# SUPERINTENDENT (TECH. I) CENTRAL EXCISE I.D.D. JABALPUR AND ORS v. PRATAP RAI

- **Citation:** [1978] 3 S.C.R. 729
- **Court:** Supreme Court of India
- **Decided:** 1978-04-26
- **Bench:** S. Murtaza Fazal Ali, Jaswant Singh, R. S. Pathak
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/superintendent-tech-i-central-excise-i-d-d-jabalpur-and-ors-v-pratap-rai-7422
- **Pages:** 7

## Headnote

Natural Justice, Principles of-When an order is struck down by the appellate authority being in violation of the principles of natural justice, there is no
final decision and fresh proceedings can be taken-Interpretation of the Appellate Collector's orders-Words and Phrases-Meaning of "without pre;udice"
Customs Act, Section 122 and 128.
A
B
Twenty-three watches on which no custom duty was paid were seized frotn
C
the respondent by the Customs Authorities apd in the adjudication proceedings
under section 122 of the Customs Act, the Assistant
Collector of
Customs
ordered that the watches which were seized be confiscated and
imposed
a
, penalty of Rs. 250/- on the respondent under Section 112 of
the
Act. In
appeal, the Appellate Collector by his order dated 22-2-1972 vacated "without
prejudice" the order of the Assistant Collector .mainly on the ground that the
Assistant Collector had not complied with the rules of natural
justice.
The
department interpreted the order as an implied order of remand and issued a
fresh notice to the respondent on 27-7-1972 and started fresh adjudication proI)
ceedings. Thereafter, the respondent filed in the
High .court of Madhya
Pradesh, a writ petition which was allowed.
The notice and the fresh adjudication proceedings were quashed.
Allowing the appeal by special leave, the Court
HELD : 1. Where an order passed in appeal vacates the order of the first
tribunal on purely technical grounds and expre~ly 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 and not to draw a sweeping conclusion merely from the fact that no
explicit direction has been made by the appellate authority. '[735 C-D]
2. (a) Whenever an order is struck do'Wll as invalid being in violation of
the principles of nafural 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 .
[732 CJ
E
F
---
(b) In tl1e instant ·case :-
A perusal of the order of the Appellate Authority clearly sho\vs two important facts: (1) that the Appellant Collector has not set aside or vacated
the 01,"der of the Assistant Collector on merits but bas vacated it only on a
technical infirn1ity, namely, the violation of the rules of natural justice and
that is why the Appeliate Collector has 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 naturnl justice.
[731 A, 732 A-Cl
(ii) The Appellate Collector found that the order of the Assistant Collector suffr.rrd frnn1 a serious procedural infirmity, viz., that it was passed without
12-315SCI/78
G
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730
SUPREME COURT REPORTS
[1978] 3 S.C.R.
giving the respondent a proper opportunity of being heard, and 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. [732 G-H, 733 AJ
Mis Thimn1asamudram Tobacco Co. v.
Assistant
Collector
of Central
•'
Excise, Ne/lore Dt. Ne/l

## Text

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729
SUPERINTENDENT (TECH. I) CENTRAL EXCISE I.D.D.
JABALPUR AND ORS.
v.
PRATAP RAI
April 26, 1978
[S. MURTAZA FAZAL ALI, JASWANT SINGH AND R. S. PATHAK, JJ.j
Natural Justice, Principles of-When an order is struck down by the appellate authority being in violation of the principles of natural justice, there is no
final decision and fresh proceedings can be taken-Interpretation of the Appellate Collector's orders-Words and Phrases-Meaning of "without pre;udice"
Customs Act, Section 122 and 128.
A
B
Twenty-three watches on which no custom duty was paid were seized frotn
C
the respondent by the Customs Authorities apd in the adjudication proceedings
under section 122 of the Customs Act, the Assistant
Collector of
Customs
ordered that the watches which were seized be confiscated and
imposed
a
, penalty of Rs. 250/- on the respondent under Section 112 of
the
Act. In
appeal, the Appellate Collector by his order dated 22-2-1972 vacated "without
prejudice" the order of the Assistant Collector .mainly on the ground that the
Assistant Collector had not complied with the rules of natural
justice.
