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Constitutional Petition No. 1193 of 1974, decided on 26th July 1971.
‑‑ Natural justice, principle of‑Maxim: Audi alteram partem‑Prior show‑cause notice neither requirement of law nor condition precedent in particular case‑Requirement of rule of natural justice, held, met If petitioner heard at any stage of proceeding, unless some prejudice shown caused by not hearing petitioner at stage of passing first adverse order.‑[Maxim].
Sind Employee's Social Security Institution and another v. Dawood Cotton Mills Ltd. P L D 1977 S C 177 and Atta Muhammad Qureshi v. The Settlement Commissioner P L D 1971 S C 61 rel.
‑‑ Maxims Audi alteram partern‑Petitioner heard at stages of appeal and revision and given full opportunity to examine record‑Non affording of opportunity of hearing at initial stage‑Such defect, held, cured‑Application of principle of natural justice regarding giving of full opportunity of hearing to person affected, held further, dependent upon facts and circumstances of each case.
Mian Arif Iftikhar v. Commissioner, Lahore Division P L D 1969 Lah. 53 and Punjab Road Transport Corporation v. Punjab Labour Appellate Tribunal Lahore and others 1973 S C M R 455 distinguished. Muhammad Shamim v. Pak Tobacco Co. Ltd. and another 1975 S C M R 46 rel.
Kaushaly Devi and others v. Bachlttar Sing and others A I R 1960 S C 1168 held not applicable.
‑‑ Rr. 10 & 12‑A‑Applicability of Rules‑Central Board of Revenue granting rebate prayed for but subsequently on scrutiny of claim goods exported not found of nature previously assumed and accordingly petitioner required by notice to refund amount erroneously allowed as rebate‑Particulars in application being found incorrect, r. 12‑A and not r. 10, held, applicable to case.
‑‑ R. 10‑Contention that unless error appeared on face of record provisions of r. 10 not attracted‑No such condition, held, found in rule‑Petitioner having been put to notice of incorrectness of particulars of goods given in his application for rebate, no prejudice, held further, caused to petitioner by issuing notice under r. 10 for refund of amount of rebate.
Satyanarayan Laxminarayan Hegde and others v. Mallikarjun Bhavaneppa Tirumale A I R 1960 S C 137 distinguished.
Mewar Textile Mills Ltd. v. Union of India and others A I R 1955 Raj 144 and Nanni Glass Works v. The Collector, Central Excise, Allahabad A I R 1965 All. 305 held not applicable.
Mansoor Ahmed Khan for Petitioner.
Shah Jamil Alan, Deputy Attorney‑General foe Respondent.
Date of hearing : 7th April 1977.
‑This petition under Article 199 of the Constitution calls in question the demand for refund of a sum of Re. 80,759.16 contained in the notice dated 6‑11‑1972 issued to the petitioner by the Assistant Collector, Central Excise and Land Customs. Karachi, respondent 4.
2. The facts giving rise to this petition, briefly stated, are t
The petitioner carries on business in the name and style of Messrs Manaoor Sons in Karachi. The petitioner received an order from Italy for supply of cotton bags made of grey cloth of the following specifications ;
"(1) Cotton bags made from grey cloth having construction of 168/168 a 48 x 52 finished size 23 X 36' with one colour printing bag at side folded and stitched also bottom folded.
(2) Cotton bags made from grey cloth having construction 21‑21, 60 x 60 finished size 55 cm x 95 am. Hemmed V in three folds at one side and 1' hemmed double fold.
(3) Cotton bags made from grey cloth having construction of 21s/21s, 60 at 60 finished size 60 cm. es 95, hemmed J' in three folds at one side and 1' hemmed double fold.
(4) Cotton bags made from grey cloth having construction of 218/211, 60 x 60 finished size 46 cm hemmed in three folds at one aide and 1' hemmed double fold."
3. The petitioner made an application for grant of rebate of the duty on cotton yarn and fabrics used in the manufacture of the aforesaid bags.
