INDIAN TRANSFORMERS LTD Vs. ASST COLLECTOR

JUDGEMENT

(1.) The petitioner is a public limited company which manufactures power/ distribution Transformers. The short question that arises for consideration in this case is, whether the petitioner is a 'related person' under S.4(4)(c) of the Central Excise Act, 1944 with regard to its supply of transformers to M/s. Genelec Company Ltd. The department proceeded firstly on the ground that the petitioner being a related person to M/s. G. E. C. Ltd. will not get the benefit of concession regarding the payment of excise duty as per notification No. 120 of 1975 CE dated 30-4-1975. The petitioner was personally heard in the matter on 28-12-1981. It is common ground that no order was passed immediately. Thereafter by Ext P5 communication dated 16-1-1982 the 2nd respondent the Superintendent of Central Excise, Kalamassery I Range, Ernakulam, Cochin 18 informed the petitioner, that "on a perusal of invoices it is seen that the transformers were sold by the petitioner after 1-4-1979 to M/s. The Genelec Ltd." It was said that it is a related company of the petitioner; on the ground that "the petitioner and M/s. Genelec Ltd. are subsidiary companies of M/s. G.E.C. of India, and thus M/s. Genelec Ltd. becomes a related company". The petitioner was requested to file the price lists immediately under the Central Excise Rules, 1944, (Vide Ext. P5). By Ext. P6 dated 29-1-1982 the petitioner filed their objections thereto. The petitioner denied the fact that M/s. Genelec Limited is a subsidiary company of the petitioner company. According to the petitioner, it will not be a related company as stated by the 2nd respondent in Ext. P5. It was submitted that they may not be requested to file the price lists under R.177-C of the Central Excise Rules. It was also specifically stated that they may be all owed to continue to pay duty on invoice value as provided in Notification No. 120/75 dated 30-4-1975. Ext. P7 order was passed by the 1st respondent on 15-3-1982. In this OP. the petitioner assails Ext. P7. on many grounds.

(2.) Counsel for the petitioner Mr. Govind Bharathan submitted that Ext. P7 order is illegal and infirm in holding that The Genelec Company Ltd. is a subsidiary of the petitioner company or that it is a related company. The counsel also contended that before passing Ext. P7 order the petitioner was not afforded a reasonable and sufficient opportunity. Ext. P7 is illegal and void. In particular, it was contended, that the petitioner was not personally heard. The procedure adopted by the 1st respondent in passing an adverse order against the petitioner (Ext. P7) is violative of the principles of natural justice. The petitioner filed an appeal from Ext. P7 order. The Appellate Collector by his order dated 29-6-1982 (Appeal No. 60/82/C. No. V/68 p 128/82) disposed of the appeal. He held that since the matter is pending in this court, "the appeal is disposed of without prejudice to the rights and obligations that may accrue to the petitioner in the light of the High Court decision."

(3.) It is common ground that the Central Excise and Salt Act, 1944 and the Rules contain adequate provisions by way of appeal, second appeal and other proceedings by which the petitioner can ventilate his grievances. Ordinarily, in such circumstances, this court will not exercise its jurisdiction under Art.226 of the Constitution. But according to counsel for the petitioner Ext. P7 suffers from a jurisdictional infirmity and it was passed arbitrarily and in violation of the principles of natural justice. Counsel contends that before passing Ext. P7 order the authority concerned failed to hear the petitioner personally and this vitiates the order. It cannot admit of any doubt that Ext. P7 order visits the petitioner with civil consequences. If personal hearing, should have been afforded but was not adhered to, there is certainly, a violation of the principles of natural justice. That is a fundamental infirmity which will afford sufficient ground for this court to invoke and exercise the jurisdiction vested in it under Art.226 of the Constitution of India. According to counsel for the petitioner, he should have been heard orally by the 1st respondent before passing Ext. P7 order and failure to do so, is violative of the principles of natural justice. Ext. P7 is totally illegal and void. Counsel for the Revenue Mr. Santhalingam took the extreme position that the petitioner was afforded a reasonable opportunity to file his objections against Ext. P5, proposal and the petitioner did file his objections, Ext. P6. According to the counsel for Revenue, opportunity so afforded to the petitioner to file his representations, is sufficient compliance of the requirements of law and there is no violation of the principles of natural justice.