High Court · 2004

Heard Mr. S.K. Kejriwal, learned Counsel appearing for the petit ioner. Also heard Ms. R. Bora, learned Central Government Counsel appearing for the respondents. 2. The petitioner company owns 3 Tea Estates i.e. Lukwah and Khona (in Sivsagar district of Assam) and Dalgaon Tea Estate in Jalpaiguri, West Be ngal. The Lukwah Tea Estate of the petitioner is duly registered with the Centra l Excise Department for manufacturing tea including tea waste, bearing Registrat ion No. 3/SIB/Package Tea/1998 dated 27.4.1998. In this proceeding, the petitioner challenges the order dated 28 3. .6.2002 of the Commissioner (Appeals) [Annexure-U], the follow up order dated 29 .10.2004 of the Assistant Commissioner, Central Excise, Jorhat (Annexure-T) and the consequential Assessment Order dated 29th October 2004 of the Assistant Comm issioner, whereby the petitioner is held liable to pay Rs.4,67,048/- as differen tial duty for package tea cleared during 2.6.1998 to 28.2.1999. The petitioner c ontends that they are entitled to the benefit of Exemption granted through Notif ication No. 8/98-C.E., dated 2.6.1998 (Annexure-A) and the contrary declaration made by the impugned order(s) is unsustainable. Mr. S.K. Kejriwal, learned Counsel for the petitioner refers to 4.1 the order dated 29.7.1999 (Annexure-L) of the Joint Commissioner (Technical), Ce ntral Excise, Shillong, wherein it was held that the petitioner is eligible to t he benefit of the Exemption Notification No. 8/98 as under Clause 4(a) of the No tification, the aggregate value of clearances which are exempt from duty of exci se, is not to be computed and accordingly the clubbing together of the clearance from the 3 different units under the petitioner is not going to deprive them of the benefits of exemption under the Notification No. 8/98. On the basis of the said finding the Joint Commissioner (Tech), held that the assessee is not liable to pay duty on their first clearance up to the aggregate value of Rs.50 lacs w. e.f. 2nd June 1998 and that they are eligible for the exemption benefits under N otification No. 8/98-C.E. dated 2.6.1998. Mr. S.K. Kejriwal contends that the said order of the Joint Comm 4.2 issioner (Tech.), has attained finality and no interference could have been made with the consequential declaration made by the Assistant Commissioner who decla red that the proceeding initiated against the petitioner through Show-Cause-Noti ce No. 911 dated 8.10.1998 and the Show-Cause-Notice dated 1049 dated 9.11.1998 are not sustainable. The Counsel also submits that through a purported Review ma de by the Commissioner, the Commissioner (Appeals) couldn’t have indirectly dist urbed the final order of the Joint Commissioner (Tech.) through the impugned ord er on 28.6.2002 (Annexure-U). The learned Counsel points out that the impugned order of 28.6.2 4.3 002 of the Commissioner (Appeals) was an ex parte order where no opportunity was afforded to the aggrieved petitioner and the consequential order of 29.10.2004 (Annexure-T) of the Assistant Commissioner too was passed without issuing any no tice to the petitioner and accordingly Mr. Kejriwal submits that the said order( s) are unsustainable in law. 5.1 Ms. R. Bora, learned Central Government Counsel on the other han d submits that for considering eligibility to the exemption benefits, the aggre gate value of clearance from all the sister factories under the petitioner compa ny is required to be computed under Notification No. 8/98 and the exercise done by the Commissioner (Appeals) as well as the Review exercise carried out by the Commissioner, Excise were consistent with the criterion stipulated under the Not ification No. 8/98. 5.2 The learned Central Government Counsel further submits that for exercising Review power, there is no necessity to issue notice to the effected p arty or to hear them and since the Commissioner, Excise exercised Review power f or protection of Government Revenue, no interference should be made with the imp ugned orders. 6. A reading of the order dated 28.6.2002 of the Commissioner (Appe als) shows that earlier a Review application was filed before the Commissioner a gainst the order of the Assistant Commissioner passed on 25.8.1999, who [by foll owing the order passed by the Joint Commissioner (Tech.)] held that M/s Lukwah T ea Estate is eligible for the exemption benefit under the Notification No. 8/98. But surprisingly Review was done without disturbing the original order of the J oint Commissioner (Tech) and only the consequential order of the Assistant Commi ssioner was set aside and the case was remanded for re-determination of the clai m. On remand the impugned order was passed by the Assistant Commissioner on 20.1 0.2004 declaring that the petitioner is not entitled to exemption of Central Exc ise duty under Notification No. 8/98 and direction was issued for recovery of du ty at the prevailing rate. From the materials in the case record, it is apparent that the o 7. rder of the Joint Commissioner (Tech) on 29.7.1998, whereby the petitioner’s uni t was held eligible for the exemption benefits on clearance made between June to August 1998, had attained finality since no challenge was made to the said find ing of the Joint Commissioner. As the order passed by the Assistant Commissioner was merely a consequential, the original order of the Joint Commissioner (Tech) , in my view couldn’t have been indirectly disturbed by the Commissioner, Excise by reviewing the consequential order of the subordinate authority, without touc hing the original order. That apart, the power of Review was exercised by the Commissione 8.1 r without affording any opportunity to the affected party and in fact in the dep artmental affidavit filed on 8.6.2005, the denial of opportunity to the petition er is admitted with the following averments of the respondents : (cid:28)That it is most respectfully submitted that the Competent Autho rity in the normal cause of its functioning does not inform about the filing of a Review Petition in the present case it was not felt necessary to intimate the Petitioner about the Review Petition against the Order dated 25th August 1999 fi led by Respondent No.4 (cid:29).

