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TMI Blog2015 (10) TMI 1845X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the gases so purchased by VCL; are sold by it to the petitioner company who subjects them to purification processes and the purified gases are then filled in cylinders of 7 cubic metres capacity by the petitioner company. Under the Cenvat Credit Rules, 2004, excise duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CL 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 Rs. 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 buyers and, therefore, there was no short payment of excise duty in this case, inasmuch as, it was the case of the revenue itself that the petitioner company and VCL were related persons and, therefore, payment of excise duty made by such related person left no short payment of excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the petitioner. It was urged that in good faith the petitioner had made submissions, but neither the adjudicating authority nor the first appellate authority have considered and dealt with the same. It was urged that the relevant submission made on behalf of the petitioner needs to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-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 availing of the alternative remedy of appeal before the Customs, Excise and Service Tax Appellate Tribunal and further appeal before the Supreme Court and, therefore, the present petition is not maintainable nor is the same capable of being entertained by this court. It was further submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-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 conclusion that there has been a breach of the principles of natural justice or the procedure required for decision has not been adopted. The court observed that while it can be said that it has recognised some exceptions to the rule of alternative remedy, that is, where the statutory authority has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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. Modern Cooperative Group Housing Society Ltd., (2010) 13 SCC 336, the Supreme Court has held that it is settled legal position that not only administrative but also judicial orders must be supported by reasons recorded in it. Thus, while deciding an issue, the court is bound to give reasons for its conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts 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 manner as may be prescribed. Clause (b) of sub-section (3) of section 4 of the Central Excise Act provides for the categories of persons who are deemed to be related. In the case at hand it is an admitted position that VCL is related to the petitioner as envisaged under clause (b) of sub-section (3) of section 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 subject goods to central excise duty at the transaction value at which the related person has sold the goods which would amount to recovering central excise duty twice on the same goods, does not arise. An alternative contention has also been raised that since VCL is a related person, the transaction could be considered as one und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a), 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 sufficient reasons to demonstrate that the relevant factors having considered objectively is a primary requirement to be satisfied by a judicial or quasi judicial authority. The requirement of reasons has been considered to be virtually a component of human rights. Under the circumstances, the impugned orders, which suffer from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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