2006 (11) TMI 225 - HC - Central Excise

Corrigendum creating demand not correction; breach of natural justice; fair procedures upheld

The court held that the corrigendum, which resulted in a substantive change in the original order by creating a demand instead of a refund, was not a mere ... Natural justice - Order Issues involved: The issues involved in the judgment are whether the impugned order can be termed as a corrigendum rectifying the mistake apparent on the face of the record and whether the corrigendum could be made without notice to the assessee.Details of the Judgment:*Issue 1: Whether the impugned order can be termed as corrigendum rectifying the mistake apparent on the face of the recordRs.*The petitioner, engaged in processing textiles, had a provisional assessment order passed for the period March 2001 to February 2002, where Excise Duty was paid based on provisional assessment. The final assessment order was issued on 31st Dec., 2002, showing excess Duty paid by the assessee and excess deemed credit availed. Subsequently, a corrigendum was issued on 25th Feb., 2003, without notice to the assessee, directing the reversal of certain amounts. The court found that the corrigendum, purportedly correcting an arithmetic mistake, resulted in a substantive change in the original order, creating a demand instead of a refund. The court held that the corrigendum was not a mere correction of arithmetic mistake and was issued in breach of natural justice principles, being a non-speaking order.*Issue 2: Whether the corrigendum of the nature under challenge could be made without notice to the assesseeRs.*The court noted that the corrigendum was issued without notice to the assessee, leading to a significant increase in the demand without proper disclosure of the reasons or source of newly substituted figures. The court held that such an order, resulting in a substantial demand increase, cannot be sustained without affording the assessee an opportunity of hearing. The court set aside the orders of the Tribunal, Appellate Commissioner, Commissioner (Appeals), and adjudicating authority, emphasizing the importance of following fair procedures and principles of natural justice.In conclusion, the appeal was allowed, and it was decided that the adjudicating authority could take proceedings against the assessee as permissible under the law after providing an opportunity of hearing.