TMI Blog2015 (10) TMI 1845X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are wholly without jurisdiction or the vires of an Act is challenged. The present case, therefore, clearly falls within the categories enumerated in the above decision viz. violation of the principles of natural justice. - writ petition admitted. Thus, under rule 8 of the Valuation Rules if the assessee does not sell excisable goods but such goods are used for his own consumption or on his behalf in the production or manufacture of other articles, the value of such goods shall be 110% of the cost of production or manufacture of such goods. Under rule 9 of the Valuation Rules, when the arrangement of assessee is such that the excisable goods are not sold by it except through a related person, the value of the goods shall be the normal transaction value at which they are sold by the related person at the time of removal to buyers (not being related person) or where such goods are not sold to such buyers, to buyers (being related person), who sells the goods in retail. Appellate Commissioner has lost sight of the main contention raised by the petitioner that it is not liable to pay duty either under rule 8 or rule 9 of the Valuation Rules, because the related party has alre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise, Vadodara (Annexure-K to the petition). The petitioner also seeks a direction to the respondents to consider and decide the petitioner s submission that there is no real short payment of excise duty in this case because M/s. VCL has paid excise duty on the goods in question at their selling price and further seeks a direction to the respondents to consider and verify the documentary and other evidence and decide the said issue. 3. The above reliefs have been prayed in the backdrop of the following facts. The petitioner company is inter-alia engaged in the business of filling in cylinders, various industrial gases like Argon, Nitrogen, Hydrogen, etc. for another company viz. M/s. Vadilal Chemicals Limited. The petitioner company and M/s. Vadilal Chemicals Limited (VCL) are separate companies but belong to the same group. VCL has been purchasing the above types of industrial gases in bulk from manufacturers like Gujarat Fertilizers Ltd. The gases received from manufacturers like Gujarat Fertilizers Ltd. in tankers and skid (which is a truck/vehicle to which a system containing 152 cylinders is permanently attached by mounting such system on the backside of the vehicle); and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere related persons then the duty payment made by VCL was to be considered as payment of duty by the petitioner company and since VCL had admittedly paid excise duty on their sale price, demand of differential excise duty from the petitioner company on the same selling price of VCL was illegal and unreasonable. The petitioner also submitted details by way of a statement/annexure to the reply, co-relating the quantities of Hydrogen gas sold by them to VCL and further sale by VCL to other buyers, thereby establishing that excise duty stood paid on the sale price charged by VCL and, therefore, there was no justification in the demand of excise duty raised against the petitioner company. The show cause notice came to be adjudicated by an order-in-original dated 23.3.2014 whereby the third respondent confirmed the demand of duty with interest and also imposed a penalty of ₹ 1,00,000/- on the petitioner company. Against the order-in-original, the petitioner company filed a substantive appeal before the second respondent, inter-alia, emphasizing in the appeal proceedings that excise duty was admittedly paid on the price charged by VCL when this buyer company sold the goods to their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on behalf of the petitioner. It was submitted that the contention raised by the petitioner goes to the root of the matter, inasmuch as, the object behind rule 9 of the rules is that in case the assessee sells the goods to a related buyer at a lesser price and pays excise duty on such lesser price, and the related person sells such goods at a higher rate, the Government is deprived of its revenue, whereas in the facts of the present case, the related person, namely, VCL has sold goods at a higher price, but as VCL has re-labelled the goods, which amounts to a manufacturing activity, it has paid excise duty on the price at which it has sold the goods to the consumers. It was submitted that, therefore, when VCL has paid central excise duty on the goods at the price at which it has sold the same, in the first place, there is no loss to the revenue and on the other hand, when VCL is considered to be a related person, the duty of excise on the price at which the goods have been sold by the related person has already been discharged. Under the circumstances, the Appellate Commissioner as well as the adjudicating authority were not justified in not considering the submission advanced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants faith in the justice delivery system; reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or rubber-stamp reasons is not to be equated with a valid decision making process. It was submitted that in the facts of the said case, the Supreme Court has remanded the matter to the concerned authority for hearing on merits by observing that it was expected of the authority to hear out the matter independently and give adequate reasons for its conclusion. It was urged that a similar course of action is required to be adopted in the facts of the present case and that the matter is required to be remanded either to the appellate authority or to the adjudicating authority as may be deemed fit by the court. 