2010 (3) TMI 470 - HC - Central Excise

Court quashes order, emphasizes reasoned decisions, directs reconsideration of stay application

EVEREADY INDUSTRIES INDIA LTD. Versus UNION OF INDIA

The Court set aside and quashed an order directing a company and its Senior Manager - Taxation to deposit duty and penalty without a hearing or ... Natural Justice – Stay order passed without considering admitted facts objectively and without grant of personal hearing. Directions given to deposit 25% of duty confirmed and penalty imposed. C.B.E.&C. Circular dated 30.03.1999 stipulating that in case of pre-deposit, authority should pass a reasoned order in an objective manner considering facts even if no hearing granted. Law that whenever an order having civil consequences passed, principles of natural justice be complied with. Impugned order not sustainable. Matter remanded. Issues:Challenge to order directing deposit of duty and penalty without hearing or consideration of facts raised in stay application.Analysis:The petitioners, a company and its Senior Manager - Taxation, challenged an order by the Commissioner, Central Excise, directing them to deposit 25% of the duty confirmed and penalty imposed without granting a hearing or considering the issues raised in the stay application. The petitioners argued that the judgment in a specific case cited by the respondent was not applicable universally. The respondents contended that compliance with natural justice principles was not required for pre-deposit applications.The Court noted that the direction to deposit the duty and penalty was based on a Supreme Court judgment without providing a hearing or considering the stay application's contentions. Referring to a circular, the Court highlighted the requirement for reasoned orders even in the absence of a hearing, emphasizing an objective consideration of the facts presented in the application.Regarding the grant of a personal hearing, the Court cited a Delhi High Court judgment emphasizing the evolving concept of natural justice, especially in cases with civil consequences. The Court concluded that since the order under challenge did not objectively consider the facts and no personal hearing was granted, it was set aside and quashed. The Court directed the respondent to reconsider the stay application, ensuring a reasoned order after providing the petitioners with a hearing.The Court observed a similar order issued by the respondent in another case, expressing concern over the lack of individual consideration. The Court clarified that the decision did not delve into the case's merits, leaving all points open for the respondent to address. The Court disposed of the writ petition without calling for affidavits, deeming the allegations not admitted by the respondents and made no order as to costs.