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2011 DIGILAW 537 (GUJ)

Vishal Engineering Nani Daman v. Union of India

2011-07-14

AKIL KURESHI, SONIA GOKANI

body2011
JUDGMENT : Akil Kureshi, J. This group of petitions arises out of common factual and legal background. They have therefore been heard together and are being disposed of by this common judgment. 2. Considering the nature of urgency involved, learned counsel for both the sides made detailed submissions before us for final disposal of the petitions. 3. For the purpose of this judgment, we may notice the facts as arising in Special Civil Application No. 5989 of 2011. The petitioner Vishal Engineering, a partnership firm, has challenged an Order dated 1st April 2011 passed by the respondent no.4 Central Board of Excise & Customs, New Delhi ["CBEC" for short] imposing certain restrictions on the petitioner availing Cenvat Credit and excise duty benefits, in exercise of power under Rule 12AA of the CENVAT Credit Rules, 2004 and Rule 12CC of the Central Excise Rules, 2002. 4. On the premise that the petitioner was prima facie found to have engaged in evasion of Central Excise duty in clearance of its finished goods i.e., M.S Ingots without cover of invoice and without payment of central excise duty, and also availed Cenvat credit on the raw material used i.e., Scrap from various suppliers without actual receipt of the same in the factory premises, a show-cause notice dated 7th June 2010 came to be issued by the respondent Director General of Central Excise [Intelligence]. The petitioner was called upon to make representation as to why restrictions of the following nature be not imposed on it. "[i] the facility of monthly payment of duties may be withdrawn and the assessee shall be required to pay excise duty for each consignment at the time of removal of goods for a period of three months. [ii] payment of duty by utilization of CENVAT credit may be restricted and the assessee shall be required to pay excise duty without utilizing the CENVAT credit for a period of three months." 5. In the show cause notice, it was specifically stipulated that if no response was received from the petitioner within the stipulated time, the matter would be decided ex parte. 6. In the show cause notice, it was specifically stipulated that if no response was received from the petitioner within the stipulated time, the matter would be decided ex parte. 6. In response to the said show-cause notice, the petitioner under its communication dated 14th June 2010 asked for supplying documents - such as, Panchnama dated 30th March 2010 under which certain documents were seized from the factory premises of the petitioner, as also, the statement of one Ankur Thakkar recorded on 3rd April 2010. The petitioner further elaborated that alongwith the show cause notice or otherwise, the proposal for imposition of restriction had not been supplied; the documents on which the proposal was based were also not supplied. The petitioner, therefore, contended that in absence of any such documents being made available, the petitioner was not aware as to on what grounds, the proposal was based. The petitioner requested that hearing fixed on 17th June 2010 may kindly be postponed and copies of proposal forwarded by the Additional Director General of Central Excise Intelligence and other relevant documents be provided to the petitioner in compliance of the principles of natural justice. 7. Pursuant to the said representation dated 14th June 2010 of the petitioner, the respondents did not supply any documents. The date for personal hearing was, however, extended and hearing did not take place as previously proposed on 17th June 2010. The petitioner, therefore, on 18th August 2010 again sent a letter to the respondent no.3Director General of Central Excise Intelligence and reiterated that copy of the proposal for imposition of restrictions and the details of documents, based on which the proposal was forwarded as also the statement of Ankur Thakkar recorded on 3rd April 2010, be supplied. The petitioner further requested that till such documents are supplied, hearing fixed on 19th August 2010 be adjourned. 8. Without supplying any of the documents demanded, the CBEC passed impugned order on 1st April 2011 and imposed following restrictions on the petitioner in terms of Rule 12AA of the CENVAT Credit Rules, 2004 and Rule 12CC of the Central Excise Rules, 2002 : "(i) the facility of monthly payment of excise duty by M/s. Vishal Engineering, Survey No. 194/4 & 194/5 Panchal Udyog Nagar, Bhipore, Daman 396210; M/s. Jalaram Ispat Pvt. Limited, situated at Plot No. 7577, Survey no. 187/6 & 173/3 & 4, Panchal Industrial Estate, Bhimpore, Daman & M/s. Vishal Casteels, Survey No. 194/1, Plot No. 1, Lubari Road, Athal, Silvassa as provided 10 of 30 under Rule 8 (1) of the Central Excise Rules, 2002, is order to be withdrawn and the assesses are required to pay excise duty for each consignment at the time of removal of goods with effect from 7/4/11 to 30/9/11. (ii) Payment of Central Excise duty by utilization of CENVAT credit as provided under rule (3) of the CENVAT credit Rules, 2004 of the above mentioned assesses is ordered to be stopped with effect from 