1980 (12) TMI 47 - HC - Central Excise

Price-list finalised without prior notice is Violation of natural justice - Constitution - Alternative remedy

Issues involved:
1. Classification of goods for excise duty.
2. Provisional approval and subsequent withdrawal of the price-list.
3. Determination of 'related persons' for valuation purposes.
4. Violation of principles of natural justice.
5. Legal effect of orders passed in violation of natural justice.
6. Jurisdiction of High Court under Article 226 despite alternative remedies.

Detailed Analysis:

1. Classification of goods for excise duty:
The petitioner, Nuwood Pvt. Ltd., engaged in the manufacture and sale of duplicating machines, classified these machines as office equipment under the Central Excises and Salt Act, 1944. The petitioner submitted a price-list for excise duty computation, which was provisionally approved by the Assistant Collector of Central Excise on 25-9-1975.

2. Provisional approval and subsequent withdrawal of the price-list:
The Assistant Collector provisionally approved the price-list on 25-9-1975. However, on 18-12-1975, the Assistant Collector issued proceedings withdrawing the provisional approval and fixed the value of the goods under Section 4 of the Act, effective from 1-10-1974. The petitioner was required to submit a revised price-list under protest and without prejudice to their rights.

3. Determination of 'related persons' for valuation purposes:
The Assistant Collector determined that 90% of the petitioner's goods were sold to Messrs Macneil and Magor Ltd., whom he considered 'related persons' under Section 4 of the Act. Consequently, the value for excise duty was based on the price at which Macneil and Magor Ltd. sold the goods to dealers. The petitioner disputed this classification, arguing that Macneil and Magor Ltd. were not related persons.

4. Violation of principles of natural justice:
The petitioner contended that no notice was given prior to the order dated 18-12-1975, which violated the principles of natural justice. The respondents did not dispute this fact but argued that the petitioner had the right to appeal, which was not exercised within the limitation period.

5. Legal effect of orders passed in violation of natural justice:
The court held that any order passed without adhering to the principles of natural justice is a nullity. Citing various precedents, the court emphasized that decisions given without regard to natural justice are void. The court referenced cases such as Kidge v. Baldwise and Collector of Customs v. A.H.A. Rahiman to support this view.

6. Jurisdiction of High Court under Article 226 despite alternative remedies:
The court noted that the failure to comply with natural justice at the original decision stage could not be cured at the appellate stage. Even if the petitioner had appealed, the appellate authority could not rectify the initial defect. The court held that a void order could be ignored and its validity attacked in collateral proceedings. Therefore, the High Court's jurisdiction under Article 226 of the Constitution could be invoked without exhausting alternative remedies.

Conclusion:
The court concluded that the order dated 18-12-1975 was a nullity due to the violation of natural justice principles. Consequently, the demand for differential duty based on this order was invalid. The court quashed the impugned demand dated 25-3-1978 and allowed the writ petition, with no order as to costs. The respondents were permitted to fix the price afresh after giving notice to the petitioner.

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