STEEL INGOTS PVT LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE order in this case will also govern the disposal of Miscellaneous Petitions No. 329, 458 and 958, all of 1987.

(2.) BY these petitions under Articles 226 and 227 of the Constitution of India, the petitioners have prayed for quashing of orders passed by the Superintendent, Central Excise, under Rule 57-1 of the Central Excise Rules, 1944 (hereinafter referred to as "the Rules") holding that as the credit of duty paid on inputs, as specified in the orders, was wrongly taken by the petitioners, the credit so taken was being disallowed. By these orders, the petitioners were directed to adjust the credit account immediately, as directed in those orders. Aggrieved by those orders, the petitioners have filed these petitions.

(3.) A number of points were urged in the petitions but having heard learned Counsel for the parties, we have come to the conclusion that the petitions deserve to be allowed on the short ground that before taking action under Rule 57-1 of the Rules, the Superintendent, Central Excise, has not given any opportunity to the petitioners to show cause why action as contemplated by the said rule be not taken. The relevant provisions of Rule 57-1 of the Rules read as follows: 57-1. (1) If the credit of duty paid on inputs has been taken wrongly the credit so taken may be disallowed by the proper officer and the amount so disallowed shall be adjusted in the credit account or the account current maintained by the manufacturer or if such adjustments are not possible for any reason, by cash recovery from the manufacturer of the said goods. It was contended on behalf of the respondents that the aforesaid rule did not envisage giving of any opportunity to show cause before proceeding to take action under Rule 57-1. But we do not see anything in that rule, which excludes the applicability of the principles of natural justice. It is now well settled, as held by the Supreme Court in Ramana Dayaram Shetty v. The International Airport Authority of India and Ors. , AIR 1979 SC 1628, (1979) II LLJ 217 SC, (1979) 3 SCC 489, [1979] 3 SCR 1014 that it is "unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. "