7/4/11 to 30/9/11. During this period, the aforementioned assesses are required to pay excise duty without utilizing CENVAT credit. However, the assesses are permitted to take CENVAT credit on goods received during this period, which can be utilized for payment of duty on goods cleared from the factory after the aforesaid period is over. (iii) The Assesses will maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit has not been taken with effect from 7.4.11 to 30.6.11. (iv) The assesses will intimate the jurisdictional Superintendent of Central Excise within twenty four hours of the receipt of principal inputs in the factory on which CENVAT credit has or has not been taken and the same should be kept available for verification for the next 48 hours. This restriction will be applicable for the period from 7/4/11 to 30/6/11. 16. The Assesses are also informed that if they clear the goods in violation of the above mentioned restriction, the said goods shall be treated as having been cleared in contravention of the provision of the Rule 12CC of the Central Excise Rules, 2002 and necessary action as provided in the law in this regard would be taken. 17. It is further ordered as clarification that in the event the operation of this order get stayed by any authority, the total duration of the period for which said facilities will not be available or the period for which the restrictions shall be operative will remain the same as specified in foregoing para 15 above with only change in corresponding dates, if the aforesaid stay order is vacated subsequently. 18. 18. This order is issued without prejudice to any action which can betaken against the assesses under this law or any law in for the time being in force." 9. In the reply affidavit filed by the respondents, it is primarily contending that the petitioners have not availed of the opportunity of personal hearing, nor any reply on merits was filed. It is also contended that looking to the nature of the proceedings, the action taken by the respondents was just and proper. 10. On the basis of above factual background, counsel for the petitioners submitted that the respondent no.4 passed the impugned order in gross violation of the principles of natural justice. He pointed out that a large number of documents, statements and other materials were relied on in the proposal sent by the Director General of Central Excise Intelligence for imposing restrictions on the petitioners. In the show cause notice, no such documents were even mentioned. Subsequently, even though the petitioner demanded such documents, the same were not supplied. The CBEC in the impugned order referred to and relied upon series of documents, statements, panchnama to form a prima facie opinion that the petitioner was involved in clandestine removal of goods without payment of duty and availment Of Cenvat Credit fraudulently. He submitted that the said order, therefore, is required to be quashed. 11. In support of his contentions, counsel relied upon the following judgments : [i] In the case of Vinay Wires & Poly Products P. Limited v. Member (C.Ex.)., C.B.E. & C., New Delhi, reported in 2010 (252) E.L.T 10 (Del.), wherein, the Division Bench of Delhi High Court under similar circumstances quashed the impugned order of restrictions finding that necessary documents were not supplied to the party. It was pointed out that the decision of Delhi High Court in the matter of Vijay Wires & Poly Products Private Limited [Supra] was carried to the Supreme Court but the SLP was dismissed. [ii] In the case of Kothari Filaments v. Commissioner of Customs (Port), Kolkata, reported in, 2009 (233) ELT 289 (SC), wherein the Apex Court, in the background of proceedings under the Customs Act, observed 13 of 30 that the Act does not prohibit application of principles of natural justice, and quashed the action of the Department which was found to be in violation of the rules of natural justice. [iii] On the decision in the case of Modulus Prefab Solutions v. Union of India, reported in, 2011 (264) ELT 17 (P&H) wherein the Punjab & Haryana High Court, considering the restrictions imposed by the Department under Rule 12CC of the Central Excise Rules, 2002, quashed the impugned action finding it to be opposed to the principles of natural justice since important documents were not supplied. [iv] Reliance is also placed on yet another decision of the Punjab & Haryana High Court in the case of Saviton Metplast (P) Limited v. Union of India, reported in, (2011) 263 ELT 519 (P&H) wherein, similar view was taken. [v] Our attention was drawn to two orders passed by the Division Bench of this Court [i] in SCA No. 25507 of 2007 dated 1st November 2007; and [ii] in SCA No. 9823 of 2007 dated 8th May 2007, wherein, the Bench finding that the panchnamas were not supplied to the manufacturers, the orders imposing restrictions under Rule 12AA/12CC came to be setaside; of course leaving it open to the Department to proceed ahead after supplying such documents. 12. On the other hand, learned counsel Mr. Ravani appearing for the Department opposed the petitions vehemently contending that looking to the nature of the proceedings involved, full fledged hearing is not envisaged. The petitioner was granted opportunity to make representation. Such opportunity was not availed of. The petitioner did not even participate in the personal hearings. 