5. Opposing the petition, Mr. R. J. Oza, learned senior standing counsel for the respondents reiterated the averments made in the affidavit in reply filed on behalf of the respondent. It was submitted that the petitioner seeks to challenge the order passed by the appellate authority without avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounded by the Supreme Court is that since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights. The court held that reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. Thus, reasons have been equated with the observance of principles of natural justice. 8. At this juncture, reference may be made to the decision of the Supreme court in the case of Commissioner of Income Tax vs. Chhabil Dass Agarwal, (2014) 1 SCC 603, wherein the court after considering various Constitution Bench decisions of the Supreme Court observed that it has been held that though Article 226 confers very wide powers in the matter of issuing writs on the High Court, the remedy of writ is absolutely discretionary in character. If the High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. The court, in extraordinary circumstances, may exercise the power if it comes to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on who is likely to be adversely affected by the action of the authorities should be given notice to show cause thereof and granted an opportunity of hearing; and secondly, the orders so passed by the authorities should give reasons for arriving at any conclusion showing proper application of mind. Violation of either of them could in the given facts and circumstances of the case vitiate the order itself. 11. Examining the facts of the present case in the light of the above decision, while it cannot be said that the impugned orders are totally non-reasoned orders, at the same time, the main contention advanced on behalf of the petitioner has not been dealt with and no reasons have been assigned for not accepting the same. The impugned order does not show that the authority concerned has applied its mind to the contention raised by the petitioner. Therefore, as held by the Supreme Court in the above decision, the principles of natural justice would stand violated in the light of the fact that the concerned authority has not applied its mind to the principal contention raised by the petitioner, inasmuch as, it has not given any reason in respect thereof. 12. In Sant Lal Gupta v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of better appreciating the controversy in issue, reference may be made to certain statutory provisions. The industrial gases under which the petitioner deals with are classified under Chapter 28 of the First Schedule to the Central Excise Tariff Act, 1985. Note 9 thereunder lays down that in relation to products of that Chapter, labelling or re-labelling of containers or repacking from bulk packs to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manufacture . Section 4 of the Central Excise Act, 1944 provides for Valuation of excisable goods for purposes of charging of duty of excise and provides that where under the Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyers (being related person), who sells the goods in retail. 17. In the case at hand, it is the case of the petitioner that it is a manufacturer who fills in gas in cylinders and labels them. The petitioner also avails cenvat credit on the inputs used by it. Thereafter the goods are sold to VCL, at which point of time, the excise duty on the cost at which goods are sold to VCL is paid. VCL, in turn, re-labels the goods which is termed to be manufacturing activity and avails of cenvat credit on the goods purchased from the petitioner and pays central excise duty on the goods sold by it. Therefore, on the normal transaction value at which the goods are sold by the related person central excise duty has been paid. According to the petitioner, the object of rule is to ensure that central excise duty is paid on the transaction value at which the related person sells the goods, which in the present case is satisfied, inasmuch as, the related person being a manufacturer, has paid central excise duty on the transaction value at which it has sold the goods. Therefore, the object of rule 9 of the Valuation Rules is satisfied and therefore, the question of once again subjecting the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... either authority. Therefore, as rightly submitted by the learned counsel for the petitioner, the impugned orders suffer from the infirmity of being nonreasoned orders as the same do not deal with the main contention raised by the petitioner. As held by the Supreme Court in Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (supra), reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations; reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies; judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants faith in the justice delivery system. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights. Thus, giving su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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