TMI Blog2016 (12) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and stands covered by ‘useless formality theory’. The amount of duty in the case of Dharampal Satyapal vs. DCCE, Gauhati [2015 (5) TMI 500 - SUPREME COURT], decided by Apex Court, was also quantified and communicated to the appellant Dharmapal Satyapal Ltd. by a recovery order of June, 2003, as evident from Paras-6 and 39 of this case law As per the above provisions of Section 154(4) recovery shall be made of duty, interest or other charges within a period of 30 days from the day on which Finance Bill 2003 receives assent of President. The amounts recoverable will include interest payable under Sec.11AB of the Central Excise Act, 1944 even if not specifically mentioned in Section 154(4) of the Finance Act - Apex Court held that issuing of a demand show cause notice for the amount recoverable under the mandate of Section 154 of the Finance Act, 2003 will be an empty formality and stands covered by ‘useless formality theory’. The amount of duty in the case of Dharampal Satyapal vs. DCCE, Gauhati (supra), decided by Apex Court, was also quantified and communicated to the appellant Dharmapal Satyapal Ltd. by a recovery order of June, 2003, as evident from Paras-6 and 39 of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 and 10.09.2001 were issued to the Appellant for recovery of ₹ 2,15,15,160/- and ₹ 2,76,90,000/- along with interest @ 24% under Section 11A 11AB of the Central Excise Act, 1944. That penalties were also proposed under Rule 173Q, Rule 230 of Central Excise Rules, 1944 and Section 11AC of the Central Excise Act, 1944. (v) That Single Member Bench of Gauhati High Court by an order dated 17.05.2002 on Writ Petitions filed by the Appellant and others, held that benefit of exemption Notification No.32/99-CE shall be admissible until 22.01.2001 when withdrawing Notification No.1/2001-CE dated 22.01.2001 was issued. That Appeals filed by the department against Single Judge Order dated 17.05.2002 was dismissed by Guwahati High Court Division Bench on 04.04.2003. (vi) That with effect from 14.05.2003 Govt. of India vide Section 154 of the Finance Act, 2003 withdrew the exemption to, inter-alia, Cigarettes of Chapter 24 with retrospective effect right from the issuance of exemption Notification No.32/99-CE dated 08.07.1999. (vii) That Government of India filed SLPs in Supreme Court against the Division Bench order passed by Guwahati High Court and by an order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C)] That in the above case laws also revalidation Section - 112(2)(b) and recovery procedure of the Finance Act, 2000 was worded similar to Section 154(4) of the Finance Act, 2003. He made the Bench go through the relevant Section 112(2)(b) 154(4) of these Finance Acts 2000 2003 respectively. 3. Shri Krishnendu Chaudhury, Supdt.(AR) appearing on behalf of the Revenue during the course of hearing as well as through written submissions received on 08.07.2016 made the following submissions/arguments.:- (i) That as per Section 154 of the Finance Act, 2003, read with upholding of its constitutional validity by Apex Court in R.C. Tobacco Pvt.Ltd. vs. UOI (supra), there cannot be any dispute on the payment of dues by the Appellant. (ii) That as per para 41, 42 55 of the case law R.C. Tobacco Pvt.Ltd. vs. UOI (supra) there is no need of a prior notice for recovery of dues under Section 154 (4) of the Finance Act, 2003. (iii) That in view of the following case laws decided by Apex Court subsequently there is no need for issuing show cause notice for recovery pursuant to retrospective amendments and even if such requirement is existing then the same is covered by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt vide Order dated 07.02.2014 in Civil Appeal No.2011 of 2014 (Arising out of SLP (C) No.10926 of 2012) admitted following substantial questions of law, which were originally drafted by Gauhati High Court in the case of appellant in Order dated 19.04.2012 [2014(302) ELT 51(Gauhati)] :- (i) Whether the CESTAT was correct in disposing of the appeal filed by the appellant after only giving them an opportunity of arguments on the stay application? (ii) Whether the Courts below have correctly appreciated the fact that Section 11A of the Central Excise Act, 1944 prescribed for issuance of a show cause notice and limitation thereunder for demand of duty in the facts of the present case while confirming the demand of duty and interest thereon? (iii) Whether the Hon ble CESTAT has appreciated the fact that if the recovery was to be made simplicitor under Section 154(4) of the Finance Act, 2003 as a result of withdrawal of exemption retrospectively then whether the machinery provided of the special procedure and independent mechanism provided for the recovery and the interest chargeable had been duly followed by the department while confirming the demand? (iv) Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 11A Section 11AB of the Central Excise Act, 1944 by passing an appellate order. These demands were already confirmed by AC, CE, Silchar under Order-in-Original dated 27.02.2001, which stands dismissed as per para 51(2) of Order dated 17.05.2002 in WP(C) 446/2001 decided by Gauhati High Court. Any further proceedings under Section 11A of the Central Excise Act, 1944 on the same issue otherwise also do not survive when the matter is decided in favour of the appellant by Gauhati High Court and the same has not been reversed. Appeal of the Appellant to that extent is required to be allowed. 