13. Counsel submitted that the petitioner has not demonstrated any prejudice on account of non-supply of the documents. He further submitted that in cases where the investigation is still going on and is at a sensitive stage, it is not feasible to supply the documents. In the present case, counsel submitted that, the petitioner demanded documents without showing any relevance. Such a request was not required to be granted. Counsel relied on the following decisions : [i] In the case of State Bank of India v. Bidyut Kumar Mitra & Ors., reported in, (2011) 2 SCC 316 wherein, the Apex Court in the background of departmental enquiry proceedings, referred to the decision in the case of State Bank of Patiala and Ors. v. S.K Sharma, reported in, (1996) 3 SCC 364 and observed as under : "43. v. S.K Sharma, reported in, (1996) 3 SCC 364 and observed as under : "43. A perusal of the note under subclause (IV) of the aforesaid Rule would make it obvious that the respondent was not only to submit a list of documents and witnesses but was also required to state the relevancy of the documents and the examination of the witnesses. The respondent himself having not complied with the procedural requirements can hardly complain that a breach of the procedural requirements under clause (xi) would ipso facto result in rendering the enquiry null and void. In any event, since the disciplinary authority has not relied on any recommendations of CVC and the respondent has failed to plead or prove any prejudice having been caused, the disciplinary proceedings cannot be said to be vitiated." 14. Heavy reliance was also placed on the decision of the Supreme Court in the case of State Bank of Patiala & Ors. [Supra] wherein, the Apex Court once again in the background of departmental inquiry proceedings summarized the principles required to be followed in the departmental inquiry proceedings/cases. It is not necessary to reproduce the entire discussion on the point. Suffice it to say that one ground mentioned, which may permit curtailment of the rule of audi alteram partem was a situation where the interests of State or public interest may call for a curtailing of the same. In which cases, the Court may have to balance public as well as State interests with the requirement of natural justice and arrive at an appropriate decision. Reliance was also placed on the decision in the case of Swadeshi Cotton Mills v. Union of India, reported in, (1981) 1 SCC 664 wherein the Apex Court observed that the phrase 'natural justice' is not capable of static and precise definition. Reliance was also placed on the decision of Supreme Court in the case of S.L. Kapoor v. Jagmohan & Ors., reported in (1980) 4 SCC 379 wherein, the Apex Court had an occasion to examine the requirement of principles of natural justice in administrative action. Reliance was also placed on the decision in the case of State of U.P v. Shatrughan Lal & Anr., reported in (1998) 6 SCC 651 wherein the Apex Court had an occasion to examine the nature of penalties i.e., confiscation and personal penalties imposable under the Customs Act. Reliance was also placed on the decision in the case of State of U.P v. Shatrughan Lal & Anr., reported in (1998) 6 SCC 651 wherein the Apex Court had an occasion to examine the nature of penalties i.e., confiscation and personal penalties imposable under the Customs Act. Having thus heard learned counsel for the parties and having perused the material on record, before adverting to the rival contentions, it would be useful to take note of the statutory provisions. Rule 12AA of the Cenvat Credit Rules, 2004 gives power to impose restrictions in certain types of cases. The said Rule 12AA of the Rules reads as under :RULE 12AA : Power to impose restrictions in certain types of cases - Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of misuse of CENVAT credit, nature and type of such misuse and such other factors as may be relevant, is of the opinion that in order to prevent the misuse of the provisions of CENVAT credit as specified in these rules, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or an exporters, may by a notification in the Official Gazette, specify nature of restrictions including restrictions on utilization of CENVAT credit and suspension of registration in case of a dealer and type of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board. 15. Similarly, Rule 12CC of the Central Excise Rules, 2002 pertains to power to impose restrictions in certain types of cases with respect to availment of Central Excise; including suspension of registration in case of a dealer, withdrawal of types of facilities of central excise and procedure for issue of such orders. 