4. The Central Board of Revenue, respondent 2, by the Notifica tion No. S. R. O. 208 (K)/71, dated 3N1‑1971, granted the rebate prayed for in exercise of powers conferred under rule 12‑A of the Central Excise Rules, 1944 (hereinafter called the Rules.).
5. The petitioner, however, it is claimed, exported a total of 3,01,000 cotton bags made from grey cloth having construction of 16e/16e x 48 x 52 finished size 23 x 36' covered by item one mentioned above, in the month of May and June 1971, under two Shipping Bills and in terms of the said notification applied for grant of rebate on 11‑6‑1971 amounting to Rs.80,759.16 which was sanctioned vide Office Order No. 8/38‑CE/71, dated 17‑4‑1972, and paid on 18‑4‑1972. However, subsequently, on further scrutiny of the claim, it was found that the goods exported by the petitioner were not of the construction of 16s/16e x 48 x 52, for which rebate was granted by the Notification No. S. R. O. 208(K)/71, dated 30‑1‑1971, but instead were of the construction of 148/148x40 x 40. Accordingly, the impugned demand notice dated 6‑11‑1972 was issued to the petitioner requiring him to refund the amount of Re. 80,759.16 within 10 days of the receipt of notice.
6. Aggrieved by this demand the petitioner on 24.4‑1973 filed an appeal with the Collector, Central Excise and Land Customs, Karachi respondent 3, which came to be dismissed by following short order, dated 27‑6‑1973, passed by respondent 3 ;
"Mr. Muhammad Bhai son of Mr. Sulaiman appeared on behalf of the party Messrs Manzoor Sons, Karachi on 19‑6‑73. He reiterated what have been stated in the appeal. The fact, however, remains that the goods exported did not conform with the descriptions given in the relative rebate notifications. As such the rebate originally allowed was not in order and the demand to recover the amount of Rs. 80,759.16 inadvertently sanctioned and paid to the party has been correctly raised by the Hqrs. Assistant Collector. C. E. & L. C., Karachi. The appeal is, therefore, rejected."
7. Dissatisfied with the above order the petitioner preferred a revision to the Federal Government, respondent 1, but the same was also rejected on 17-8‑1974. 'his order reads as follows :
"Heard Mr. Muhammad Bhai on behalf of the applicants on 15th March 1974, at Karachi.
(2) Alter a careful perusal of the revision application and the connected records of the case it is fully established that the goods exported did not conform to the specification of the relevant notification. The revision application therefore fails and is accordingly rejected."
Therefore, the petitioner has filed the present petition impugning the demand notice and containing the following prayers
(i) that the impugned demand is without authority, bad in law and has been issued in excess of jurisdiction ;
(ii) that there is no warrant or authority for the issuance of the impugned demand notice ;
(iii) declare the impugned notice to be bad in law and of no consequence whatsoever as against the petitioner and laying no liability on him ;
(iv) may be pleased to prohibit the respondents, their officers, servants and any person acting through or under them or any of them from enforcing the demand and/or making any realization thereunder."
8. Bye have heard Mr. Mansoor Ahmed Khan, Advocate, for the petitioner, and Mr. Shah Jamil Alam, Deputy Attorney‑General for the respondents.
9. The learned counsel for the petitioner has raised two‑fold contentions before us. The first contention is that the demand for refund of the rebate was made without first issuing show‑cause notice to and hearing the petitioner and as such It violated the principle of natural justice. The second contention is that unless there was error apparent on the lace of the record the provisions of rule 10 of the Rules, whereunder notice of demand was Issued, were not attracted.
10. Taking up the first contention that the demand for refund of the rebate was made without first issuing the show‑cause notice and hearing the petitioner and as such it violated the principle of natural justice, the argument of the learned counsel for the petitioner was that the order of grant of rebate was passed on 17‑4‑1972, after scrutiny of the goods shipped as reflected by the certificates issued by the inspector, Central Excise and Land Customs, Karachi, dated 19.5‑1971 and 16-6-1971 (Annexures "C/1" and 'C/2 to the petition) and verification of 8 bills for purchase of cloth issued by Messrs Nishat Sarhad Textile Mills, Peshawar, which were verified by the Superintendent, Central Excise and Land Customs, Peshawar, and, therefore, the notice of demand in fact amounts to setting aside the aforesaid order without hearing the petitioner. However, under rule 11 of the Rules, it is provided that if any of the particulars entered in the application submitted under sub‑rule (2) or sub‑rule (5) is found to be incorrect, either before or after the export of the goods, the applicant shall be liable to refund to the Government the sums received by him as rebate.
