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Issues Involved:
1. Whether the petitioner is a 'related person' under Section 4(4)(c) of the Central Excise Act, 1944. 2. Whether the petitioner was denied a reasonable and sufficient opportunity to be heard, violating principles of natural justice. Detailed Analysis: Issue 1: Whether the petitioner is a 'related person' under Section 4(4)(c) of the Central Excise Act, 1944 The petitioner, a public limited company manufacturing power/distribution transformers, was contested by the department on the grounds that it is a 'related person' to M/s. Genelac Company Ltd. The department's stance was based on the assertion that both the petitioner and M/s. Genelac Ltd. are subsidiary companies of M/s. G.E.C. of India, thus making them related companies. Consequently, the petitioner was denied the benefit of excise duty concession as per Notification No. 120 of 1975-C.E., dated 30-4-1975, and was requested to file price lists under the Central Excise Rules, 1944. The petitioner denied this relationship, arguing that M/s. Genelac Ltd. is not a subsidiary of the petitioner-company and thus not a related company. Issue 2: Whether the petitioner was denied a reasonable and sufficient opportunity to be heard, violating principles of natural justice The petitioner contended that Ext. P7 order was illegal and void as it was passed without affording a reasonable and sufficient opportunity to be heard. The petitioner argued that the procedure adopted by the 1st respondent in passing Ext. P7 was violative of the principles of natural justice, specifically highlighting that the petitioner was not personally heard before the adverse order was issued. The petitioner had filed an appeal against Ext. P7, and the Appellate Collector disposed of the appeal, noting that the matter was pending in the High Court. The court examined whether an oral hearing is an essential pre-requisite to comply with the principles of natural justice. It was noted that while written representations might sometimes suffice, the circumstances of each case determine the necessity of an oral hearing. The court referenced several authoritative texts and judicial decisions to underscore that an oral hearing should be afforded when the facts are complex, the credibility of the affected party is in question, or when the authority has created an impression that an oral hearing would be provided. The court concluded that in this case, the 1st respondent had created an impression that the petitioner would be heard orally, especially since the petitioner was heard on 28-12-1981. However, the petitioner was not given an oral hearing before the issuance of Ext. P5, which introduced a new basis for treating sales to M/s. Genelac Ltd. as sales to a related person. Therefore, the failure to provide an oral hearing constituted a violation of the principles of natural justice. Judgment: The court held that Ext. P7 order was illegal and violative of the principles of natural justice due to the failure to afford the petitioner an oral hearing. Consequently, Ext. P7 was quashed, and the 1st respondent was directed to hear the petitioner and dispose of the matter in accordance with the law. The petitioner was also allowed to present any material to substantiate their contentions against Ext. P5 notice. Additionally, the bank guarantee furnished by the petitioner, as per court orders, was discharged in light of the annulment of Ext. P7. Conclusion: The judgment underscores the necessity of adhering to the principles of natural justice, particularly the requirement of an oral hearing in cases where the circumstances demand it. The court's decision to quash Ext. P7 and direct a fresh hearing ensures that the petitioner's rights are protected, and procedural fairness is maintained.
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