Non participation in adjudication and right to be heard: opportunity to file replies granted; vires of Rule 26(2) kept open.

Petitioners who abstained from adjudication were granted a fresh opportunity to file responses within four weeks, because they could have participated without prejudice to their challenge to the vires of Rule 26(2) of the Central Excise Rules, 2002; the impugned non-participation orders are set aside and adjudicating authorities must observe principles of natural justice and hear petitioners before disposing show-cause notices. The question on the vires of Rule 26(2) and all merits are kept open, but petitioners cannot benefit from their earlier non-participation or raise limitation to avoid disposal.

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Issues: Whether the impugned adjudication orders passed in absence of petitioners' replies to show-cause notices should be set aside and petitioners granted opportunity to file replies and participate in proceedings; whether the challenge to the vires of Rule 26(2) of the Central Excise Rules, 2002 should be adjudicated at this stage.

Analysis: The Court examined the factual position that many petitioners did not file replies or participate in adjudication because they were advised that participation would amount to waiver of their challenge to the vires of Rule 26(2). The Court refrained from deciding the merits of the impugned orders or the constitutional challenge to Rule 26(2). Instead, it balanced the interests of justice by allowing petitioners an opportunity to file responses and be heard by the Adjudicating Authorities, subject to payment of specified costs, and directed adherence to principles of natural justice in any fresh adjudication. The Court expressly kept the question of the vires of Rule 26(2) and all parties' contentions on merits open for future determination.

Conclusion: Impugned orders set aside and petitioners granted four weeks to file responses to show-cause notices; petitioners must pay specified costs to obtain benefit of this order; issue of vires of Rule 26(2) left open.

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