The
department interpreted the order as an implied order of remand and issued a
fresh notice to the respondent on 27-7-1972 and started fresh adjudication proI)
ceedings. Thereafter, the respondent filed in the
High .court of Madhya
Pradesh, a writ petition which was allowed.
The notice and the fresh adjudication proceedings were quashed.
Allowing the appeal by special leave, the Court
HELD : 1. Where an order passed in appeal vacates the order of the first
tribunal on purely technical grounds and expre~ly 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 and not to draw a sweeping conclusion merely from the fact that no
explicit direction has been made by the appellate authority. '[735 C-D]
2. (a) Whenever an order is struck do'Wll as invalid being in violation of
the principles of nafural 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 .
[732 CJ
E
F
---
(b) In tl1e instant ·case :-
A perusal of the order of the Appellate Authority clearly sho\vs two important facts: (1) that the Appellant Collector has not set aside or vacated
the 01,"der of the Assistant Collector on merits but bas vacated it only on a
technical infirn1ity, namely, the violation of the rules of natural justice and
that is why the Appeliate Collector has 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 naturnl justice.
[731 A, 732 A-Cl
(ii) The Appellate Collector found that the order of the Assistant Collector suffr.rrd frnn1 a serious procedural infirmity, viz., that it was passed without
12-315SCI/78
G
H
B
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E
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730
SUPREME COURT REPORTS
[1978] 3 S.C.R.
giving the respondent a proper opportunity of being heard, and 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. [732 G-H, 733 AJ
Mis Thimn1asamudram Tobacco Co. v.
Assistant
Collector
of Central
•'
Excise, Ne/lore Dt. Ne/lore, A.I.R. 1961 A.P. 324 approved.
3. (a) The implication of the term "without llrejudice" 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 Coliector 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. [733 E-FJ
(b) 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
was passed. In this view of the matter the Assistant Collector had
ample
jurisdiction in issuing the notice against the respondent in order to start fresh
adjudicatory proceedings 'in accordance with law. [733 F-G]
Collector of Central Excise, Madras v. K. Pulappa Nadar, A.I.R. 1964
Mad. 111 and The Marsden Spg. and Co. Ltd. v. Shri L. V. Pol, Superintendent
of Central Excise (Tax), I.LR. 1965 Guj. 111 criticised, discussed and distinguished.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 363 of
'
1978.
Appeal by Special Leave from the Judgment and Order dated the
29th November 1976 of the Madhya Pradesh High Court in M.P.
No. 32 of 1973E.C. Agarwa/a and Girish Chandra for the Appellant.
Naunit Lal and Kailash Vasdev for Respondent.
The Judgment of the Court was delivered by
FAZAL ALI, J.-This appeal by special leave is directed against the
judgment of the Madhya Pradesh High Court dated 19th November
1976 by which lbe High Court quashed the notice dated 27th July
1972 issued by the Assistant Collector of Customs and also quashed
fresh adjudication proceedings started by him under the provisions of
the Customs Act (hereinafter referred to as the Act).
·--~
The appeal lies within a very narrow compass and turns upon
the interpretation of the order passed by the appellate authority under
section 128 of the Act.
On 27th February 1969 the respondent
Pratap Rai was detraiued at Jabalpur by the Customs authoriti.es while
he was travelling by the Bombay Janta Express. On being searched
as many as 23 wrist watches on which no custom duty was paid were
H
recovered from his
person.
Thereafter adjudication
proceedings
under section 122 of the Act were coinmenc¢ by the Assistant Col-
~
!ector of Customs which culminated in the order of the Assistant
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CENTRAL EXCISE SUPDT. V. PRATAP RA! (FaZ(ll Ali, J.)
7 31
Collector dated 30th June, 1969 by which the watches were seized
A
.and ordered to be confiscated.
A penalty of Rs. 250/- was levied
on the respondent under section 112 of the Act. The respondent then
carried an appeal to the Appellate Collector under section 128 of
the Act against the order of the Assistant Collector.
The Appellate
Collector by his order dated 22nd February 1972 vacated the order
of the i\ssistani Collector mainly on the ground that the Assistant
Collector had not complied with the rules of natural justice. The fate
B
of this case depends on the interpretation of the order passed by the
Appellate Collector.