15. Similarly, Rule 12CC of the Central Excise Rules, 2002 pertains to power to impose restrictions in certain types of cases with respect to availment of Central Excise; including suspension of registration in case of a dealer, withdrawal of types of facilities of central excise and procedure for issue of such orders. Rule 12CC of the Central Excise Rules, 2002 reads as under : "Rule 12 CC : Power to impose restriction in certain types of cases - Notwithstanding anything contained in these rules, where the Central Government, having regard to the extent of evasion of duty, nature and type of offences or such other factors as may be relevant, is of the opinion that in order to prevent evasion of, and default in payment of, excise duty, it is necessary in the public interest to provide for certain measures including restrictions on a manufacturer, first stage and second stage dealer or an exporter, may by a notification in the Official Gazette, specify nature of restrictions including suspension of registration in case of a dealer, types of facilities to be withdrawn and procedure for issue of such order by an officer authorized by the Board." 16. To regularize the procedure of such restrictions either under Rule 12AA of the CENVAT Credit Rules, 2004 or under Rule 12CC of the Central Excise Rules, 2002, a Notification came to be issued by the Central Government on 30th December 2006. It would be necessary to reproduce entire Notification in its present form, which has been amended from time to time, since inception. It would be necessary to reproduce entire Notification in its present form, which has been amended from time to time, since inception. Notification Under Central Excise Rule 12cc [1] Deterrent against tax evaders - Withdrawal of facilities from manufacturers, registered dealers or exporters indulging in tax evasion - In pursuance of Rule 12CC of the Central Excise Rules, 2002, and rule 12AA of the CENVAT Credit Rules, 2004, the Central Government, hereby declares that where a manufacturer, first stage or second stage dealer, or an exporter including a merchant exporter is prima facie found to be knowingly involved in any of the following :- (a) removal of goods without the cover of an invoice and without payment of duty; (b) removal of goods without declaring the correct value for payment of duty, where a portion of sale price, in excess of invoice price, is received by him or on his behalf but not accounted for in the books of account; (c) taking of CENVAT credit without the receipt of goods specified in the document based on which the said credit has been taken; (d) taking of CENVAT credit on invoices or other documents which a person has reasons to believe as not genuine; (e) issue of excise duty invoice without delivery of goods specified in the said invoice; (f) claiming of refund or rebate based on the excise duty paid invoice or other documents which a person has reason to believe as not genuine; (g) removal of inputs as such on which CENVAT credit has been taken, without paying an amount 1equal to credit availed on such inputs in terms of subrule(5) of rule 3 of the CENVAT Credit Rules, 2004., an officer authorized by the Board may for withdrawal of facilities or impose certain restrictions as specified in para 2 of this Notification. 2. 2. Facilities to be withdrawn and imposition of restrictions - (1) Where a manufacturer is prima facie found to be knowingly involved in committing the offences as specified in para 1, the following restrictions may be imposed on the facilities, namely : (i) the facility of monthly payment of duties may be withdrawn and the assessee shall be required to pay excise duty for each consignment at the time of removal of goods; (ii) payment of duty by utilization of CENVAT credit may be restricted and the assessee shall be required to pay excise duty without utilizing the CENVAT credit; (iii) the assessee may be required to maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit has not been taken; (iv) the assessee may be required to intimate the Superintendent of Central Excise regarding the receipt of principal inputs in the factory on which CENVAT credit has or has not been taken, within a period specified in the order and the said inputs shall be made available for verification upto the period specified in the order. 17. On close perusal on the Rule 12AA of the CENVAT Credit Rules, 2004 and Rule 12CC of the Central Excise Rules, 2002 it becomes clear that these rules envisage certain restrictions with respect to availment of certain facilities either with respect to Central Excise or availment of CENVAT credit. Such restrictions can be imposed having regard to extent of evasion of duty, nature and type of offences or such other relevant features which authorities consider it necessary to do so to prevent evasion of or default in payment of excise duty, etc. The Notification issued on 30th December 2006 lays down procedure for imposition of such restrictions and nature of restrictions which can be imposed. Under para 1 of the said Notification, it is provided that where a manufacturer, first stage or second stage dealer, or an exporter including a merchant exporter is prima facie found to be knowingly involved in any of the activities specified in clause (a) to (g) thereof; an officer authorized by the Board may order for withdrawal of facilities or impose certain restrictions, as specified in paragraph 2 of the said Notification. The said clauses (a) to (g) of para 1 of the Notification include activities of removal of goods without the cover of an invoice, or without payment of duty, or