ORDER
P.G. Chacko, Member (J)
1. On careful examination of the records of the case and on hearing both sides in the stay application, I am of the view that the appeal itself can be finally disposed of at this stage in the interest of justice. I, therefore, allow the stay application unconditionally and proceed to dispose of this appeal.
2. The department, by a show cause notice, had directed the appellants to reverse the Modvat credit of Rs. 2,91,286/- availed earlier by them. This was on the alleged ground that the credit had been taken without valid duty paying documents. The notice had also proposed to impose penalty on the party under Rule 173Q of the Central Excise Rules. The party contested the notice. The dispute was adjudicated by the jurisdictiqnal Assistant Commissioner, who disallowed the Modvat credit and imposed a penalty of rupees five lakhs. The assessees, aggrieved by this order of the Assistant Commissioner, preferred an appeal to the Commissioner (Appeals). They also filed a stay application praying for waiver of pre-deposit of the duty and penalty amounts and for stay of recovery thereof, pending the appeal. Learned Commissioner (Appeals) passed “stay order” dated 18-11-1999 directing the appellants to deposit an amount of rupees four lakhs for purposes of Section 35F of the Central Excise Act within two weeks from the date of receipt of the order. The appellants, on receipt of the stay order, submitted application on 5-1-2000 praying for modification of the stay order on the grounds of prima facie case and financial hardships. This application was not considered by the lower appellate authority. The said authority, on the other hand, proceeded to dispose of the appeal itself finally, which resulted in the impugned order. As per the impugned order, the appeal of the party stands rejected on the sole ground of non-compliance with the direction for pre-deposit of rupees four lakhs. Hence the present appeal.
3. Heard both sides. Learned advocate, Shri Mayur Shroff, has contended that the proceedings of the lower appellate authority are patently illegal on account of non-observance of the principles of natural justice. This contention is based on the following undisputed facts :-
The stay order itself was passed by the learned Commissioner (Appeals) without affording any opportunity of hearing to the party and it was so done by the authority by relying on a decision of the Gujarat High Court [1998 (97) E.L.T. 424 (Guj.)L which, according to the learned counsel, was misunderstood by the learned Commissioner (Appeals) to hold that a personal hearing is not a must for deciding stay application. Though a modification application was submitted seeking modification of the stay order, the same was not considered by the Commissioner (Appeals). Thereafter, without affording any opportunity of personal hearing to the party in the appeal, learned Commissioner (Appeals) rejected the appeal on the sole ground of non-deposit of amount, without looking into the merits of the matter. Learned counsel further submits that the Gujarat High Court had decided the above case by relying on the Hon’ble Supreme Court’s ruling in the case of U.O.I, v. Jesus Sales Corporation -1996 (83) E.L.T. 486 and that the Apex Court in the cited case had not altogether dispensed with personal hearing on stay applications. What the Apex Court had held was to the effect that an appellate authority should exercise its discretion in a reasonable and rational manner taking into consideration the relevant facts and circumstances of a particular appeal while considering the question as to whether deposit of an amount be dispensed with unconditionally or subject to conditions. Learned advocate has, in this connection, submitted that there is nothing on record to show that the lower appellate authority exercised its discretion in the manner stipulated by the Apex Court. He, therefore, submits that the stay order passed by the learned Commissioner (Appeals) is squarely contradictory to, and inconsistent with, the ruling of the Apex Court and, for that matter, the ruling of the Gujarat High Court. The learned advocate has, therefore, prayed for setting aside the impugned order on the sole ground of negation of natural justice.
4. Learned JDR has attempted to defend the impugned order. However, he has not disputed the learned advocate’s plea that the impugned order was passed without observing the principles of natural justice.
5. I have carefully considered the submissions. I am completely in agreement with the arguments of the learned advocate on the question relating to natural justice in the instant case. The decision of the Supreme Court in the case of Jesus Sales Corporation had laid down certain norms to be followed by appellate authorities in dealing with stay applications during the pendency of the appeal. Accordingly, it was incumbent on the learned Commissioner (Appeals) to take into consideration the relevant facts and circumstances of the particular appeal while considering the appellants’ stay application. The stay order passed by the learned Commissioner (Appeals) does not disclose whether the authority took into consideration the relevant facts and circumstances of the case. This apart, the stay order was passed without affording any opportunity of personal hearing to the party. For a proper consideration of the facts and circumstances of any case, a personal hearing is a pre-requisite, which was dispensed with by that authority, which act, in my considered view, runs against the ruling of both the Gujarat High Court and the Apex Court. Therefore, the stay order itself is unsustainable. The impugned order passed finally by the learned Commissioner (Appeals) is consequential to the illegal stay order. Therefore, the impugned order is equally illegal, apart from the fact that the impugned order suffers from violation of natural justice. For these reasons, I set aside both the stay order and the final order passed by the learned Commissioner (Appeals) and allow the present appeal by way of remand, directing the Commissioner (Appeals) to reconsider the appellants’ stay application and pass a speaking order thereon, after affording a reasonable opportunity of personal hearing to them. The appeal shall, thereafter, be finally disposed of on merits after affording a similar opportunity to the appellants and a speaking order shall be passed in the appeal, subject, of course, to the results of the stay application.