11. It is agreed that the Rules do not make any provisions for issuance of notice before making any demand to refund the sums received by the petitioner as rebate.
It is settled law that where the prior show‑cause notice is not the requirement of law or condition precedent and the petitioner Is heard at any stage of the proceedings, unless some prejudice is shown to have been caused by not hearing the petitioner at the stage when the first adverse order was passed, the requirement of principle of natural justice is met. If an authority is needed reference may be had to the latest pronouncement of their Lordships of the Supreme Court in Sind Employees Social Security Institution and another v. Dawood Cotton Mills Ltd. (P L D 1977 S C 177) wherein his Lordship Anwarul Haq, J., who wrote the opinion of the Court, at page 180 of the report observed as follows :
"The question whether the demand made by the Social Security Institution stood vitiated on account of the failure of the Institution to afford to the employers an opportunity of being heard stands amply answered by the opinion expressed by this Court in The Collector, Sahiwal v. Muhammad Akhtar 1971 S C M R 681. It was observed in that case that "the Courts in Pakistan have taken the view that where the giving of a notice is provided for by the statute itself, then the failure give such a notice is fatal and cannot be cured. But where there is no specific statutory provision and reliance is only placed on the principles of natural justice and audi alteram partem there, if at some stage or other, the person aggrieved has been given a fair opportunity of representing his point of view, then the defect, if any, in the initial order may be deemed to have been cured. Each case will have to be determined on its own facts. If the statutory provision for notice be of a mandatory nature, then an order without any notice would be wholly void; but if there be no such provision or if the provision be merely of a directory nature, then, wherever a violation of this principle of natural justice is alleged, the Court may call upon the party alleging the same to prove prejudice before it sets aside the order. Such prejudice would obviously not be there if it is found that the party had been actually given a full hearing by the appellate or revisional authority and afforded every opportunity of showing cause against the allegations made.
To more or less the same effect is the decision in Atta Muhammad Qureshi v. The Settlement Commissioner P L D 1971 S C 61."
12. It is not disputed in this case that the petitioner was heard at the stage of the appeal as well as the revision as is borne out from the Ogden quoted to extenso hereinbefore. However, Mr. Mansoor Ahmed Khan learned counsel for the petitioner, submitted that the petitioner has been prejudiced as the report of the Central Excise Officer wherein it was stated that the construction of the cloth used in the bags exported by the petitioner was 149/14:‑40 x 40 was not disclosed to the petitioner and that the said report being incorrect, the petitioner had no opportunity to rebut the allegations made therein. But the submission of the learned counsel is not correct. In the memorandum of appeal submitted by the petitioner before respondent 3, he did not state that the goods exported were according to the notification. In fact the petitioner in clauses (a) and (d) of the memorandum of appeal admitted or at least impliedly admitted that the goods exported were not according to the notification. The relevant clauses are reproduced herein below for the. sage of convenience.
"(a) That at no time we have intentionally purchased 14s/14s‑40 x 40 in lieu of 16s/16s, 48 x 52."
(b) That Excise Rebate difference between 14/14, 40 x 40 and 16 x 16, 48 x 52 are negligible as the Excise duty on the Cotton Yarn of coarse quality is the same upto 28.4 counts and the Excise. Duty on fabrics is the same per sq. yd. regardless of its construction."
