2016 (12) TMI 473 - HC - Central Excise

Valuation - whether freight and insurance amount pertaining to the goods cleared by the Assessee should be included in the assessable value of the goods or not? - Held that - Under normal circumstances, the assessee is obliged only to go before the Appellate Authority under Section 35(1) of the Central Excise Act, 1944. The order under challenge is an order against which a statutory appeal is available. Therefore, generally we would have refrain from entertaining the writ petition on the ground of availability of statutory alternative remedy - But the case on hand stands on a unique footing. This is a case where the petitioner has paid an amount of ₹ 10,82,682/- as against a duty demand of ₹ 11,94,200/-. In other words the petitioner has not come to this Court bypassing the alternative remedy of appeal, for the purpose of avoiding the pre-deposit condition. More over, the grievance of the petitioner is something peculiar. His grievance is that under explanation to Section 4 (1) of the Act, the price-cum-duty for excisable goods sold by the assessee should be determined in a particular manner - But unfortunately, there has been no discussion nor any finding recorded. Since the requirement under Explanation to Section 4(1) is statutory, the adjudicating authority appears to have failed to comply with this requirement, forcing us to interfere with the Order-in-Original. Though it is true that the adjudicating authority may not have a power of review as available to Civil Courts, the fact remains that the petitioner is not aggrieved by the mere absence of a power of review. The petitioner is aggrieved by the failure of the adjudicating authority to consider his objections to the show cause notice and to record a finding. Therefore, we need not go into the question as to whether the matter should have been reviewed or not. The writ petition is allowed, the impugned order of the Additional Commissioner is set aside - Matter remanded back for re-adjudication.

Summary

Issues: Challenge to Order-in-Original under Central Excise Act, 1944 regarding inclusion of freight and insurance amount in assessable value of goods.

In this judgment, the High Court of Andhra Pradesh considered a writ petition challenging an Order-in-Original passed by the Additional Commissioner under the Central Excise Act, 1944. The petitioner contested the inclusion of freight and insurance amounts in the assessable value of goods, leading to an excess duty demand, interest, and penalty. The court noted that ordinarily, the petitioner should have pursued the statutory appeal process under Section 35(1) of the Act. However, the unique circumstances of the case, where the petitioner had partially paid the duty demand, justified the court's intervention despite the availability of an alternative remedy.

The petitioner's main contention revolved around the interpretation of the explanation to Section 4(1) of the Act, which determines the price-cum-duty for excisable goods. The court highlighted the specific request made by the petitioner regarding this aspect during the adjudication process. The Order-in-Original lacked a discussion or finding on this crucial statutory requirement, prompting the court to intervene due to the adjudicating authority's failure to comply with the statutory provision.

The respondent argued that the adjudicating authority lacked the power of review, citing a government circular. However, the court clarified that the issue was not about a review but the failure of the authority to consider the petitioner's objections and record findings. The court emphasized that the petitioner's grievance was not about the absence of a review power but the failure to address statutory requirements, leading to the setting aside of the impugned order and directing the respondent to reconsider only the aspect related to the explanation under Section 4(1) after providing an opportunity for a fresh hearing and submission of evidence by the petitioner.

Ultimately, the court allowed the writ petition, set aside the order, and instructed the respondent to issue a fresh order while withholding any refund of the deposited amount until the new order was passed. The court closed pending miscellaneous petitions without any cost orders.