without declaring the correct value for payment of duty, etc. Paragraph 2 of the said Notification lists facilities to be withdrawn and imposition of restrictions, which are as follows : (i) the facility of monthly payment of duties may be 21 of 30 withdrawn and the assessee shall be required to pay excise duty for each consignment at the time of removal of goods; (ii) payment of duty by utilization of CENVAT credit may be restricted and the assessee shall be required to pay excise duty without utilizing the CENVAT credit; (iii) the assessee may be required to maintain records of receipt, disposal, consumption and inventory of the principal inputs on which CENVAT credit has not been taken; (iv) the assessee may be required to intimate the Superintendent of Central Excise regarding the receipt of principal inputs in the factory on which CENVAT credit has or has not been taken, within a period specified in the order and the said inputs shall be made available for verification upto the period specified in the order. Paragraph 2 of the Notification also envisages imposition of stricter and stringent restrictions in case where manufacturer/dealer is found to be knowingly involved in repeated defaults. Paragraph 3 of the Notification lays down that the provisions of this notification shall be applicable only in a case where the duty or CENVAT credit alleged to be involved in the offences specified in para 1 is more than Rs. 10 lakhs. Paragraph 4 of the Notification lays down the procedure for imposition of restrictions. It requires the Commissioner of Central Excise or Director General of Central Excise Intelligence to make a proposal to the Chief Commissioner or Director General of Central Excise Intelligence, after examining the records and other evidence and after satisfying himself that the person has knowingly committed the offence as specified in para 1. The Chief Commissioner of Central Excise or Director General of Central Excise Intelligence; as the case may be, once again after examining the records is of the opinion that there are sufficient grounds to form a reasonable belief that a person has knowingly committed the offences specified in para 1, may forward the proposal alongwith his recommendations to the Board. The Chief Commissioner of Central Excise or Director General of Central Excise Intelligence; as the case may be, once again after examining the records is of the opinion that there are sufficient grounds to form a reasonable belief that a person has knowingly committed the offences specified in para 1, may forward the proposal alongwith his recommendations to the Board. It is clearly specified that, however, the Chief Commissioner of Central Excise or Director General of Central Excise Intelligence, before forwarding his recommendations, shall given an opportunity of being heard to the person against whom the proceedings have been initiated and shall take into account any representation made by such person before he forwards his recommendations to the Board. It is further provided that the authorized officer of the Board, after examining the recommendations received from the Chief Commissioner of Central Excise or Director General of Central Excise Intelligence, may issue an order specifying the type of facilities to be withdrawn, or the type of restrictions to be imposed and the period for which such withdrawal of facilities or restrictions shall operate. 18. From the nature of the proceedings, the ultimate order that the Board may pass and the resultant effect on the assessee, it can hardly be disputed that such order would have adverse civil consequences to him. It is also not the case of the respondents that restrictions envisaged in the said notification would not result into any civil consequences. If that be so, even by the general principles of administrative law, requirement of hearing and following the principles of natural justice would be necessary. In the present case, more so, since the notification itself envisages that the Chief Commissioner of Central Excise or Director General of Central Excise Intelligence, before forwarding his recommendations, shall give an opportunity of being heard to a person against whom the proceedings have been initiated and also shall take into account any representation made by such person before forwarding such recommendations to the Board. 19. The law is well settled. In any action of the State involving adverse civil consequences to a citizen, unless the Statute specifically or by necessary implications excludes requirement of hearing, the principles of natural justice would automatically apply, and hearing would be necessary before any such adverse orders could be passed or action could be taken. 