8.2 As can be seen from the above stand of the respondents, the Comm issioner, Excise fell it unnecessary to afford a hearing while reviewing the ord er passed by the Assistant Commissioner. But since the review decision has reve rsed the earlier positive declaration in favour of the petitioner, an opportunit y ought to have been afforded to the effected party during the Review process. 9. Under the Central Excise Rules, 1944 (hereinafter referred to a s (cid:28)the Rules (cid:29)), in Rule 2(ii)(c), the (cid:28)Collector (cid:29) means (cid:28) the Collector of Excis e, Shillong (cid:29). (cid:28)The Collector (Appeals) (cid:29) in Rule 2(B) (ii-a) of the Rules means in relation to an order of decision of an officer of the Central Excise subordi nate to, inter alia, (cid:28)the Collector of Central Excise Shillong (cid:29). Considering the se definitions, the Collector (Appeals) could not have considered an Appeal or R evision against the order of the Commissioner, Central Excise who is not subordi nate to the Commissioner (Appeals). Accordingly the order passed on 28.6.2002 by the Commissioner (Appeals), in pursuant to the exercise of Review power by the Commissioner, Central Excise, in my view was, inconsistent with the hierarchial structure of the authorities under the Department. 10. Although it is averred in the counter affidavit that notice of t he proceeding before the impugned order was passed on 29.10.2004 by the Assistan t Commissioner was issued, nothing is brought on record to show that such notice was actually served on the assessee. On the contrary, it is the specific stand of the petitioner that no notice or opportunity was afforded to them at any sta ge during the deliberation before the Commissioner (Appeals) or before the Assis tant Commissioner and ex-parte orders were passed on 28.6.2002 and 29.10.2004. H aving regard to the provisions of Section 35E(4) read with Section 35B(4) of the Central Excise Act, 1944 (hereinafter referred to as (cid:28)the Excise Act (cid:29)) which en visages a notice to the effected party in an Appellate proceeding, it is clear t hat without a reasonable opportunity, the petitioner could not have been fastene d with the liability to pay excise duty. 11. The respondents herein didn’t file any appeal or Review against the adjudication order dated 29.7.1999 (Annexure-L) which held that the petition er is eligible to exemption benefits under Notification No. 8/98 and while the s aid order remains undisturbed, a different view on the entitlement of the petiti oner to the tax benefits granted by the Joint Commissioner (Tech.) on 29.7.1999 couldn’t have been taken through the subsequent orders. 12. It mayn’t be out of place to record that the ex-parte Review ord er of the Commissioner was never furnished to the aggrieved party (petitioner) a nd couldn’t be produced by the respondents even for this Court’s perusal. Theref ore there might be some force in the petitioner’s contention that this Review or der was never formally passed by the Commissioner. 13. For the foregoing discussions and having regard to the fact that the order of the Joint Commissioner (Tech.) has attained finality and the Revie w order was ex-parte passed by the Commissioner without any legal competence and further considering the fact that the impugned orders have been passed without hearing the petitioner, this petition deserves to be allowed. Consequently the i mpugned orders dated 29.10.2004 (Annexure-T), 28.6.2002 (Annexure-U) and the Ass essment Order dated 29th October 2004 are held to be vitiated and the same are q uashed. Since the petitioner has furnished Bank Guarantee as per the Court’s int erim order dated 17.12.2004 covering the entire assessed amount, the Bank Guaran tee shall be returned to the petitioner. 14. The case is accordingly allowed without any order of cost.