M.M. Pareed Pillay, J.
1. Petitioner is the manufacturer of Magnesium sulphate (Mg so4 7H20). It was characterised as a fertiliser and it was marketed under the Brand name Tachila Mark Valam'. Central Plantation Crops Research Institute, Kerala Agricultural University and Rubber Research Institute of India made authoritative recommendation to the effect that Magnesium Sulphate is a fertiliser. The Department of Agriculture, Government of Kerala has drawn up a scale for distribution of Magnesium Sulphate as a fertiliser material by permit system at 50% subsidy to the coconut growers. The Magnesium Sulphate manufactured by the petitioner is marketed by Messrs F.A.C.T. Ltd., Kerala State Co-operate Marketing Federation Limited, Kerala State Co-operative Rubber Marketing Federation Ltd., Shaw Wallace & Co. Ltd., Mysore Fertiliser Company and South India Chemicals and Fertilisers Ltd. etc. Under Exemption Notification No. 40/83-C.E., dated 1-3-1983 in exercise of the powers conferred by Rule 8(1) of the Central Excise Rules, 1944, the Central Government exempted fertilisers of all sorts falling under T.I. 14 HH of the First Schedule to the Central Excises and Salt Act, 1944 from the whole of the excise duty leviable thereon under Section 3 of the Central Excise Act. According to the petitioner, magnesium sulphate is a fertiliser which was entitled to and eligible for exemption from payment of excise duty. Vide Notification No. 81/75-C.E., 22-3-1975 issued by the Central Government, sulphuric acid falling under T.I. No. 14G intended for use in the manufacture of fertilisers was exempted from the whole of the duty of excise leviable thereon, provided on satisfaction of the Assistant Collector of Central Excise that the said sulphuric acid has been so used for the production of fertilisers. The Assistant Collector on satisfaction that the petitioner was entitled to duty-free supply of sulphuric acid as his product of magnesium sulphate is a fertiliser issued Ext. P-3 communication to the petitioner. Ext. P-4 is the licence issued by the Assistant Collector.
2. Grievance of the petitioner is that a show cause notice (Ext. P-12) was issued to him by the Supdt. of Central Excise, Range Alwaye calling upon him to a show cause to the Asstt. Collector of Central Excise within thirty days as to why duty of excise should not be demanded on the Magnesium Sulphate cleared on and from 28-2-1986 called upon as to why the licence issued to him for procuring duty-free sulphuric acid should not be withdrawn and also as to why duty of excise payable on the sulphuric acid so obtained on and from 28-2-1986 should not be demanded. On 9-1-1987 (Ext. P-13) a further show cause notice was issued to the petitioner. Petitioner sent Ext. P-17 memorandum to the Ministry of Finance, Government of India, New Delhi. The reminders are Exts. P-18 and P-19. Petitioner sent a detailed reply to the show cause notice by Ext. P-20 dated 10-1-1987. In Ext. P-20 the petitioner requested for personal hearing before the matter is finally decided and also requested to drop the proposed action against him.
3. It is the case of the petitioner that his request has been simply rejected by Ext. P-21 without stating any reasons by the first respondent, even though expected to pass a considered order was expected. Ext. P-24 communication the petitioner informed the Assistant Collector of Central Excise that he would be moving before the Honourable High Court for redressal of his grievances and also requested to await a decision from the High Court before further action in the matter. The Assistant Collector by Ext. P-25 informed the petitioner that as there was no stay or injunction from the High Court the case would be, decided on 24-2-1987. It was there after that Ext. P-27 order was passed confirming the show cause notice under Section 11A in respect of magnesium sulphate and Rule 196 in respect of Sulphuric Acid and ordered payment forthwith of Central Excise duty to be worked out.
4. Main contention of the petitioner is that Exts. P-21 and P-27 orders were passed without hearing the petitioner and without affording him an opportunity to substantiate his contentions. As Exts. P-21 and P-27 were passed without hearing the petitioner it has become necessary to quash Exts. P-21 and P-27. Exts. P-21 and P-27 quashed and respondents 2 and 3 are directed to consider the matter afresh in accordance with law after affording opportunity of hearing to the petitioner.
The Original Petition is allowed.