19. The law is well settled. In any action of the State involving adverse civil consequences to a citizen, unless the Statute specifically or by necessary implications excludes requirement of hearing, the principles of natural justice would automatically apply, and hearing would be necessary before any such adverse orders could be passed or action could be taken. In the present case, quite to the contrary, procedure itself envisages giving an opportunity of being heard to a person likely to be affected pre-judicially by the order that may be ultimately passed. It also requires the authorities to take into account representation, if so made by such a person. In case of Smt. Maneka Gandhi v. Union of India and Anr., reported in AIR 1978 SC 597 , it was observed that "32. It is well established that even where there is no specific provision in a statute or rules made thereunder for showing cause against action proposed to be taken against an individual, which affects the rights of that individual, the duty to give reasonable opportunity to be heard will be implied from the nature of the function to be performed by the authority which has the power to take punitive or damaging action." 20. Looking to the sensitive nature of the proceedings, adverse impact on an industry on account of restrictions, the procedure envisages examination of record at three stages. A proposal has to be initiated at the hands of the Commissioner of Central Excise or Additional Director General of Central Excise Intelligence, after examining the records and other materials. The Chief Commissioner or Director General of Central Excise Intelligence shall examine the said proposal; the material on which the same is based and after giving opportunity of hearing to the person concerned and taking into account his representation; if any, and after satisfying himself that there is a reasonable belief that any of the breaches envisaged in Clause (a) to (g) in Para 1 of the notification have been committed, forward the proposal with his recommendations to the Board for passing final order. At the third stage, the authorized officer of the Board would once again examine the recommendations received and pass final order, as is found necessary, and in a given case, impose any of the restrictions as envisaged in para 2 of the notification. 21. At the third stage, the authorized officer of the Board would once again examine the recommendations received and pass final order, as is found necessary, and in a given case, impose any of the restrictions as envisaged in para 2 of the notification. 21. While having thus examined the provisions of the notification, we must also be conscious of the fact that such restrictions are not permanent in nature. They are imposed for a specific period and would operate for a period specified in the order, during which period, certain facilities would be withdrawn or suspended or certain restrictions of availing of CENVAT credit, etc., would be imposed. These measures, thus, are necessarily in the nature of temporary deterrence when it is prima facie found that the manufacturer or dealer has indulged into some irregular activities such as availing of CENVAT credit wrongly or clearance of goods without payment of duty, etc. We are also conscious that for either recovery of unpaid Central Excise duty or for imposition of penalty, full fledged proceedings of adjudication are envisaged under the Central Excise Act. Such proceedings require issuance of show cause notice, supply of documents, opportunity of hearing to the concerned person and also permitting him to lead evidence; if so desired. These proceedings go through several stages - of appeal and revision. These proceedings necessarily consume long time before a final order could be passed and ultimately implemented. The procedure envisaged under Rule 12AA and 12CC of the respective rules should not therefore be confused with the full fledged departmental proceedings for recovery of unpaid excise duty or for imposition of penalties including personal penalties. These proceedings, therefore, are necessarily in the nature of summary proceedings. The very fact that such restrictions are allowed to be imposed on prima facie satisfaction of the authorities that the person concerned has engaged or involved himself in any of the illegal acts mentioned in clause (a) to (g) of para 1 of the Notification would show that it would not be necessary to establish the allegations and charges beyond reasonable doubt, and only prima facie satisfaction would be sufficient. This coupled with the fact that the restrictions envisaged are for a limited period and are in the nature of suspension of certain facilities or restriction on availment of certain credit facilities temporarily, would convince us that the order, though may have temporary unpleasant consequences on the assessee, the same does not have any permanent adverse effect. 22. Viewed from this angle, we must appreciate the requirement of natural justice to be followed in such cases. It is stated time, and time again, that principles of natural justice cannot be put in strait jacket. Its applicability depends upon the context and the facts and circumstances of each case. In case of A.K Roy v. Union of India & Anr., reported in AIR 1982 SC 710 , it was observed as under : "99. We do not suggest that the principles of natural justice, vague and variable as they may be, are not worthy of preservation. As observed by Lord Reid in Ridge v. Baldwin, (1964) AC 40, 6465 the view that "natural justice is so vague as to be practically meaningless" is tainted by "the perennial fallacy that because something cannot be cut and dried or nicely weighed or measured therefore it does not exist". But the importance of the realization that the rules of natural justice are not rigid norms of unchanging content, consists in the fact that the ambit of those rules must vary according tot he context, and they have to be tailored to suit the nature of the proceeding in relation to which the particular right is claimed as a component of natural justice." 