2010 (1) TMI 30 - HC - Central Excise

Court sets aside order for lack of hearing opportunity, directs respondent to comply within four weeks. Director General to act lawfully.

VINAY WIRES AND POLY PRODUCTS PVT LTD Versus MEMBER (CENTRAL EXCISE) CBEC NEW DELHI AND ANOTHERS

VINAY WIRES AND POLY PRODUCTS PVT LTD Versus MEMBER (CENTRAL EXCISE) CBEC NEW DELHI AND ANOTHERS - 2010 (252) E.L.T. 10 (Del.) Issues Involved:1. Quashing of Order No. 51/2009-M (CX)/DA dated 16.12.2009.2. Alleged non-compliance with principles of natural justice.3. Authority and procedure under Rule 12CC of the Central Excise Rules, 2002 and Rule 12AA of CENVAT Credit Rules, 2004.4. Supply of relied-upon documents to the petitioner.Issue-wise Detailed Analysis:1. Quashing of Order No. 51/2009-M (CX)/DA dated 16.12.2009:The petitioner sought the quashing of the impugned order which imposed several restrictions on the petitioner, including the withdrawal of the facility of monthly payment of excise duty and the restriction on the utilization of CENVAT credit.2. Alleged Non-Compliance with Principles of Natural Justice:The petitioner argued that the impugned order was passed without giving a proper opportunity of hearing and without supplying the relied-upon documents. The court emphasized that the principles of natural justice were specifically spelt out in paragraph 4 of Notification No. 32/2006-CE (NT), which mandates an opportunity of being heard and consideration of the noticee's representation before forwarding recommendations to the Central Board of Excise and Customs.3. Authority and Procedure under Rule 12CC of the Central Excise Rules, 2002 and Rule 12AA of CENVAT Credit Rules, 2004:The court examined the provisions of Rule 12CC and Rule 12AA, which empower the Central Government to impose restrictions to prevent evasion of excise duty. The notification issued under these rules allows for the withdrawal of facilities and imposition of restrictions if a manufacturer is prima facie found to be involved in certain specified offences. The procedure requires that the Commissioner of Central Excise or the Additional Director General of Central Excise Intelligence must give the noticee an opportunity of being heard and consider any representation made before forwarding recommendations to the Board.4. Supply of Relied-Upon Documents to the Petitioner:The petitioner requested the supply of documents relied upon by the Director General of Central Excise Intelligence to make an effective representation. The court noted that despite the petitioner's request, the documents were not supplied, which was admitted in the impugned order itself. The court referred to the Supreme Court's decision in Kothari Filaments v. Commissioner of Customs, emphasizing that the principles of natural justice require the supply of documents to the noticee to furnish an effective reply.Conclusion:The court concluded that the impugned order was passed without following the prescribed procedure, as the petitioner was not given a true opportunity of hearing. Consequently, the impugned order was set aside. However, the respondent was given the liberty to proceed with the initial notice dated 03.09.2009, provided they supply the relied-upon documents to the petitioner within four weeks, allowing the petitioner to make a representation thereafter. The Director General was directed to proceed in accordance with the law.Disposition:The writ petition was disposed of, and the impugned order was set aside, with directions for compliance with the principles of natural justice.