TMI Blog2010 (1) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 03.09.2009, provided they supply copies of the relied upon documents to the petitioner within four weeks. Thereafter, the petitioner would have an opportunity of making a representation within four weeks. - 14152/2009 & 16314/2009 - - - Dated:- 22-1-2010 - Advocates who appeared in this case: For the Appellant: Mr Pradeep Jain For the Respondent: Mr Mukesh Anand with Mr Sailesh Tiwari and Mr R. L. Thapliyal, DGCEI (SIO) CORAM:- HON 'BLE MR JUST ICE BADAR DURREZ AHMED HON 'BLE MR JUST ICE SIDDHARTH MRIDUL 1. Whether Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in Digest? Yes BADAR DURREZ AHMED, J (ORAL) 1. In this writ petition, quashing of order No. 51/2009-M (CX)/DA dated 16.12.2009 passed by the Member (Central Excise), Central Board of Excise and Customs, is prayed for. The impugned order imposes the following restrictions on the petitioner:- i. The facility of monthly payment of excise duty by the assessees i.e, M/s. Vinay Wires and Poly Products Pvt. Ltd., Unit I and II, Kanpur, as provided under rule 8(1) of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in order to prevent evasion of, and default in payment of, excise duty, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or an exporter, may by a notification in the Official Gazette, specify nature of restrictions including suspension of registration in case of a dealer, types of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board. 4. A plain reading of the said rule indicates that the Central Government has been empowered to issue a notification in the official gazette specifying the nature of restrictions, including the suspension of registration in the case of a dealer, types of facilities to be withdrawn and ¯procedure for issue of such order by an officer authorized by the Board. There is no doubt that by virtue of the said Rule 12CC, the Central Government is empowered to specify, inter alia, the types of facilities to be withdrawn in case it is of the opinion that it would be necessary to do so in order to prevent evasion of and default in payment of excise duty and that the same would be necessary in public interest. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit may be restricted and the assessee shall be required to pay excise duty without utilising the CENVAT credit: Provided that where a person is found to be knowingly involved in committing any one or more type of offences as specified in para 1 for the second time or subsequently, every removal of goods from his factory may be ordered to be under an invoice which shall be countersigned by the Inspector of Central Excise or the Superintendent of Central Excise before the said goods are removed from the factory or warehouse. Explanation I.- It is clarified that a person against whom the order under sub-para (3) of para 4 has been passed may continue to take CENVAT credit; however, he would not be able to utilize the credit for payment of duty during the period specified in the said order. Explanation II.- For second time or subsequent offence, the restriction specified in clauses (i) and (ii) may also be imposed. (2) Where a first stage or second stage dealer is found to be knowingly involved in committing the type of offence specified at clauses (d) or (e) of para 1, the registration granted under rule 9 of the Central Excise Rules 2002 may be suspended for a specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs to issue orders in terms of the said notification. 6. From a reading of the said notifications, it is clear that before the Chief Commissioner of Central Excise or the Director General of Central Excise Intelligence, as the case may be, forwards his recommendations, he is required to give an opportunity of being heard to the person against whom the proceedings have been initiated and is required to take into account any representation made by such person before he forwards his recommendations to the Board. 7. In this backdrop the facts of the present case may be seen. It appears that certain searches were conducted on 30.06.2009 in the factory premises of the petitioner company. Pursuant thereto, a show cause notice dated 03.09.2009, purportedly in terms of paragraph 4 of the said notification, was issued to the petitioner. The relevant portion of the said notice reads as under:- NOTICE IN TERMS OF PARA 4 OF NOTIFN. NO. 32/2008-CE (NT) DT. 30.12.2006 Whereas consequent to searches conducted on 30.06.2009 in your factory premises, DGCEI (Hqrs.) during investigations have prima facie found that you were found engaged in clandestine clearances of your finished goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details of sale of finished goods not reflected in the invoices issued by the company for the period from June 2005 to June 2009. It is also apparent that the notice issuing authority had also made a comparison of these figures with the daily stock account maintained by the petitioner and it is on the basis of these documents and comparisons that the noticee was put to notice that there was evidence of clandestine clearance of the excisable goods from the noticee's premises without payment of duty and education cess. Apart from this, the notice also has reference to statements of Sh Vinay Kannodia, Sh C. N. Malviya, Sh Siddharth Dixit, Sh Ajay Kumar Dwivedi and Sh Ravi Kant Tripathi wherein the said persons are said to have admitted the clandestine clearance of goods without payment of duty. Therefore, it is clear that the notice issuing authority had the aforesaid documents available with him. The personal hearing was fixed for 11.09.2009 and on that date itself the petitioner submitted a reply calling for supply of the relied upon documents so that the petitioner would be in a position to give a suitable and effective representation/ explanation to the allegations made against i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve defence. Non-supply of relied upon documents is against the principles of natural justice. It is therefore, requested that copies of all the documents, sought to be relied upon, may be furnished to the noticee so as to enable him to set forth an effective defence in his favour. It is further requested that the notice may be given reasonable time, say one month, to file suitable and effective explanation to the allegations made, after furnishing copies of relied upon documents. No action may please be taken before supply of relied upon documents in keeping with the requirements of the rules of natural justice. Noticee would like to be heard before the case is decided. Thanking you, Yours sincerely, Sd/- (Dr Prabhat Kumar)" (emphasis supplied) However, the documents were not supplied to the petitioner and the hearing was concluded on 11.09.2009 itself and no further hearing was given to the petitioner. The fact that the documents were not supplied to the petitioner is admitted in the impugned order itself in paragraph 5 thereof, which reads as under:- "5. The personal hearing before the Director General was attended by Sh. Prabhat Kumar, advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in law he is entitled to a proper hearing which would include supply of the documents. Only on knowing the contents of the documents, he could furnish an effective reply." It appears that in the decision before the Supreme Court, the principles of natural justice has not been specifically spelt out in the relevant provisions but the Supreme Court took the view that Act did not prohibit application of principles of natural justice and thereafter went on to apply the same. However, in the present case, the principles of natural justice are specifically spelt out in paragraph 4 of the said notification itself, where the requirement of granting an opportunity to being heard has been clearly indicated and also that the noticee's representation should be duly considered before a recommendation is forwarded to the Central Board of Excise and Customs. In the present case, we find that, despite the petitioner having requested for the documents which were relied upon by the said Director General, the same were not supplied to the petitioner. 11. The learned counsel for the respondent submitted that the non-supply of such documents would not be fatal inasmuch as these are not adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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