In order to appreciate the point in issue 1t may be necessary to
extract the relevant portion of the order of !he Appellate Collector
which runs thus :-
"The adjudication, therefore, suffers for lack of principle of natural justice, inasmuch as adequate opportunities
were not given to the appellant to defend his case. I, therefore, without prejudice, vacate the order of the adjudication
passed by the Assistant Collector, Central
Excise, Jabalpur."
(Emphasis supplied).
The department appears to have interpreted the aforesaid order
as an implied crder of remand and issued a fresh notice to the respondent on the 27th July, 1972 and started fresh adjudication proceedings according to the implied direction of the Appellate Collector.
Thereafter the respondent filed a wnt petition in the High
·Court of Madhya Pradesh assailing the notice and praying that the
proceedings started by the Assistant Collector even after the
vacation of the order by the Appellate Collector be quashed.
The plea
taken by the respondent appears to have found favour with the High
Court which allowed the petit[on, quashed the notice as also the fresh
adjudication proceedings. -The appellant obtained special leave of
this Court against the order of the High Court and hence this appeal
before us.
The only point that was contended before us by Mr. E. C.
Agrawala appearing in support of the appeal was
that the
High
·Court has erred in not properly interpreting the order of the Appellate Coilector.
According to the learned counsel, a true and plain
interpretation of the order of the Appellate Collector would clearly
reveal that he had merely vacated the order of the Assistant Collector because it suffered from a technical infirmity and had not barred
the commencement of fresh adjudicatory proceedings. Mr. Naunit
Lal appearing for the respondent however submitted that there was
no clear direction in the order of the Appellate Collector from which
it could be inferred that he had remanded the case, and, therefore,
there was no jurisdiction in the Assistant Collector to issue a fresh
notice or start adjudicatory proceedings against the respondent.
In
our opinion, the contention of counsel for the appellants appears to
be sound and must prevail. A perusal of the order cf the Appellate
Collector extracted above. clearly shows two important facts : (1)
that the Appellate Collector has not set aside or .vacated the order
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SUPREME COURT REPORTS
[1978] 3 s.c.R..
of the Assistar.t Collector on merits bnt has vacated it only on a
technical inlhmity, namely, the violation of the rules of. vatural justice and that is why the Appellate Collector has
advised
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
Collect0r clearly shows that he never intenue.:i to bar fresh a<'judicatcry proceedings provided they were
conducted
according
to the
principles of nrrtural 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 lef~ open. All that is done 1s that the order assailed by
virtue of its iaherent defect is vacated but the pcoceedings are not
terminated.
In the case cf M/s. Thimmasamudram Tobacco Co. v. Assistant
Collector of Central .Excise, Nellore Dt. Nellore(') while construing
the provisions c.f the Central Excise and Salt Act which was almost
on identical terms as the Customs Act a Division Bench of the Andhra
PraJesh High Court observed as follows :
"Assuming that section 35 of the Central Excise Act
does not clothe the appellate authority with power to remand the matter to the officer whose orders is appealed
agair.sl, nothing stands in the way cf the Assistant Col·
lector initiating the proceedings
afresh,
when
his order
was quashed not on merits but on technical grounds, i.e.
for not foliowing either the
procedure or the
dictates of
natural justice. In a case where the
!law in
the
order
appealed against consists of in the non-observance of certain
procedure or in not giving effect to the maxim 'audi alteram
partem', it is open to the officer concerned to start the proceckre @~e against with a view to iollc.w the rules of procedure and the principles of natural ju·;tice".
.
We find ourselves in complete agreement with the view taken by the
G
Andhra Pradesh High Court and the observations made by Reddy,
C.J. who spolce for the Court. It is obvious that in the instant case
the Appellate Collector found that the ordor of the Assistant Collector suffered from a serious procedural infirmity, viz .• that it was
passed without giving the respondent a pro~er opportunity of being
heard, aP.d, therefore, had to be vacated.
Tn
such circumstances,
therefore, it cannot be said that fresh proceedings by complynig with
JI
the rules of m1tural justice could not be started against the respondent.
