Larsen and Toubro Ltd. vs Union of India and Others

M.B. Shah, C.J.—By the present petition under Article 226 of the Constitution of India, the petitioners, who are manufacturers of cement, are challenging the Order dated 27th March, 1987 passed ex parte by the Central Excise Authorities denying the benefit of Exemption Notification No. 36/87 dated 1.3.1987.

A Writ Petition was filed on 25.6.1987 and pending the Writ Petition, a Show Cause Notice (Exhibit ''L'' to the petition), came to be issued by the then Asstt. Collector of Central Excise, Division-Chandrapur. The said Writ Petition was consequently amended so as to impugn even the said show cause notice.

It is contended that on 25.7.1980, an Industrial Licence was granted to the Petitioners to manufacture Portland Cement and the capacity permitted was to the tune of Rs. 3200 Metric tones per day. It appears that in October, 1983 production commenced. On 15.7.1982, an application for a capacity of additional 3200 Metric Tones per day was made and on 19.9.1986, an Industrial Licence was issued by the Ministry of Industries allowing substantial expansion to raise the original licence capacity by making it double.

It further appears that on 1.3.1987, Exemption Notfn. No. 36/87 dated 1.3.1987 was issued (Exhibit ''F'' to the petition) providing for exemption from excise duty in excess the amount calculated at the rate of Rs. 175/- per Ton on the terms and conditions stipulated therein. It appears that on 14th March, 1987, the Petitioners gave notice to Respondent No. 2 intimating that the despatches from second unit will commence from 19.3.1987. In the circumstances, claiming to be eligible for exemption, the petitioners claimed the benefit of Exemption Notfn. No. 36/87 dated 1.3.1987.

By an Ex-parte Order dated 27.3.1987, the excise authorities rejected the said claim of the petitioners claiming the benefit of exemption under the said Notification by holding that the second unit was only an expansion of the factory to get more production of cement. It is an admitted position that before passing the said ex parte decision, no opportunity of hearing whatsoever was granted to the petitioners.

In the circumstances, Writ Petition came to be filed on 25th June, 1987 impugning the said ex-parte decision dated 27.3.1987 passed by the excise authorities, inter alia, on the ground that the said order was in violation of principles of natural justice and hence a nullity. The said Writ Petition was admitted. The petitioners, however, continued to pay duty under protest.

On 25.8.1987, classification List No. 8 was filed claiming benefit of the said Notification. However, on 13.9.1989, during the pendency of the said Writ Petition, a show cause notice was issued which was replied to by the Petitioners by their letter dated 14.10.1989. Chamber Summons taken out challenging the said show cause notice on diverse grounds which Chamber Summons was allowed and the Writ Petition was consequently amended in July, 1990.

The Petitioners are seeking to claim exemption under the said Notfn. No. 36/97 dated 1.3.1987 on diverse grounds more particularly set out in the Writ Petition as also in the affidavit in rejoinder filed before this Court. The respondents also filed affidavit in reply to the Writ Petition.

We have heard the learned Counsel for the petitioners and the respondents at some length and we feel that the present petition can be disposed of without expressing any opinion on merit of the case.

In view of the fact that the said order dated 27.3.1987 rejecting the benefit of exemption under the said Notification by the Respondents is an ex-parte decision without affording opportunity of hearing to the Petitioners and further considering the fact that the Writ Petition also impugns the show cause notice dated 13.9.1989, it would be proper that the said ex-parte decision passed in violation of the principles of natural justice is set aside and the matter be remanded back to the Central Excise Authorities for hearing on merits and after affording an opportunity to the petitioners.

In the circumstances, we pass the following orders :

(a) That the said order dated 27.3.1987 being Exhibit ''K'' to the petition, passed by the Excise Authorities rejecting the benefit of exemption under the said Notfn. No. 36/87 dated 1.3.1987 to the Petitioners is quashed and set aside; and

(b) That the matter is remanded back to the Competent Central Excise Authorities to adjudicate upon the said Show Cause Notice dated 13.9.1989 being Exhibit ''L'' to the petition on merits and after affording reasonable opportunity of hearing to the parties and for making the Written Submission, if necessary and desired. The Competent Central Excise Authorities to decide the matter in accordance with law and pass and communicate the order as expeditiously as possible;

(c) All claims and contentions of both the parties are kept open.

Petition disposed of accordingly with no order as to costs.