2016 (12) TMI 849 - HC - Central Excise

Court sets aside order for breaching natural justice, remands for fresh consideration

The court found that the Commissioner of Central Excise-II breached principles of natural justice under Section 14AA of the Central Excise Act, 1944 by ... Principles of natural justice - Reasoned order requirement under Section 14AA - Right to hearing before exercise of power under Section 14AA - Remand for fresh considerationPrinciples of natural justice - Right to hearing before exercise of power under Section 14AA - Whether the Commissioner breached the principles of natural justice by passing the impugned order under Section 14AA without affording the petitioners an opportunity of hearing and without taking into consideration their reply to the show-cause notice. - HELD THAT: - The Court held that authorities exercising powers under Section 14AA have dual obligations: to pass a reasoned order and to adhere to the principles of natural justice by affording an opportunity of hearing. Although the impugned order was reasoned, there is no material to show that the Commissioner personally afforded the petitioners a hearing or considered their reply to the show-cause notice (which had been issued by other departmental personnel). In the absence of any record that a notice of hearing was given or that the reply was taken into account, the Commissioner's action in passing the order without hearing the petitioners constituted a breach of the principles of natural justice.The impugned order was set aside on grounds of breach of natural justice.Remand for fresh consideration - Reasoned order requirement under Section 14AA - What remedial course should follow the finding of breach of natural justice? - HELD THAT: - The Court directed that the matter be remanded to the Commissioner for fresh consideration. On remand the Commissioner is at liberty to afford the petitioners a reasonable opportunity of hearing and must pass a reasoned order while exercising powers under Section 14AA. The Court specified a time frame for completion of the exercise to ensure expeditious disposal.Matter remanded to the Commissioner for fresh consideration with liberty to hear the petitioners and to pass a reasoned order within four weeks from communication of the Court's order.Final Conclusion: The Court set aside the impugned order under Section 14AA as passed in breach of natural justice and remanded the matter to the Commissioner for fresh consideration, directing that the petitioners be afforded a reasonable hearing and that a reasoned order be passed within four weeks; WP No.2269 of 2005 disposed of. Issues:- Breach of principles of natural justice under Section 14AA of the Central Excise Act, 1944 by the Commissioner of Central Excise-II.Analysis:The petitioners challenged an order under Section 14AA of the Central Excise Act, 1944 issued by the Commissioner of Central Excise-II, dated December 15, 2005. The petitioner's counsel argued that the Commissioner did not provide a reasonable opportunity of hearing before passing the impugned order. The counsel emphasized that Section 14AA imposes dual obligations on authorities: to issue a reasoned order and to ensure the principles of natural justice are followed. While the Commissioner issued a reasoned order, the petitioners were not granted a hearing, and their response to the show-cause notice was not considered. This failure to adhere to natural justice principles was cited as a breach warranting court intervention.The department's counsel contended that a show-cause notice was indeed issued, but the records did not clarify whether the petitioner's response was taken into account. Referring to a previous judgment involving similar provisions, it was highlighted that authorities must fulfill both the obligation of providing a reasoned order and ensuring natural justice when exercising powers under Section 14AA. In the present case, although the order was reasoned, the Commissioner did not grant the petitioners a hearing or consider their response to the show-cause notice. The Commissioner's actions were deemed a breach of natural justice principles.Consequently, the court set aside the impugned order and remanded the matter to the Commissioner for fresh consideration. The Commissioner was directed to provide a reasonable opportunity of hearing to the petitioners before issuing a new order. The court emphasized the need for a reasoned order and instructed the Commissioner to complete the process within four weeks from the date of communication of the order. The petition was disposed of with no costs awarded.