The Appellate Collector has clearly used the words "without
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( l) A.T.R. 196! A r. 3'4
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·CENTllAL llXlJISE SUPDT. v. l'RATAP RAI (Fazal Ali, J.)
7 33
;prejudice" which also indicate that tpe order ?f the, Colleetor was. not
final and irrevocable.
The term 'without prejudice has been defined
Jn Black's Law Dictionary as follows :
''Where an offer or admission is made 'without prejudice', or a motion is denied or a bill in
equity dismissed
'without pr~judice', it is meant as '.I
declaration that no
rights or privileges of the party concerned are to be considered as thereby waived or lost, exc~pt in so far as may
be expresEly conceded or decided.
See.
also,
Dismissal
without Prejudice".
:Similarly, in Wharton's Law Lexicon the author while interpreting the
term 'without prejudice' observed as follows :-
"The w0rds import an understanding that if the negotiation fails, nothing that has passed shall be taken advantage of thereafter; so, if a defendant offer,
'without prejudice', to pay half the claim, the plaintiff must not only rely
on the o.ffer as an admission of his having a right to sorne
payment.
The rule is that nothing written or said
'without prejudice' can be considered at the trial without the consent of
both pmties--not even by a judge in determining whether
or n0t there is good cause for depriving a successful litigant
of costs __ .. The word is also frequently used without the
foregoing implications in statutes and inter parties to exclude or save transactions, acts and rights from the consequences of a stated proposition
and so as to
mean not
affection', '~aving' or 'excepting'".
In short, therefore, the implication of the tenn 'without prejudice'
mea11s (l) that the cause or the matter Ii.as not been decided on
merits, (2) that fresh proceedings according to law were not barred.
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It is true that the Appellate Collector docs not say in so many
words that the case is remanded to the Assistant Collector but the
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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 rnles of natural jus!ice.
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 natnral justice and having been vacated the parties
would be relegated to the position which they occupied before the G
order of the Assistant Collector was passed. In this view of the
matter 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 The H
Collector of Central Excise, Madras v. K. Palappa Nadar(') and
(1) A.l.R. 1964 Mad. 111.
734
SUPREME COURT REPORTS
[1978] 3 S.C.R.
A
of the Gujarat High Court in the case of The Marsden Spg. and Co.
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Ltd. v. Shri L. V. Pol, Superintendent of Central Excise (Tax)(1).
In the Madras case (supra) the order impugned ran as follows:
"Having regard to all the circumstances of the case,
the Central Board of Revenue hereby directs, without prejudice to the merits of the case, [italics (here in ' ') ours] the
order dated 3rd March, 1956 passed by the Collector of
Central Excise, Madras shall be vacated".
The High Court while interpreting the order observed as follows :-
"After careful consideration of the arguments of the
learned Ad,ocate 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".
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 (supra) 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 these
circumstances,
therefore,
the
Madras case (supra) being clearly distinguishable as indicated above,
we are of the opinion that the view taken by the Madras
ffigh,
Court is of no assistance to the respondent.
The case of The Marsden Spg. & Co. Ltd. (supra) is also clearly
F
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.
G
2. The amounts of excise duty nnd penalty recovered
H
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 was
no power in the original tribunal to initiate de novo
proceedings and impose a fresh penalty."
(!) 1.L.R. [!965] Guj. Ill.
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E:ENTRAL EXCISE SUPDT. v. PRA TAP RAI ( F azal A Ii' l.)
7 3 5
It appears that
the
Gujarat High
Court practically adopted
the reasonings of the Madras High Court in the case mentioned
above but the order impugned in the Gujarat case was clear end
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 consequeiltial 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 was no 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 inter-
. preting an order of this kind to give full and complete effect to the
exact words used by the authorities and 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 as no express words were used in the order cf
the Appellate Collector remanding the case the Aisistant Collector
was not justified in commencing
fresh
adjudicatory
proceedings
against the respondent.
For these reasons, therefore, we allow the appeal, set aside the
order of the High Court and dismiss the writ petition filed by the
respondent in the High Court and restore the fresh adjudicatory
proceedings started by the Assistant Collector by virtue of the notice
dated 27-7-1972.
In the peculiar circumstances of this case
we
make no order as to costs .
S. R.
Appeal allowed .
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