BCL INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) Prayer in this petition filed under Articles 226/227 of the Constitution of India is for quashing communication dtd. 5/11/2018, Annexure P.8 whereby the Chief Commissioner, Central Goods and Services Tax (Chandigarh Zone), Chandigarh (CGST) has refused to transfer appeal from Commissioner (Appeals) Ludhiana to some other Commission (Appeals). Further prayer has been made for restraining respondent No.4 - Commissioner (Appeals), Ludhiana from deciding the appeal.

(2.) A few facts relevant for the decision of the controversy involved as narrated in the petition may be noticed. The petitioner is engaged in the manufacture of Vanaspati Refined Oil falling under Chapter Heading 15 of the First Schedule to Central Excise Tariff Act, 1985. The refined oil is manufactured from crude rice bran oil and is exempt from Central Excise Duty vide notification dtd. 1/3/2006. During the course of refining of crude oil, Gadh/Soap Stock, Fatty Acid etc. emerge which are also exempt from payment of excise duty. The respondent department issued a number of show cause notices to all the refined oil manufacturers raising demand of Central Excise Duty on Fatty Acid, Wax and Gum which were cleared without payment of duty. Opinion was formed by the respondent-department that fatty acid, gum, gadh were subject to Excise Duty and refined oil manufacturers were wrongly clearing these products without payment of duty. Few of the manufacturers filed appeals before the Tribunal which were decided in different manner and resultantly, the matter went to the larger bench of the Tribunal. The respondent department raised issue of levy of excise duty on fatty acid. The Tribunal concluded that fatty acids, gums and waxes were nothing but waste arising during the course of refining of rice bran oil and the same could not be considered as manufactured excisable goods. The said items were held entitled to the benefit of exemption notification dtd. 18/5/1995. The appeal of the petitioner involving the same issue came up for consideration before Commissioner (Appeals), Ludhiana who vide order dtd. 18/4/2018, Annexure P.2 inspite of decision of the larger bench of the Tribunal concluded that the petitioner was liable to pay duty on fatty acids, gums and Gadh because it was manufacturing plastic and tin containers which were captively consumed. One appeal of the petitioner and two appeals of the department came up for consideration before Commissioner (Appeals), Ludhiana who vide order dtd. 16/7/2018, Annexure P.3 held that the petitioner was liable to pay duty on fatty acids, waxes, gums etc. The Commissioner (Appeals) reiterated its earlier findings and did not think it appropriate to consider submissions of the petitioner whereby the petitioner had pointed out that the order was not passed on the basis of the said issue and earlier Commissioner (Appeals) had already settled the issue of manufacture of plastic containers in its favour. The officials of the Directorate General of Central Excise Intelligence (DGCEI) searched premises of the petitioner on 29/7/2011 and seized 1238 kg stearic flakes. The DGCEI initiated investigation against the petitioner alleging that they were getting invoices without material and using the same to sell their products. The DGCEI after concluding its investigation issued a show cause notice raising demand of Rs.14,18,645.00 as wrongly availed cenvat credit and Rs.11,56,622.00 on account of alleged clearance of stearic acid flakes clandestinely. The petitioner filed reply to the show cause notice and Assistant Commissioner vide order dtd. 14/11/2017, Annexure P.4 dropped the show cause notice. Vide order dtd. 20/2/2018, Annexure P.5, the Commissioner, GST Commissionerate, Ludhiana reviewed the order passed by the Assistant Commissioner and directed him to file an appeal on his behalf before the Commissioner (Appeals) -respondent No.4. The Assistant Commissioner in compliance to review order dtd. 20/2/2018 preferred an appeal before the Commissioner (Appeals) which is pending adjudication. The Commissioner (Appeals) fixed the matter for personal hearing on 20/9/2018, 9/10/2018 and 23/10/2018. Mrs. Charul Baranwal is holding charge of Commissioner (Appeals) who is wife of Commissioner who had reviewed the order passed by Assistant Commissioner and directed him to file appeal before Commissioner (Appeals). Thus, the husband is holding charge of appellant and the wife is holding charge of Appellate Authority. Though appeal was filed in the name of Assistant Commissioner but he had just complied with the order of the Commissioner. According to the petitioner, on earlier occasion, the Commissioner (Appeals) decided the appeals contrary to the decision of the larger Bench of the Tribunal. Therefore, the petitioner vide letter dtd. 29/9/2018, Annexure P.7 requested the Chief Commissioner, CGST, Chandigarh to transfer appeal from Mrs. Charul Baranwal to some other Commissioner (Appeals) on the ground that the wife cannot hear appeal when husband is appellant. The Chief Commissioner vide letter dtd. 5/11/2018, Annexure P.8 declined the request of the petitioner holding that the petitioner may file appeal before the higher Appellate Authority against the order of Commissioner (Appeals) who is an independent quasi judicial authority and bound to decide the appeal without any bias or ill feeling. On account of declining of request of the petitioner by the Chief Commissioner, the petitioner vide letter dtd. 23/11/2018, Annexure P.9 requested Chairman, CBIC to transfer appeal to some other Commissioner (Appeals) in the interest of justice. A number of appeals have already been transferred from one Commissioner (Appeals) to another. The Commissioner (Appeals) vide notice dtd. 18/12/2018, Annexure P.10 fixed the matter for hearing on 10/1/2019. According to the petitioner, the appeal which is pending before Commissioner (Appeals) Ludhaina has been filed on the basis of review order passed by Mr. Baranwal who is husband of Mrs. Charul Baranwal holding charge of Commissioner (Appeals) which is clear conflict of interest and it is against the principles of natural justice as well as equity that appeal has been filed by husband and wife is acting as Appellate Authority. The petitioner has no hope and trust that respondent No.4 could decide the appeal in fair and unbiased manner and thus prays that the appeal should be heard by some other Commissioner (Appeals) Hence the instant writ petition by the petitioner before this Court.

(3.) A written statement has been filed on behalf of respondent Nos. 1 to 4 through Commissioner (Appeals), CGST, Ludhaina wherein it has been inter alia stated that the appeal filed by the petitioner was rightly dismissed by the Commissioner (Appeals), Ludhiana. It was observed that the finding of the larger bench of the Tribunal in its order dtd. 30/1/2018 was on the issue regarding the benefit of exemption notification dtd. 18/9/1995 to the refined oil manufacturers and the products such as fatty acid, acid oil, gums, wax and gadh oil etc. were incidental products and were nothing but waste and, therefore, covered by the exemption notification. Further, as per proviso to the notification dtd. 18/5/1995, the benefit was not available, if the factory was also manufacturing other excisable goods other than the exempted goods. Therefore, as the petitioner was also manufacturing plastic and tin containers which were excisable goods and chargeable to central excise duty though they were capitvely consumed, the benefit of the exemption notification was held to be not available to the petitioner. It has been further stated that the order reviewing the order in original dtd. 14/11/2017 on the issue of wrong availment of cenvat credit was dtd. 20/2/2018 and the appeal was filed on 12/3/2018 i.e. prior to the decision of the Commissioner (Appeals) dtd. 18/4/2018 and 16/7/2018. The posting of Shri Ashutosh Baranwal and Mrs. Charul Barnawal was ordered as per transfer policy. There is no instruction of the Central Board of Excise and Customs which prohibits the posting of spouse as the appellate authority where the husband is posted as the Executive Commissioner. There is no bias feeling against the petitioner and the appeals are decided in accordance with law. There have been instances in the past where Commissioner (Appeals) and Executive Commissioners have been posted in the same jurisdiction on spouse ground in the department. On these premises, prayer for dismissal of the petition has been made.