M/S Gujarat State Fertilizers And Chemicals LTD vs. Union Of INDIA

Facts

The petitioner, M/s Gujarat State Fertilizers and Chemicals Ltd., challenged an Order in Original (OIO) passed by the Commissioner of Central Excise, Vadodara, dated March 15, 2018. The challenge was based on two grounds: firstly, that the officer who heard the petitioner's personal hearing on February 17, 2017, did not decide the matter, and instead, it was adjudicated by a different Commissioner after a jurisdiction bifurcation. Secondly, the petitioner contended there was a substantial delay of approximately 13 months between the hearing date and the pronouncement of the order, which they argued was unsustainable. The Show Cause Notice (SCN) pertained to the period December 2011 to March 2016. The respondents argued that the petition was not maintainable as an alternative remedy under Section 35B of the Central Excise Act, 1944, was available. They also contended that the same officer had heard the matter and passed the order, and the delay was justified by subsequent information requests and submissions.

Held

The Court noted that an appealable order under Section 35B of the Central Excise Act, 1944, was available to the petitioner before the CESTAT. While acknowledging the petitioner's grievances regarding the breach of principles of natural justice and the delay in judgment delivery, the Court found it appropriate to relegate the parties to the CESTAT. Crucially, the Court observed that a subsequent Show Cause Notice for a later period (April 2016 to June 2017) concerning identical factual and legal issues had been decided in favor of the petitioner by the CESTAT on February 28, 2020. The Court also addressed the issue of pre-deposit for appeal, noting that Section 35F of the Act mandates a pre-deposit of 7.5% of the duty demand. The Court directed the petitioner to deposit Rs. 3,63,784/- (7.5% of Rs. 9,32,088.25, the duty determined by CESTAT for a limited period) within one week and file the appeal before the CESTAT within four weeks. The petition was disposed of without entering into the merits of the OIO, keeping all issues open for adjudication by the Tribunal. The Court explicitly stated that this order should not be treated as a precedent.

Key Issues

1. Whether the Order in Original (OIO) passed by the Commissioner of Central Excise, Vadodara, is vitiated due to the adjudication being done by an officer different from the one who conducted the personal hearing, thus violating the principles of natural justice, as argued by the petitioner under the principles of natural justice and relevant case law? The revenue contended that the officer who heard the matter was the same officer who adjudicated it, despite a jurisdiction change. 2. Whether the delay of approximately 13 months between the date of personal hearing and the pronouncement of the OIO is excessive and renders the adjudication unsustainable, as argued by the petitioner citing various High Court judgments? The revenue argued that the delay was not excessive and was due to the time taken for information exchange, with the hearing concluded on August 21, 2017, and the order passed on March 15, 2018. 3. Whether the High Court should entertain the writ petition when an alternative statutory remedy of appeal to the CESTAT is available under Section 35B of the Central Excise Act, 1944, as argued by the revenue? The petitioner approached the High Court directly, challenging the OIO.