13. Moreover, according to the respondents they had given full opportunity to the petitioner to examine the record. We may herein b.‑low reproduce paragraph 11 of the counter affidavit filed by Syed Mahmood Ali, Deputy Superintendent, Central Excise and Land Customs, on behalf of the respondents, the contents whereof have not at all been controverted in the affidavit‑in‑rejoinder filed by the Attorney of the petitioner:
"(1) That para. 10 of the petition is denied. No notice was necessary for the demand notice. In any case, the petitioner was given full opportunity and was heard by the Collector of Central Excise and Land Customs, Karachi and by the C. B. R. The demand is net vague. At the hearing of the appeal and revision, relevant papers with regard to the construction of the cloth were shown to him. There is no violation of the principle of natural justice. The sample drawn by the Inspector, Central Excise was available and the petitioner could have challenged the correctness of the statement of its supplier and the Superintendent of Messrs Nishat Sarhad Textile Mille Ltd., Peshawar, but he did not do so. In appeal filed by the petitioner he did not challenge the facts that the bags which were exported had different constructions then the one which ware notified for purposes of rebate. A true copy of appeal is annexed hereto and marked 'R 6'. In fact in paragraph 10 of the memo. of appeal it is stated as under :
That at no time we have intentionally purchased 14s x 14s, 40 x in lieu of 16 x 16 x , 48 x 52."
14. The learned counsel for the petitioner then argued that the goods exported by the petitioner were checked and verified before their export as evidenced by the certificates, Annexures C/1 and C/2 to the petition, issued by the Inspector, Central Excise and Land Customs. However, these certificates. as explained by the respondents, are only in respect of number and description of the goods I.e. measurement of the goods shown in the A. E. 2 Form and not in respect of the construction of the cloth fabrics from which the bags were manufactured.
The learned counsel for the petitioner cited a number of rulings in support of his contention that principle of natural justice contemplates not only a hearing but also a reasonable opportunity to be heard and to meet the documents and report used against him. These are: Mian Arif Iftikhar v. Commissioner, Lahore Division (P L D 1969 Lah. 53 ) and Punjab Road Transport Corporation v. Punjab Labour Appellate Tribunal Lahore and others (1973 S C M R 455).
In the latter case an enquiry report was used in passing the order of dismissal by the employer and in this connection it was observed by their Lordships of the Supreme Court that it was necessary and consistent with the principles of natural justice that not only the respondent should have been furnished with a copy of the enquiry report but also he should have been given an opportunity to show cause why the order of dismissal should not be passed against him. However, In a subsequent case namely, Muhammad Shamim v. Pak. Tobacco Co. Ltd. and another (1975 S C M R 46) their Lordships of the Supreme Court while distinguishing the above‑cited case observed: "This case is distinguishable from the present case. In this case a show cause notice was given in writing. The result of the enquiry report was also communicated to him. It is admitted that the petitioner did not ask the respondent to supply a copy of the enquiry report. In such circumstances, the petitioner can have no legitimate grievance in this respect" Therefore, the application of the principle laid down by their Lordships will depend on the facts and circumstances of each case. In the present case, as already noticed, the entire material and record was shown to the petitioner and therefore, the cases cited by the learned counsel for the petitioner are distinguishable on facts.
The learned counsel also cited Kaushalya Devi and others v. Bachittar Singh and others (A I R 1960 S C 1168) from foreign jurisdiction, namely, Indian Supreme Court. In this case the High Court had set aside the order passed by the Deputy Custodian‑General on the ground that the same was based on no evidence but the Supreme Court after reviewing the entire material on the record had reversed the same by holding that it could not be said that there was no material from which the Deputy Custodian‑General would have come to that conclusion. This case is also of no help to the petitioner. Therefore, we find no substance in this contention and accordingly overrule it.
Now, this takes us to the consideration of the second contention that unless there was an error apparent on the face of the record the provisions of rule 10 of the Rules whereunder notice of demand was issued were not attracted.
But before we examine this contention there is another aspect of the case which we may immediately consider. There is no doubt that the notice of demand for refund of the amount of rebate allowed by the respondents was issued, as mentioned in the notice, under rule 10 of the Rules, which provides that when for any reason the duty has not been levied or paid or has been short‑levied or short‑paid or when any duty has been erroneously refunded or when abatement in duty has been erroneously allowed the person liable to pay the duty or the person to whom such refund has been erroneously made or in whose favour such abatement has been erroneously allowed shall pay the duty due on written demand being made. But n our opinion, rule 10 has no application to the facts of the present case.
