CE.Ref. 1/2008 BEFORE HON’BLE THE CHIEF JUSTICE(ACTG.) MR. A.K.GOEL HON’BLE MR JUSTICE UJJAL BHUYAN JUDGMENT AND ORDER(ORAL) [Goel,C J(Actg.)] :- This appeal has been preferred by the assessee under Section 35G of the Central Excise Act, 1944, (’the Act’), against the Customs, Excise & Servi ce Tax Appellate Tribunal (hereafter referred to as ’CESTAT’), upholding the de mand of the Revenue with reference to Section 154 of the Finance Act,2003, retr ospectively withdrawing the exemption granted under Section 5-A of the Act rea d with sub section(3) of Section 3 of the Additional Duties of Excise Goods of S pecial Importance Act, 1957 and sub-section(3) of Section 3 of the Additional Du ties of Excise (Textiles and Textile articles) Act, 1978. The appellant has cla imed the following substantial questions of law : I. Whether the decision in the R.C. Tabacco case leaves open the question as to whether a Show Cause Notice is required under law to be issued before recov ery of excise duty refunds under Section 154 of the Finance Act, 2003 ? II. Whether the Hon’ble CESTAT has wrongly considered itself bound by the de cision in the R.C. Tabacco case to reject the Appellant’s contention that a Show Cause Notice must mandatorily be issued prior to recovery of excise duty refun ds under Section 164 of the Finance Act, 2003? III. Whether Section 154 of the Finance Act, 2003 could only have validated actions already taken prior to the passing of the Finance Act, 2003 for the reco very of excise duty refunds, and whether therefore no subsequent action for reco very of the said refunds from the Appellants could stand validated? IV. Whether Section 154(3) of the Finance Act, 2003 only bars the maintenanc e or continuance of any suit or proceedings for any action taken or anything don e or omitted to be done in respect of any goods covered by Excise Notifications Nos 32/99-CE and 33/99-CE dated 08.07.1999, and does not apply to appeals, or to proceedings against actions taken or anything done or omitted to be done in res pect of such goods? V. Whether interest ought to have been levied for periods for which payment was not made in view of the then valid and subsisting Order-in-Appeal No.40/CE( A)/Ghy/05 dated 125.06.2005 passed by the Commissioner, Customs Central Excise(A ppeals)? VI. Whether the subsequent notifications issued by the department, passed w hich excluded the Appellant and other similarly placed industries in the region outside the purview of Section 154 of the Finance Act, 2003. VII. Whether the subsequent notifications treated the Appellant and other sim ilarly placed industries in the region as a separate category by restoring benef its that allegedly were withdrawn by the issuance of notification 6 of 2001, da ted 01.03.2001 under the provisions of section 154 Finance Act,2003. 2. The appellant is a manufacturer of Pan Masala containing tobacco fa lling under Chapter 24 of the Central Excise (Tariff )Act, 1985. The impugned no tification dated 8.9.1999 was issued under Section 5-A of the Act, subject to certain conditions. The exemption continued upto 21.2.2001. The appellant file d writ petition in this Court challenging withdrawal of the exemption notificati on. The writ petition was allowed and the notification dated 1.3.2001 was quas hed. However, on appeal, the Division Bench of this Court vide judgment dated 3.12.2002 held, that withdrawal of exemption was violative of principle of ’prom issory estoppel’. The said judgment was challenged by the Revenue before the Ho n’ble Supreme Court. During the pendency of the said appeal, the Finance Act, 20 03 was passed whereby the exemption was withdrawn with retrospective effect. In pursuance thereof, order in original dated 6.6.2003 was issued for recovery of the amount of exemption availed by the appellant. The appellant filed departm ental appeal and also sought waiver of predeposit which was declined. The appel lant filed writ petition in this Court challenging refusal to waive predeposit a nd also the order dated 6.6.2003. The writ petition was considered on merits a nd was dismissed by Single Bench of this Court on 18.5.2004 holding that order dated 6.6.2003 was not vitiated on account of absence of notice to the appellant before the said order. Judgment of the Hon’ble Supreme Court in J.K. Cotton Sp inning and Weaving Mills Ltd and Another vs. Union fo India and others, 1987(Sup p) SCC 35 was held to be distinguishable. This Court held that no prejudice was caused to the appellant by absence of show cause notice. The relevant finding is as under : It is in the above backdrop that the petitioners have approached this Court invoking its writ jurisdiction challenging the legality and validity of the afo rementioned impugned orders. The basic thrust of argument made by Mr. Sridharan was that on the face of it the appellate authority having admitted that no notic e was issued to the petitioners giving an opportunity of hearing and it also ha ving noticed that the purported supersession of the earlier notification dated 8 .8.2003 by subsequent notifications could not be placed on records and thus the earlier notification dated 8.8.2003 by which the decision to keep in abeyance th e show cause notices and/or recoveries was conveyed held that field, could not h ave ordered for depositing the amount in question within 30 days of receipt of t he order by way of rejecting the stay application. Placing reliance on the decis ion of the Apex Court in JK Spinning & Weaving Mills Ltd.