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2011 DIGILAW 214 (GAU)

RNT Plantations Limited v. Union of India

2011-03-15

HRISHIKESH ROY

body2011
JUDGMENT Hrishikesh Roy, J. 1. Heard Mr. S.K. Kejriwal, learned Counsel appearing for the Petitioner. 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 Bengal. The Lukwah Tea Estate of the Petitioner is duly registered with the Central Excise Department for manufacturing tea including tea waste, bearing Registration No. 3/SIB/Package Tea/1998 dated 27.4.1998. 3. In this proceeding, the Petitioner challenges the order dated 28.6.2002 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 Commissioner, whereby the Petitioner is held liable to pay Rs.4,67,048/- as differential duty for package tea cleared during 2.6.1998 to 28.2.1999. The Petitioner contends that they are entitled to the benefit of Exemption granted through Notification No. 8/98-C.E., dated 2.6.1998 (Annexure-A) and the contrary declaration made by the impugned order(s) is unsustainable. 4.1 Mr. S.K. Kejriwal, learned Counsel for the Petitioner refers to the order dated 29.7.1999 (Annexure-L) of the Joint Commissioner (Technical), Central Excise, Shillong, wherein it was held that the Petitioner is eligible to the benefit of the Exemption Notification No. 8/98 as under Clause 4(a) of the Notification, the aggregate value of clearances which are exempt from duty of excise, 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 Notification No. 8/98-C.E. dated 2.6.1998. 4.2 Mr. S.K. Kejriwal contends that the said order of the Joint Commissioner (Tech.), has attained finality and no interference could have been made with the consequential declaration made by the Assistant Commissioner who declared that the proceeding initiated against the Petitioner through Show-Cause-Notice No. 911 dated 8.10.1998 and the Show-Cause-Notice dated 1049 dated 9.11.1998 are not sustainable. 4.2 Mr. S.K. Kejriwal contends that the said order of the Joint Commissioner (Tech.), has attained finality and no interference could have been made with the consequential declaration made by the Assistant Commissioner who declared that the proceeding initiated against the Petitioner through Show-Cause-Notice 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 made by the Commissioner, the Commissioner (Appeals) couldn't have indirectly disturbed the final order of the Joint Commissioner (Tech.) through the impugned order on 28.6.2002 (Annexure-U). 4.3 The learned Counsel points out that the impugned order of 28.6.2002 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 notice 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 hand submits that for considering eligibility to the exemption benefits, the aggregate value of clearance from all the sister factories under the Petitioner company 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 Notification 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 party or to hear them and since the Commissioner, Excise exercised Review power for protection of Government Revenue, no interference should be made with the impugned orders. 6. A reading of the order dated 28.6.2002 of the Commissioner (Appeals) shows that earlier a Review application was filed before the Commissioner against the order of the Assistant Commissioner passed on 25.8.1999, who (by following the order passed by the Joint Commissioner (Tech.)) held that M/s Lukwah Tea 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 Joint Commissioner (Tech) and only the consequential order of the Assistant Commissioner was set aside and the case was remanded for re-determination of the claim. But surprisingly Review was done without disturbing the original order of the Joint Commissioner (Tech) and only the consequential order of the Assistant Commissioner was set aside and the case was remanded for re-determination of the claim. On remand the impugned order was passed by the Assistant Commissioner on 20.10.2004 declaring that the Petitioner is not entitled to exemption of Central Excise duty under Notification No. 8/98 and direction was issued for recovery of duty at the prevailing rate. 7. From the materials in the case record, it is apparent that the order of the Joint Commissioner (Tech) on 29.7.1998, whereby the Petitioner's unit 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 finding 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 touching the original order. 8.1 That apart, the power of Review was exercised by the Commissioner without affording any opportunity to the affected party and in fact in the departmental affidavit filed on 8.6.2005, the denial of opportunity to the Petitioner is admitted with the following averments of the Respondents: That it is most respectfully submitted that the Competent Authority 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 filed by Respondent No. 4 8.2 As can be seen from the above stand of the Respondents, the Commissioner, Excise fell it unnecessary to afford a hearing while reviewing the order passed by the Assistant Commissioner. But since the review decision has reversed the earlier positive declaration in favour of the Petitioner, an opportunity ought to have been afforded to the effected party during the Review process. 9. Under the Central Excise Rules, 1944 (hereinafter referred to as "the Rules"), in Rule 2(ii)(c), the "Collector" means " the Collector of Excise, Shillong". But since the review decision has reversed the earlier positive declaration in favour of the Petitioner, an opportunity ought to have been afforded to the effected party during the Review process. 9. Under the Central Excise Rules, 1944 (hereinafter referred to as "the Rules"), in Rule 2(ii)(c), the "Collector" means " the Collector of Excise, Shillong". "The Collector (Appeals)" in Rule 2(B) (ii-a) of the Rules means in relation to an order of decision of an officer of the Central Excise subordinate to, inter alia, "the Collector of Central Excise Shillong". Considering these definitions, the Collector (Appeals) could not have considered an Appeal or Revision against the order of the Commissioner, Central Excise who is not subordinate 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 the proceeding before the impugned order was passed on 29.10.2004 by the Assistant 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 stage during the deliberation before the Commissioner (Appeals) or before the Assistant Commissioner and ex-parte orders were passed on 28.6.2002 and 29.10.2004. Having regard to the provisions of Section 35E(4) read with Section 35B(4) of the Central Excise Act, 1944 (hereinafter referred to as "the Excise Act") which envisages a notice to the effected party in an Appellate proceeding, it is clear that without a reasonable opportunity, the Petitioner could not have been fastened 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 Petitioner is eligible to exemption benefits under Notification No. 8/98 and while the said order remains undisturbed, a different view on the entitlement of the Petitioner to the tax benefits granted by the Joint Commissioner (Tech.) on 29.7.1999 couldn't have been taken through the subsequent orders. 12. 12. It mayn't be out of place to record that the ex-parte Review order of the Commissioner was never furnished to the aggrieved party (Petitioner) and couldn't be produced by the Respondents even for this Court's perusal. Therefore there might be some force in the Petitioner's contention that this Review order 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 Review 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 impugned orders dated 29.10.2004 (Annexure-T), 28.6.2002 (Annexure-U) and the Assessment Order dated 29th October 2004 are held to be vitiated and the same are quashed. Since the Petitioner has furnished Bank Guarantee as per the Court's interim order dated 17.12.2004 covering the entire assessed amount, the Bank Guarantee shall be returned to the Petitioner. 14. The case is accordingly allowed without any order of cost.