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2008 Supreme(Guj) 148
GLR 2008 (2) 1585
HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE Z.K.SAIYED
M/S PATEL FILTERS LTD - Petitioner(s)
Versus
UNION OD INDIA & 1 - Respondent(s)
Special Civil Application No. 2730 of 1989
Decided on:28/04/2008
MR UDAY M JOSHI for M/S TRIVEDI & GUPTA for the Petitioners
MR HRIDAY BUCH, learned Additional Standing Counsel for the Central Government, for Respondent(s):1-4
Headnote:
Central Excise and Salt Act, 1944 - Sections 4(1)(a)(ii), 35A and 11A - Constitution of India, 1950 - Article 226 - Petition challenges primarily order - Petitioner Company filed an appeal against Order-in-Original - Approving price list by adding after hearing petitioner-appellant appellate authority came to conclusion that one Oliver Company Limited was closely related with petitioner-Company that relationship between two is so - Interrelated that petitioner-appellant and buyer company have direct interest in business of each other they would appellate authority set aside order made by jubilating authority and held that price charged by buyer company to customers of buyer company shall be treated as assessable value of goods manufactured and sold by petitioner-appellant was to be charged excise duty accordingly - Held, Appellate authority is bound to be well versed with more particularly provisions which relate to procedure in appeal which an appellate authority is required to statutorily comply with - Appellate authority has failed to comply with the requisite statutory provisions and show from the record satisfaction of prerequisite conditions for exercise of jurisdiction to enhance the assessment by making addition of any duty of excise which has not been levied or paid, etc - Appellate authority cannot be permitted a second innings is incumbent upon appellate authority to establish that prerequisite conditions stand fulfilled before appellate authority assumes jurisdiction Impugned order cannot be sustained and quashed and set aside - Petition is allowed
(Per : HONOURABLE MR.JUSTICE D.A.MEHTA)
1. This petition challenges primarily order dated 12.12.1988 (Annexure-H) made by Collector of Customs and Central Excise (Appeals), Mumbai (hereinafter referred to as 'the appellate authority').
2. The petitioner-Company filed an appeal against Order-in-Original dated 21.05.1987 made by the Assistant Collector of Central Excise, Division-IV, Ahmedabad, approving price list No.181/83-84 dated 22.06.1983 by adding 30%. However, after hearing the petitioner-appellant the appellate authority came to the conclusion that one M/s.Hindustan Dorr Oliver Company Limited (the buyer company) was âSclosely relatedâý with the petitioner-Company; that the relationship between the two is so interrelated that the petitioner-appellant and the buyer company have direct interest in the business of each other. Therefore, they would be covered by Proviso (ii) of Section 4(1)(a) of the Central Excise and Salt Act, 1944 (the Act). Hence, the appellate authority set aside the order made by the adjudicating authority and held that the price charged by the buyer company to the customers of the buyer company shall be treated as the assessable value of the goods manufactured and sold by the petitioner-appellant and the petitioner-appellant was to be charged excise duty accordingly.
3. On behalf of the petitioner-appellant it is submitted that the entire order made by the appellate authority is without jurisdiction as the appellate authority has travelled beyond the subject matter of the appeal by holding that the petitioner-appellant and the buyer company are related persons. It is submitted that originally a show cause notice was issued by the adjudicating authority on the ground that the petitioner-Company and the buyer company are related. The show cause notice came to be challenged by the petitioner by way of Special Civil Application No.5922 of 1986 which came to be disposed of vide order dated 09.04.1987 whereunder the petitioner was directed to reply to the show cause notice. Upon the reply having been tendered the adjudicating authority came to the conclusion that the petitioner and the buyer company were not related. However, the adjudicating authority came to the conclusion that drawing and designing charges were required to be added in the assessable value of the goods in the hands of the petitioner-Company. It is this order which was challenged by the petitioner-Company, but there was no appeal filed by the revenue against the finding of the adjudicating authority about the petitioner and the buyer company not being related.
4. Learned advocate, therefore, submitted that the subject matter of appeal before the appellate authority was restricted to limited ground of addition to the extent of 30% to the price list while arriving at the assessable value and no other issue was alive before the appellate authority. Inviting attention to sub-section (4) of Section 35A of the Act it was stated that the order of the appellate authority disposing of the appeal had to record in writing the points for determination and the decision on such points accompanied by reasons for the decision. That the order of the appellate authority, therefore, could not have travelled beyond the subject matter of the appeal.
5. At this stage attention of the learned advocate of the petitioner was invited to sub-section (3) of Section 35A of the Act inviting submissions as to operation of Second Proviso under the said sub-section. It was submitted that the Second Proviso can come into play only provided a notice within the prescribed time limit was issued to the appellant to show cause against the proposed order, but the appellate authority having failed to issue any such notice, the appellate authority could not have resorted to the provisions of the Second Proviso to sub-section (3) of Section 35A of the Act. In support of the submissions made reliance was placed on the following decisions:
i. India House Vs. Kishan N. Lalwani, (2
