Court Upholds Forfeiture of Facility for Excise Duty Non-Payment

The court dismissed the writ petition, upholding the forfeiture of the facility to pay Central Excise Duty in monthly installments due to the petitioner's admitted default. It was determined that the lack of prior notice did not violate the principles of natural justice as the rule explicitly provided for forfeiture in case of non-payment within 30 days. The court relied on Supreme Court precedents to conclude that a show cause notice would have been redundant given the admitted default. The petitioner's reliance on a High Court judgment was distinguished, and no costs were awarded.

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Issues Involved:
1. Forfeiture of facility to pay Central Excise Duty in monthly installments.
2. Alleged violation of the principles of natural justice due to lack of notice before passing the impugned order.

Issue-Wise Detailed Analysis:

1. Forfeiture of Facility to Pay Central Excise Duty in Monthly Installments:

The petitioner-company, a manufacturer of rigid PVC film and sheets, was availing the facility of paying Central Excise Duty in monthly installments under Rule 8 of the Central Excise Rules, 2002. The company defaulted in paying the duty for September 2005 by one day, paying it on 5th November 2005 instead of before 5th November 2005. This delay was attributed to an unintentional mistake by the company staff, who failed to notice an amendment to Rule 8 that changed the grace period from one month to 30 days. Consequently, the 1st respondent passed an order on 2nd February 2006, forfeiting the facility to pay duty in monthly installments for two months and requiring the petitioner to pay duty for each consignment by debiting the current account (PLA) without availing CENVAT credit during this period. The petitioner challenged this order via a writ petition.

2. Alleged Violation of Principles of Natural Justice:

The petitioner argued that the impugned order was passed without prior notice, violating the principles of natural justice. The respondent countered that there was no amendment to Rule 8 changing the period from one month to 30 days and that the petitioner's default was admitted. The court examined the pre-amended and amended versions of Rule 8, noting that the amended sub-rule (3A) explicitly provided for forfeiture of the facility if duty was not paid within 30 days of the due date.

The court referred to several Supreme Court judgments to determine whether the lack of notice constituted a violation of natural justice. In cases such as *Viveka Nand Sethi v. Chairman, J. & K. Bank Ltd.*, the Supreme Court held that principles of natural justice are not rigid and can be dispensed with when facts are admitted and an inquiry would be an empty formality. Similarly, in *Karnataka SRTC v. S.G. Kotturappa*, it was held that the extent of compliance with natural justice principles depends on the specific facts of each case and can be waived if it leads to an empty formality.

The court concluded that since the petitioner admitted the default and the rule explicitly provided for forfeiture, a show cause notice would not have made a difference. The petitioner's reliance on a Punjab and Haryana High Court judgment in *Krishna Engineering Works Ltd. v. Union of India* was distinguished on the grounds that the Supreme Court judgments provided a more relevant precedent.

Conclusion:
The court dismissed the writ petition, holding that the petitioner's admitted default justified the forfeiture of the facility to pay duty in monthly installments without the need for a prior notice, as any hearing would have been an empty formality. The principles of natural justice were deemed to have been sufficiently addressed given the circumstances of the case. No costs were awarded.

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