-vs- Union of India as reported in 1987(32) ELT 234 (SC), it was argued by Mr. Sridharana that amendm ent to Section 154 of the Finance Act, 2003 retrospectively will always be subje ct to Section 11 A of the Central Excise Act, 1944 under which a notice is requ ired to be issued on person chargeable within the duty. Referring to paragraph 3 1 of the judgment, he submitted that the provisos of Section 51 of the Finance Act, 1982 by which retrospective effect to the amendments of Rules 9 and 49 of C entral Excise Rules, 1944 was brought about and which is pari materia to the pro visions of Section 154 of the Finance Act, 2003, such retrospective operation c annot override the express provisions of Section 11A and in the instant case the petitioners having not been issued with any notice before passing the impugne d order dated 6.6.2003 and this position having been admitted by the appellate a uthority in its order dated 31.3.2004 and yet having ordered for deposing the e ntire amount in question, the impugned orders are not sustainable. The Deputy Commissioner while passing the impugned order dated 6.6.200 3 elaborately dealt with the materials on record and the judgments of this Court and their effect. It also recorded as to how the petitioners have been discharg ing their duty liability by way of adjustments as was provided for by the Divisi on Bench of this Court in writ appeals and have been claiming refund of the amou nt so adjusted inn terms of the earlier notification dated 8.7.99. It also notic ed as to how the notification dated 8.7.99 stood amended retrospectively in term s of Section 154 of the Finance Act, 2003 and the stipulations therein. There wa s question of entertaining the refund claim after the retrospective amendment br ought about by the Finance Act,2003 for the period from March, 2001 to April,200 3 which stood at Rs.85,31,17,836/-. The Deputy Commissioner also found that the petitioner cleared their finished goods without payment of appropriate duty sinc e 2nd fortnight of November,2002 amounting to Rs.25,46,34,087/- calculated upto 31st May,2003 and kept informing the department from time to time by their vario us correspondences that in defiance of the judgment and order of this Court date d 3.12.2002 passed in the writ appeals, the duty payable on clearance may be adj usted from the amount of pending refund which the department never exceeded to. Having regard to the provisions of Section 154(3) of the Finance Act,2003, he observed that the said judgment and order dated 3.12.2002 is not enforceable an d consequently the duty not paid by the petitioners during the period from 2nd f ortnight of Noovember,2002 till 30th April, 2003 is liable to be recovered. It i s on this basis recovery of the amount of Rs.25,46,34,087/- has been ordered as duty not paid against the goods cleared during the aforesaid period along with i nterest payable. In the impugned order dated 31.3.2004 although the appellate authority prima facie found fault with non-issuance of show cause notice to the petitione rs before passing the order dated 6.6.2003 and it also recorded that the stand o f the department that the earlier notification dated 8.8.2003 has already been s uperseded could not be substantiated, but dealing with the moot point that the D ivision Bench judgment of this Court dated 3.12.2002 quashing the notification dated 1.3.2001 is pending consideration before the Apex Court, it has referred to the stay order dated 12.1.2004 passed by the Apex Court staying operation o f the said judgment and order dated 3.12.2002. It also noticed the observation of the Apex Court that if the Government has taken any decision independent of the judgment of this Court, the stay order would not come in the way thereof. R eferring to the impugned order dated 6.6.2003 passed by the Deputy Commissioner in terms of Section 154 of the Finance Act,2003, it found that the relief grante d in writ appeal was no longer available to the petitioner in view of the stay o rder passed by the Apex Court. It is in this context the appellate authority has held that the petitioners does not have a strong prima facie case on merit. Acc ordingly the stay application has been rejected by the impugned order dated 31.3 .2004 with a direction to the petitioners to deposit the entire amount before th e appeal could be heard. The concept of natural justice has undergone a great deal of change in recen t years. Over the years by a process of judicial interpretation two rules have b een evolved as representing the principle of natural justice to judicial proces s including therein quashi judicial and administrative process. What is known as useless formality theory received consideration of the Apex Court in the ca se of M.C. Mehta- vs. Union of India as reported in (1999) 6 SCC 237. The Apex C ourt while not expressing any opinion on the correctness or otherwise of the u seless formality theory left the matter for decision in an appropriate case ha ving found from admitted and indisputable facts of that case that grant of a wri t will be in vain. The Apex Court in the case of Canara Bank -vs- Debasis Das as reported in (2003) 4 SCC 557 while discussing in detail the concept, meaning, o bject, scope and applicability of natural justice held that, unless failure of justice is occasional or that it would not be in public interest to dismiss a p etition on the fact situation of a case, the Court may refuse to exercise the ju risdiction. It further held that