2026 (2) TMI 518 - HC - Central Excise

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 ... Challenge to orders passed for non-participation in adjudication - Right to be heard and principles of natural justice - Doctrine of vires of subordinate legislation - Rule 26(2) of the Central Excise Rules, 2002 - HELD THAT:- The petitioners could have always participated in the proceedings without prejudice to their contentions on the issue of vires. However, the petitioners chose to go by the advice given to them, and now that we have granted an opportunity to the petitioners in [2026 (2) TMI 9 - JHARKHAND HIGH COURT], we think that interest of both parties would be substantially balanced if an opportunity is granted to the petitioners to file their reply and contest the show-cause notices on merits. Thus, we set aside the impugned orders and grant the petitioners four weeks’ time to file their responses to the show-cause notices. If no responses are filed within four weeks, the Adjudicating Authorities are free to pass fresh orders without awaiting such responses. The Adjudicating Authority, no doubt, would have to comply with the principles of natural justice and fair play and hear the petitioners, as is required under the law, before the show-cause notices are disposed of. The issue of vires of Rule 26(2) of Central Excise Rules, 2002 is kept open. In fact, all parties' contentions on the merits are explicitly kept open. The petitioners will not be entitled to take any advantage of their nonparticipation or raise any limitation issues for the disposal of the show-cause notices. Writ petitioners are disposed of. 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.