23. Under the circumstances, insistence of the petitioners that invariably in all cases all documents must be supplied regardless of the stage of investigation; and regardless of the sensitivity of the case, does not seem acceptable. The contention of the petitioners that a full fledged hearing must be provided and even opportunity to the petitioners to lead further evidence and may be even, in the given case to cross examine the persons whose statements have been recorded, also does not command us. 24. We may also recall that such proceedings may be initiated at a stage when the departmental proceedings for recovery of duty and penalty may not have yet been commenced. Such proceedings are envisaged even when investigation is not fully completed. 24. We may also recall that such proceedings may be initiated at a stage when the departmental proceedings for recovery of duty and penalty may not have yet been commenced. Such proceedings are envisaged even when investigation is not fully completed. In a given case, such investigation may be at a initial stage. In some cases nature of investigation may be sensitive and may involve other parties also. The statement of witnesses of such cases, if disclosed, may hamper the investigation and may pre-judicially affect the Revenue in its ultimate proceedings, which may be commenced at a later stage. Such are some of the cases where the Department may be, in our opinion, justified in contending that the material relied upon in making the proposal for imposing restrictions should be withheld. These cases, however, must be few and far between, in the nature of exception and not a matter of rule. 25. Having said so, reverting back to the facts of the present case, we find that none of the documents, heavily relied upon by the Department - right from the stage of sending the proposal by the Additional Commissioner and issuance of show cause notice, though time and again demand, such documents were not supplied. Such documents were placed before the Director General. The Director General, in turn, sent his opinion to the Board after having examined the proposal of the Addl. Director General and having perused the material accompanying such a proposal. Ultimately, the impugned order came to be passed, without ever supplying documents to the petitioners. Such documents were numerous. These documents, from the impugned order, clearly emerges were not merely the statements of the petitioners themselves or the documents collected from the factories of the petitioner but there were several other statements of witnesses who were independent in nature. Without referring to these documents, statements and other materials in the show cause notice, without supplying or permitting inspection thereof to the petitioners, the proposal was moved, recommendations made and finally accepted by the Board, which ultimately culminated into passing of the impugned order imposing certain restrictions in availment of the CENVAT credit. We are of the view that there was clear violation of requirement of natural justice, as applicable in the present case. Impugned order, cannot be sustained. 26. We are of the view that there was clear violation of requirement of natural justice, as applicable in the present case. Impugned order, cannot be sustained. 26. The contention that the petitioner ought to have shown relevance of the documents they demanded cannot be accepted. It was not as if the petitioners on their side were demanding any documents to defend themselves. They were only demanding documents which the Department relied upon. 27. The contention that the prejudice must be shown or in the present case the same has not been demonstrated must also be rejected. The respondents relied upon several documents to form a prima facie opinion that the petitioners had breached rules and regulations while availing CENVAT credit facilities. Such a conclusion, though prima facie, must be based on evidence which needs to be disclosed to the petitioners. This was not done. In our view prejudice was writ large on the face of the record. 28. Before concluding, we may observe that in a given case, if the documents are too bulky, or otherwise too cumbersome to supply, instead of supplying copy to the petitioners, permitting inspection thereof, may also be sufficient compliance of the requirement of natural justice. In the present case, however, this was also not done. 29. In the result, the impugned orders are quashed. Restrictions imposed are set aside. This is without prejudice to the rights of the respondents to proceed further in accordance with law, after supplying necessary materials. If the respondents wish to proceed further from the stage of issuance of show cause notice, they would supply necessary documents to the petitioners within four weeks from the date of receipt of copy of this order. Order accordingly.