every occasion when time is sought and sufficient cause is made out, the case would be adjourned to another day. However the adjudicating authority is required to give one date at a time and record his reasons for granting adjournment on each occasion. It is not permissible for the adjudicating authority to issue one consolidated notice fixing three dates of hearing, whether or not the party asks for time, as has been done in the present case. Apart from the fact that the notice of hearing has not been served in accordance with Section 37C of the Act, the notice itself suffers from a legal infirmity inasmuch as it fixes three dates of hearing at a time, which is not in consonance with the proviso to Section 33A of the Act.
The High Court further observed that by notice for personal hearing three dates and absence of the petitioners on those dates appears to have considered as grant of three adjournments. In this regard it may be noted that Section 33A(2) provides for grant of not more than 3 adjournments, which would envisage four dates of personal hearing and not three dates, as mentioned in the personal hearing.
Therefore, even if by virtue of the dates stated in the notice for personal hearing it were assumed that adjournments were granted, it would amount to grant of two adjournments and not three adjournments, as grant of three adjournments would mean, in all four dates of personal hearing.
The High Court allowed the petition as the order passed by the adjudicating authority is clearly in breach of the principles of natural justice. The High Court restored the matter to the file of the adjudicating authority to decide the same in accordance with law after affording adequate opportunity of hearing to the petitioners.
By: Mr. M. GOVINDARAJAN - March 18, 2017
Discussions to this article
Nice article Sir. I have seen some notices where three dates are mentioned. If