legal formulations cannot be divorced from the fact situation of the case. Likewise in the case of Escorts Farms-vs-Commission er , as reported in (2004) 4 SCC 281, the Apex Court observed , reiterating the same position that rules of natural justice are to be followed for doing substan tial justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. In the instant case the petitioners, to show that they have been prej udiced by the impugned action having placed to material. In the aforesaid case o f Canara Bank(supra) the Apex Court also observed that though in all cases post decisional hearing cannot be a substitute for pre-decisional hearing, in a give n case the position might be different. In the present case, the petitioners ap art from attacking the impugned order dated 6.6.2003 more emboldened by the obs ervation made by the appellate authority have not stated anything as to what mat erial they could have placed before the Deputy Commissioner, had they been issu ed with a notice. The entire action on the part of the Deputy Commissioner was u pon assessing the situation that had arisen pursuant to the judgment in writ app eals and the effect and retrospective operation of Section 154 of the Finance Ac t,2003 coupled with the stay order passed by the Apex Court. Undisputed facts fo r which there is no plausible explanation from the petitioners dilute the plea o f non-issuance of notice to the petitioners. The principle that in addition to b reach of natural justice, prejudice must also be proved has been developed in se veral cases. The Apex Court have also emphasized that not mere violation of natu ral justice but de-factor of K.L. Tripathi-vs-State Bank of India as reported in (1984) 1 SCC 43, the Apex Court quoting Wade’s Administrative Law observed as f ollows : It is not possible to lay down rigid rules as to when the pri nciples of natural justice are to apply, nor as to their scope and extent. Ther e such thing as a merely technical infringement of natural justice. The require ments of natural justice must depend on the facts and circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the su bject matter to be dealt with, and so forth. The Apex Court has consistently applied the principle of prejudice in several cases. In absence of any prejudice shown, the absence of a notice to show cause does not make any difference. Thereafter, the appellant agitated the same issue before the departmental appe llate authority and vide order dated 24.6.2005, the appellate authority set asid e the order in original dated 6.6.2003 and remanded the matter for fresh consid eration, ignoring the judgment of this Court dated 18.4.2004. However, on furth er appeal by the Revenue, the CESTAT set aside the said order holding that t he appeal itself was not maintainable and objection to the recovery proceeding was not open to the appellant in view of judgment of the Hon’ble Supreme Cour t in R.C.Tabacco (P) Ltd. and another vs. Union of India and another, (2005) 7 S CC 725. The CESTAT noticed the stand of the learned counsel appearing for the appellant as follows : Shri A. Madhav Rao, learned Advocate appearing for the respondents and vice versa, does not challenge the duty-liability, but states that interest is not payable for the entire period in view of the Order-in-Appeal subsisting in favour of the appellants. He also states that where the refunds have been grante d after finalization of assessment, the same is not required to be paid back a s no appeals have been preferred by the Department against the same. The CESTAT concluded as follows : In view of our findings above, we are of the view that the low er Appellate Authority was not justified in allowing the appeals and setting a side the Order-in-Original , particularly in the light of the specific provision regarding non-maintainability of appeal contained in Section 154(3) of the Fin ance Act, 2003 and the Hon’ble Supreme Court’s decision in the case of R.C. Taba cco (cited supra). 3. We have heard the learned counsel for the parties. 4. Learned counsel for the appellant submitted that R.C. Tabacoo (supra) w as wrongly applied to the case of the appellant and the appellant had not been given any opportunity of being heard as required under Section 11A of the Act an d even if Section 154 of the Finance Act, 2003 was valid, the same could not aff ect the procedure for recovery of the amount due, in accordance with Section 11 A of the Act. 5. We are unable to accept this submission. The correctness and validity of the order 6.6.2003 has already been put in issue by the appellant in a writ petition before this Court and it was held that absence of show cause notice und er Section 11A did not affect the validity of the order dated 6.6.2003. The sa id judgment has admittedly become final and the finding recorded therein is res- judicata. The same, therefore, cannot be allowed to be re-agitated. It appears that for this reason, the learned counsel for the appellant fairly stated bef ore the CESTAT that the appellant did not dispute the liability and limited him self to the issue of interest. No argument whatsoever has been raised by the le arned counsel for the appellant on the issue of interest. Only contention relate s to validity of order dated 6.6.2003 on the ground that no notice was given whi ch issue already stands concluded against the appellant. 6. In view of above, the questions raised before us have to be decided ag ainst the assessee. The appeal is dismissed. No costs.