Vs. I.T.C. Limited  INSC 125 (17 February 1994)
Reddy, B.P. (J) Jeevan Reddy, B.P. (J) Hansaria B.L. (J)
1995 SCC (2) 38
Having heard the counsel for both sides, we are of the opinion that it is notreally
necessary for us to go deep into the matter.
Respondent 1 is I.T.C. Limited. It appears, searches were made by the Director
General of Inspection (Customs and Central Excise) in the premises of the first
respondent on the basis of which he issued the proceedings called "Order-
in-original No. 1/1986 dated 10-4-1986".
In this order, he enunciated the principles applying which the amount of duty
payable by the first 39 respondent should be determined. It is stated that the
assessing authority determined the duty at Rs 1,12,76,000.04 by its order dated
17-7-1986. Later on, the assessing authority
served another demand for additional excise duty amounting Rs 8,29,10,883.25.
This was done without giving an opportunity to the first respondent to meet the
grounds upon which the duty was enhanced or revised, as the case may be.
respondent filed a writ petition in the High Court questioning the said
enhanced demand which has been allowed by the High Court with the observation
that before enhancing the duty payable by the first respondent, the assessing
authority shall give a notice calling upon the first respondent to show cause
why it should not be made liable for paying the enhanced duty. It is this order
which is challenged in this appeal.
Bajpai, learned counsel for the Revenue says that the direction of the High
Court to issue a show-cause notice was not called for, inasmuch as the order
dated 17-7-1986 was only a provisional one. He
submits that subrule (5) of Rule 9-B of the Central Excise Rules does not
provide for a fresh opportunity for a fresh show-cause notice being given
before determining the final duty. Hence, says the counsel, no opportunity or
show-cause notice was called for before serving the final demand.
Sorabjee, learned counsel appearing for the first respondent says and which
submission is recorded herewith - that the first respondent does not challenge
the correctness and validity of the Order-in-original No. 1/86 dated 10-4- 1986
passed by Shri B.K. Aggarwal, Director General of Inspection (Customs and
Central Excise). The counsel, however, says that it should be open to the first
respondent to question the interpretation placed upon the said order by the
Revenue. It is made clear that while the interpretation of the said order shall
be open in the proceedings taken herein, its correctness or its validity shall
not be questioned by the first respondent. So far as the directions made by the
High Court are concerned, we are substantially in agreement with it. Before the
first respondent is made liable for higher or enhanced duty, it must be told on
what grounds it is sought to be made liable for additional duty and it must be
given an opportunity of meeting those grounds. This is the minimum requirement
of the principle of natural justice which must be read into sub-rule (5) of
Rule 9-B, wherever called for.
are also told that pursuant to the judgment of the High Court, proceedings have
already been initiated, a show- cause notice served upon the first respondent
and that the proceedings are now in progress. The said proceedings shall now be
concluded expeditiously - without waiting for orders of the tribunal or any
court. The appeal is accordingly disposed of. It is obvious that against the
order passed by the assessing authority, the aggrieved party shall have the
remedies prescribed by law. No costs.