Case: Superintendent (Tech. I) Central Excise I.D.D.Jabalpur And Vs. Pratap Rai

written or said without prejudice can be considered at the trial without the consent of both parties - not even by a judge in determining whether or not there is good cause for depriving a successful litigant of costs... The word is also frequently used without the foregoing implication in statutes and inter partes to exclude or save transactions, acts and rights from the consequences of a stated proposition and so as to mean not affecting, saving or excepting."8. In short, therefore, the implication of the term "without prejudice" means, (1) that the cause or the matter has not been decided on merits, (2) that fresh proceedings according to law were not barred. It is true that the Appellate Collector does not say in so many words that the case is remanded to the Assistant Collector but the tenor and the spirit of the order clearly shows that what he intended was that fresh proceedings should be started against the respondent after complying with the rules of natural justice. Thus, in our view, a true interpretation of the order of the Appellate Collector would be that the order of the Assistant Collector was a nullity having violated the rules of natural justice and having been vacated, the parties would be relegated to the position which they occupied before the order of the Assistant Collector had ample jurisdiction in issuing the notice against the respondent in order to start fresh adjudicatory proceedings in accordance with law.The High Court, however, strongly relied on two decisions, namely, the decision of the Madras High Court in the case of Collector of Central Excise, Madras v. K. Palappa Nadar, AIR 1964 Mad 111 , and of the Gujarat High Court in the case of Marsden Spg. and Co. Ltd. v. L. V. Pol, Superintendent of Central Excise (Tax), ILR 1965 Guj. 240.9. In the Madras case the order impugned ran as follows (page 111) :"Having regard to all the circumstances of the case, the Central Board of Revenue hereby directs, without prejudice to the merits of the case, the order dated 3rd March, 1956, passed by The Collector of Central Excise, Madras, shall be vacated, ""After careful consideration of the arguments of the learned Advocate General for the appellant and also of the respondent, we are of the opinion that, in the absence of any specific words in the order of the Central Board of Revenue, it is not possible to spell out from its terms a precise direction for a de novo enquiry, giving jurisdiction to the Collector, for that purpose."10. In our opinion, the interpretation put by the Madras High Court does not appear to be correct and is too narrow and does not carry out the object of the Act. The Central Board of Revenue had merely vacated the order without prejudice to the merits of the case which clearly meant that the merits were not decided by it, Secondly, the order impugned in the Madras case does not indicate the ground on which the order was vacated whereas in the instant case the Appellate Collector has expressly stated that the order was vacated because it violated the rules of natural justice. The reason given by the Appellate Collector in the instant case makes all the difference. In the circumstances, therefore, the Madras case being clearly distinguishable as indicated above, we are of the opinion that the view taken by the Madras High Court is ofno assistance to the respondent.The case of Marsden Spg. & Co. Ltd., ILR 1965 Guj 240, is also clearly distinguishable. In that case the impugned order was extracted thus :"Having regard to all the facts of the case and taking into account the contentions put forth by the appellants, I hereby order that the decision of the Superintendent, Central Excise (Tax), Ahmedabad, shall be set aside.2. The amounts of excise duty and penalty recovered from the appellants in pursuance thereof shall be refunded to them."Construing this order the High Court observed as follows :"If the appellate order merely annulled the original order without containing any other directions there wasno power in the original Tribunal to initiate de novo proceedings and impose a fresh penalty."11. It appears that the Gujarat High Court practically adopted the reasonings impugned in the Gujarat case was clear and explicit and was final and irrevocable. The order clearly shows that it was passed on the merits of the case after taking into account the contentions put forth by the appellant. Secondly, the consequential order, viz., that the amount of excise duty and penalty recovered from the appellants was to be refunded to them which clearly indicated that there wasno question of any fresh proceedings being initiated. On the other hand, in the instant case, such a consequential order is wholly wanting in the judgment of the Appellate Collector. For these reasons, therefore, the Gujarat case is clearly distinguishable because the order in that case was couched in terms very different from the one we have in the instant case. Thus, on a careful consideration of the facts and circumstances of the present case, we are clearly of the opinion that where an order passed in appeal vacates the order of the first Tribunal on purely technical grounds and expressly states that it was being passed without prejudice which means an order not on the merits of the case, such an order does not debar fresh adjudicatory proceedings which may be justified under the law. It is necessary for the court interpreting an order of this kind to give full and complete effect to the exact words used by the authorities not to draw a sweeping conclusion merely from the fact that no explicit direction has been made by the appellate authority. We are unable to agree in this case with the High Court that asno express words were used in the order of the Appellate Collector remanding the case, the Assistant Collector was not justified in commencing fresh adjudicatory proceedings against the respondent.12.