7. The answer to points at Para-4.1(iii) above is whether an intimation/notice under Sec.154(4) of the Finance Act, 2003 was required to be issued to the appellant as per the recovery mechanism provided in Section 154(4) of the Finance Act, 1944. This aspect was not touched by the Adjudicating authority but is required to be answered in view of the remand proceedings ordered by the Hon ble Apex Court and Gauhati High Court. It is the case of the appellant that exact amount of duty/refunds to be recovered and interest on demand under Section 11A was required to be intimated in writing to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat under certain circumstances principles of natural justice may even be excluded by reason of diverse factors like time, place, the apprehended danger and so on. 31 . We are not concerned with these aspects in the present case as the issue relates to giving of notice before taking action. While emphasizing that the principles of natural justice cannot be applied in straight-jacket formula, the aforesaid instances are given. We have highlighted the jurisprudential basis of adhering to the principles of natural justice which are grounded on the doctrine of procedural fairness, accuracy of outcome leading to general social goals, etc. Nevertheless, there may be situations wherein for some reason - perhaps because the evidence against the individual is thought to be utterly compelling - it is felt that a fair hearing would make no difference - meaning that a hearing would not change the ultimate conclusion reached by the decision-maker - then no legal duty to supply a hearing arises. Such an approach was endorsed by Lord Wilberforce in Malloch v. Aberdeen Corporation - (1971) 1 WLR 1578 at 1595, who said that a breach of procedure...cannot give (rise to) a remedy in the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Medical Council v. Spackman - 1943 AC 627. This Court also spoke in the same language in the case of The Board of High School and Intermediate Education, U.P. Ors. v. Kumari Chittra Srivastava Ors. - (1970) 1 SCC 121 : AIR 1970 SC 1039, as is apparent from the following words : 8.The learned counsel for the appellant, Mr. C.B. Aggarwal, contends that the facts are not in dispute and it is further clear that no useful purpose would have been served if the Board had served a show cause notice on the petitioner. He says that in view of these circumstances it was not necessary for the Board to have issued a show cause notice. We are unable to accept this contention. Whether a duty arises in a particular case to issue a show cause notice before inflicting a penalty does not depend on the authority s satisfaction that the person to be penalised has no defence but on the nature of the order proposed to be passed. XX XX XX XX XX XX XX XX XX XX XX XX 36 . Keeping in view the aforesaid principles in mind, even when we find that there is an infraction of principles of natural justice, we have to address a further question as to whether any purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that answers to certain questions are not really dependent on upholding of the constitutional validity of Section 154(4) of the Finance Act, 2003. In the case of Union of India -vs.-Maharaja Shree Umaid Mills (Supra) decided by Apex Court also there was an intimation Order dated 27.05.2002 asking the party to pay the amounts. In the present proceedings before us there are two categories of interest mentioned in the provisions of Section 154(4) of the Finance Act, 2003. One interest category is specified along with duty and the second interest starts if payments are not recovered within 30 days. To appreciate the issue provisions of Section 154(4) of the Finance Act, 2003 are reproduced below:- 154. Amendment of notification issued under Section 5-A of the Central Excise Act.- (1) XX XX XX XX XX (2) XX XX XX XX XX (3) XX XX XX XX XX (4) Recovery shall be made of all amounts of duty or interest or other charges which have not been collected or, as the case may be, which have been refunded but which would have been collected or, as the case may be, which would have not been refunded if the provisions of this sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the authority issuing recovery order under Section 154(4) of the Finance Act, 2003 whether interest liability of Section 11AB, with respect to amounts due, should be restricted till the date of assent given by President of India or will continue till the date of payment because first category of interest mentioned in Section 154(4) has not referred to interest payable under Section 11AB of the Central Excise Act, 1944. From the records of the case it is observed that no recovery order/communication, indicating quantified amounts payable and interest, has been issued to the appellant under Section 154(4) of the Finance Act, 2003. A recovery action is always required to be initiated by the department in view of the relied upon case laws decided by the Apex Court. In view of the above observations we hold that recovery order, indicating quantified demand and interest, was required to be communicated to the appellant which need not be a formal show cause notice when merits of the case were already settled by Apex Court in R.C. Tobacco Pvt.Ltd. vs. Union of India(supra). Second, part of the recovery to be made within 30 days, as per Section 154(4) of the Finance Act, 2003, is that am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not have been allowed to be taken or utilised, if the provisions of sub-section (1) had been in force at all material times, within a period of thirty days from the date on which the Finance Act, 2000 receives the assent of the President and in the event of non-payment of such credit of duty within this period, in addition to the amount of credit of such duty recoverable, interest at the rate of twenty four percent per annum shall be payable, from the date immediately after the expiry of the said period of thirty days till the date of payment. 8.2 Recovery mechanism provided in Section 112(2)(b) of Finance Act, 2000 is identical to recovery mechanism provided under Section 154(4) of the Finance Act, 2003. In view of the ratio laid down by the Apex Court in the above case laws and harmonious construction of the recovery mechanism under Section 154(4) of the Finance Act, 2003, 30 days period under Section 154(4) has to be counted from the date on which a recovery order, specifying the amounts and interest payable, is communicated to the appellant. 9. In view of the observations made above, the impugned Order-in-Original dated 31.10.2007, passed by the Adjudicating auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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