Recovery order quashed for denying documents and violating natural justice in Central Excise proceedings

The MP HC allowed a writ petition challenging recovery of short paid Central Excise Duty. The court held that alternative remedy doctrine is not an absolute bar to writ jurisdiction and depends on facts and circumstances. The petitioner was denied requisite documents relied upon in the show cause notice despite repeated requests, and was not afforded proper hearing opportunity, violating principles of natural justice. Even after earlier remand, the authority again passed recovery order without providing documents or hearing, repeating the violation. The court quashed the recovery order dated 29.03.2024 and remanded the matter for fresh adjudication with proper compliance of natural justice principles.

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Issues Involved:
1. Non-supply of relied upon documents (RUDs) to the petitioner.
2. Violation of principles of natural justice.
3. Maintainability of the writ petition despite the availability of an alternative remedy.

Summary:

Non-supply of Relied Upon Documents (RUDs):
The petitioner, a partnership firm engaged in the manufacture of Pan Masala, Mouth Freshner, and Sweet Supari, challenged the order dated 29.03.2024 issued by respondent no.2 for recovery and penalty. The petitioner argued that despite being issued a show cause notice on 09.11.2012, only 6 out of 32 relied upon documents were provided. The petitioner was assured that the remaining documents would be supplied, which did not happen, leading to the inability to file a proper reply. Consequently, the respondent no.2 passed a final order on 16.11.2022 confirming the demand and penalty without providing the necessary documents. The Commissioner (Appeals) allowed the petitioner's appeal and remanded the matter for fresh adjudication, but respondent no.2 again failed to provide the documents and passed another recovery order on 29.03.2024.

Violation of Principles of Natural Justice:
The petitioner contended that the final order of recovery and penalty was passed in gross violation of the principles of natural justice as they were not afforded a proper opportunity of hearing. The respondent no.2 did not comply with the Commissioner (Appeals) order to provide the necessary documents before adjudicating the show cause notice afresh. This non-compliance led to the violation of the petitioner's constitutional rights u/Article 19(1)(g) and 21.

Maintainability of the Writ Petition:
The respondent opposed the petition, arguing that the petitioner had not claimed non-receipt of documents in their communication and had an alternative remedy of appeal. The respondent cited various judgments to support their contention that the petitioner should have availed the alternative remedy. However, the court held that the rule of alternative remedy is not an absolute bar to the maintainability of a writ petition. The court referred to the judgment in Godrej Sara Lee Ltd. Vs. Excise & Taxation Officer, which states that the availability of an alternative remedy does not oust the jurisdiction of the high court and that the rule is one of policy, convenience, and discretion rather than law.

Judgment:
The court found that the petitioner was not supplied with the necessary documents, which prevented them from replying to the show cause notice, leading to the final order of recovery. The respondent no.2 did not adhere to the directions of the Commissioner (Appeals) and violated the principles of natural justice by not providing the documents and opportunity of hearing. Consequently, the final order dated 29.03.2024 was set aside, and the matter was remanded back to respondent no.2 for fresh adjudication. Respondent no.2 was directed to provide all relied upon documents to the petitioner and then proceed to pass an order on the merits after giving due opportunity of hearing. The petition was allowed with no order as to cost.

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