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In our opinion, the contention of counsel for the appellants appears to be sound and must prevail. A perusal of the order of the Appellate Collector extracted above clearly shows two important facts :(1) that the Appellate Collector has not set aside or vacated the order of the Assistant Collector on merits but has vacated it only on a technical infirmity, namely, the violation of the rules of natural justice and that is why the Appellate Collector had advisedly used the words "without prejudice" in his order,(2) that the Assistant Collector in his order dated 30th June, 1969, had directed confiscation of the watches and imposed a penalty of Rs. 250 and if the Appellate Collector intended to set aside this order completely and irrevocably then he should have passed a consequential order for refund of the amount of the penalty and release of the property confiscated. The fact that no such order was passed by the Appellate Collector clearly shows that he never intended to bar fresh adjudicatory proceedings provided they were conducted according to the principles of natural justice. It seems to us that whenever an order is struck down as invalid being in violation of the principles of natural justice there is no final decision of the cause and fresh proceedings are left open. All that is done is that the order assailed by virtue of its inherent defect is vacated but the proceedings are not terminated.In the case of Thimmasamudram Tobacco Co. v. Assistant Collector of Central Excise, Nellore Dn., AIR 1961 AP 324  , 325, while construing the provisions of the Central Excises and salt Act which was almost on identical terms as the Customs Act, a Division Bench of the Andhra Pradesh High Court observed as follows :"Assuming that section 35 of the Central Excises Act does not clothe the appellate authority with power to remand the matter to the officer whose order is appealed against, nothing stands in the way of the Assistant Collector initiating the proceedings afresh, when his order was quashed not on merits but on technical grounds, i.e., for not following either the procedure or the dictates of natural justice. In a case where the flaw in the order appealed against consists of in the non-observance of certain procedure or in not giving effect to the maxim audialteram partem, it is open to the officer concerned to start the procedure once again with a view to follow the rules of procedure and the principles of naturalfind ourselves in complete agreement with the view taken by the Andhra Pradesh High Court and the observations made by Reddy C.J., who spoke for the court. It is obvious that in the instant case the Appellate Collector found that the order of the Assistant Collector suffered from a serious procedural infirmity, viz., that it was passed without giving the respondent a proper opportunity of being heard, and, therefore, had to be vacated. In such circumstances, therefore, it cannot be said that fresh proceedings by complying with the rules of natural justice could not be started against the respondent. The Appellate Collector has clearly used the words "Without prejudice" which also indicate that the order of the Collector was not final and irrevocable. The term "without prejudice" has been defined in Blacks Law Dictionary as followsan offer or admission is made without prejudice, or a motion is denied or a bill in equity dismissed without prejudice, it is meant as a declaration that no rights or privileges of the party concerned are to be considered as thereby waived or lost, except in so far as may be expressly conceded or decided. See, also, Dismissal withoutshort, therefore, the implication of the term "without prejudice" means, (1) that the cause or the matter has not been decided on merits, (2) that fresh proceedings according to law were not barred. It is true that the Appellate Collector does not say in so many words that the case is remanded to the Assistant Collector but the tenor and the spirit of the order clearly shows that what he intended was that fresh proceedings should be started against the respondent after complying with the rules of natural justice. Thus, in our view, a true interpretation of the order of the Appellate Collector would be that the order of the Assistant Collector was a nullity having violated the rules of natural justice and having been vacated, the parties would be relegated to the position which they occupied before the order of the Assistant Collector had ample jurisdiction in issuing the notice against the respondent in order to start fresh adjudicatory proceedings in accordance with law.The High Court, however, strongly relied on two decisions, namely, the decision of the Madras High Court in the case of Collector of Central Excise, Madras v. K. Palappa Nadar, AIR 1964 Mad 111  , and of the Gujarat High Court in the case of Marsden Spg. and Co. Ltd. v. L. V. Pol, Superintendent of Central Excise (Tax), ILR 1965 Guj.appears that the Gujarat High Court practically adopted the reasonings impugned in the Gujarat case was clear and explicit and was final and irrevocable. The order clearly shows that it was passed on the merits of the case after taking into account the contentions put forth by the appellant. Secondly, the consequential order, viz., that the amount of excise duty and penalty recovered from the appellants was to be refunded to them which clearly indicated that there wasno question of any fresh proceedings being initiated. On the other hand, in the instant case, such a consequential order is wholly wanting in the judgment of the Appellate Collector. For these reasons, therefore, the Gujarat case is clearly distinguishable because the order in that case was couched in terms very different from the one we have in the instant case. Thus, on a careful consideration of the facts and circumstances of the present case, we are clearly of the opinion that where an order passed in appeal vacates the order of the first Tribunal on purely technical grounds and expressly states that it was being passed without prejudice which means an order not on the merits of the case, such an order does not debar fresh adjudicatory proceedings which may be justified under the law. It is necessary for the court interpreting an order of this kind to give full and complete effect to the exact words used by the authorities not to draw a sweeping conclusion merely from the fact that no explicit direction has been made by the appellate authority. We are unable to agree in this case with the High Court that asno express words were used in the order of the Appellate Collector remanding the case, the Assistant Collector was not justified in commencing fresh adjudicatory proceedings against the respondent.