However, the correct rule as rightly submitted by the learned Deputy Attorney‑General under which such a demand could be made is sub‑rule (11) of rule 12‑A of the Rules, the relevant part whereof provides that if any of the particulars entered in the application submitted under sub‑rule (2) or sub‑rule (5) is found to be incorrect, either before or after the export of the goods, the applicant shall be liable to refund to the Government the sums received by him as rebate. Sub‑rules (2) and (5) ' of rule 12‑A of the Rules provide for making of application to the Central Board of Revenue for grant of rebate of duty in respect of the goods in the manufacture of which excisable goods have been used and which are to be reported and the time within which, the manner and the officer to whom an application has to submitted. In the present case the particulars of the construction of the cloth was subsequently found not to be in accord with the particulars of the cloth given in the application in the prescribed form on the basis of which rebate was allowed. Thus the petitioner was liable to refund to the Government the sum received by him as a rebate . Therefore, the question that falls for consideration is when notice of demand was made under one rule but claim for refund fell under another rule, whether the demand should be upheld or not. We would have been inclined to set aside the demand if the petitioner would have been ‑ able to show that the authority who had made the demand had no powers to make such demand under sub‑rule (11) of rule 12 A of the Rules or that the petitioner was misled or could not make proper reply or present proper defence. But in the present case all the material on which the demand of refund of the amount of rebate in duty allowed was based. as already stated, was shown or made available to the petitioner. Moreover, the notice clearly stated that the petitioner had exported the bags made of cloth having construction of 14s x 14x‑40 x 40 instead of cloth having construction of 169 x 169‑47 x 52 as was allowed per notification S. R. O. 203 (K)/71 dated 30‑1‑1971. The petitioner was, therefore, put to notice that the particulars of the cloth mentioned by him in the application for rebate were incorrect. Therefore, no prejudice was caused to him by issuance of notice under rule 10 for refund of the amount of rebate is the duty allowed to him.
Now, even if for the sake of arguments it is assumed that rule 10 was applicable, the contention of the learned counsel that claim of refund could be made only if the error was apparent on the face of the record could not be accepted, as on plain reading of the provisions of rule 10 of the Rules no such condition can be found therein. However, the learned counsel referred us to Satyanaroyan Laxminaryan Hegde and others v. Mallikarjun Bhavanappa Tirumale (AIR 1960 S C 137) in support of his contention. In this case it was held by the Supreme Court of India as follows :‑‑
"An error which has to be established by a long drawn process of reasoning on points where there may conceiveably be two opinions can hardly be said to be an error apparent on the face of the record. As the above discussion of the rival contentions shows the alleged error in the present case is far from self‑evident and if it can be established, it has to be established, by lengthy and complicated arguments. We do not think such an error can be cured. by a writ of certiorari according to the rule governing the powers of the superior Court to issue such a writ. In our opinion the High Court was wrong in thinking that the alleged error in the judgment of the Bombay Revenue Tribunal viz., that an order for possession should not be made unless a previous notice had been given, was an error apparent on the face of the record so as to be capable of being corrected by a writ of certiorari."
But in this case the provisions of rule 10 of the Rules were not under consideration and the above observations should be understood in the context of the facts and law namely, Bombay Tenancy and Agricultural Lands Act, 1948; involved in that case. The learned Judges of the Supreme Court of India in this case were considering the question whether the view taken by the Bombay Revenue Tribunal that "the plaintiff/respondent must fail in his application for possession because he had failed to terminate the tenancy by notice before taking the proceedings for ejectment", was wrong and if so, was such an error apparent on the face of the record.
The learned counsel also referred us to Mewar Textile Mills Ltd: v. Union of India and others (A I R 1955 Raj. 144) and Nanni Glass Works v. The Collector, Central Excise, Allahabad (A I R 1965 All. 305). But in view of what we have stated hereinbefore, these cases are irrelevant. Besides, they do not support the contention of the learned counsel for the petitioner.
We therefore, find no substance in this petition, and dismiss it leaving the parties, on the circumstances of the case, to bear their own costs.
S. A. H. Petition dismissed.
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