TaxTMI 
TaxTMI 
2015 (12) TMI 1267
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....ing any action against the Petitioner Company pursuant to OIO No.AHM-CEX-003-JC-18 to 32-14-15 dated 30.03.2015 passed by the Joint Commissioner of Central Excise, Ahmedabad-III. (C) That Your Lordships may be pleased to issue a Writ of Mandamus or any other appropriate writ, direction or order, directing the 2nd Respondent herein to strictly follow the directions issued by the Commissioner of Central Excise (Appeals) vide OIA No.100 to 101/2006 dated 12.7.2006 (Annexure-"C") and thereupon conducting adjudication of the case remanded by the Appellate Tribunal vide order No.A/10089/2014 dated 15.01.2014 (Annexure-"F"). 2. The facts giving rise to the present petition are that the petitioner company for the period 1995-96 to 7th November, 1998 was producing "Washed Clay" by using Hydrochloric Acid or Sulphuric Acid for washing natural clay and selling the product under the trade name "Bleach-9" claiming exemption from payment of excise duty. On 7th November, 1998, the Central Excise officers visited the petitioner's factory, drew a panchnama and commenced inquiry in respect of the petitioner's manufacturing activities on the basis that washing of clay with acid re....
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....each-9" was activated earth. By an order dated 12th July, 2006 (Annexure 'C' to the petition), the Commissioner (Appeals) decided the appeals filed against the orders of the Additional Commissioner wherein he inter alia observed thus:- "... ... ... I, therefore, observe that Department should examine if it would be appropriate to sent the both reports of the Chemical Examiner, Vadodara to Chief Chemist Central Revenue Control Laboratory, New Delhi for his opinion if on these parameters it could be said if it is activated earth and then if he desires afresh samples be provided to him and then decide the issue of demand/classification of "Bleach,9" for the entire period w.e.f. 15.4.99 (the date on which the appellants informed the Department about the change of manufacturing process of Bleach 9) onwards. Needless to say that if there is any adverse report of Chief Chemist the same should be provided to the appellants before any decision in the matter. Like wise the appellants should also be allowed to produce the parameter/reports which would substantiate their claim that item manufactured by them is nonactivated. The appellants defence that item is not activated, be....
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....ty to strictly follow the directions given by the first appellate authority vide OIA dated 12th July, 2006. 5. On 2nd March, 2015, the petitioner company received a letter from the Superintendent of Central Excise (O&A) with a copy of letter dated 25th February, 2015 issued by the Director CRCL, New Delhi, informing the petitioners that the Joint Commissioner of Central Excise would hear the remanded cases in view of the report of the Director/Chief Chemist. On 9th March, 2015, the petitioner company submitted a letter before the Joint Commissioner referring to the directions issued by the Commissioner (Appeals) in OIA dated 12th July, 2006 and emphasized that the directions of the Commissioner (Appeals) were not strictly followed even though the Appellate Tribunal had directed to do so. It was also stated that it was not clear from the letter of the Chief Chemist whether all the details like reports of IIT and Vaibhav Enviro Consultant, the petitioners' defence etc. were sent to the Chief Chemist, CRCL or not. On 19th March, 2015, a personal hearing was held before the Joint Commissioner at which point of time also, the petitioners' advocate referred to the directions o....
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....r should be sent to the Chief Chemist, Central Revenue Control Laboratory, New Delhi for his opinion if on those parameters it could be said if it is activated earth and then if he desires, fresh samples be provided to him and that the issue of demand/classification of "Bleach-9" for the entire period with effect from 15th April, 1999 be decided accordingly. It was pointed out that the Commissioner (Appeals) has specifically stated that if any adverse report of the Chief Chemist is received, the same should be provided to the petitioners before any decision in the matter and that the petitioners should be allowed to produce the parameters/reports which would substantiate their claim that the item manufactured by them is non-activated. That the petitioners' defence that the item is not activated was also to be sent to the Chief Chemist with the Chemical Examiner's report. It was submitted that in the first round, since the directions were not duly complied with, the matter reached up to the stage of the Tribunal and the Tribunal remanded the matter to the adjudicating authority for a fresh decision. It was submitted that even thereafter, the adjudicating authority did not pr....
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....ief Chemist. Attention was invited to the contents of the said letter to point out that the petitioner had specifically requested that the reports of IIT, Bombay and Vaibhav Enviro Consultant, Ahmedabad be sent to the Chief Chemist, CRCL to state as to whether the parameters considered by the two expert bodies indicated that Bleach-9 was activated earth and whether the opinion of these two expert bodies that there was no activation on the basis of such parameters was correct. It was pointed out that after a report/opinion is received from the Chief Chemist, CRCL, the petitioner had requested for an opportunity to crossexamine him in case it is found that the opinion/report was still not proper and adequate. That the petitioner had also sought for an opportunity of personal hearing before taking any final decision in the matter. It was pointed out that despite the aforesaid position, the adjudicating authority passed the impugned order without granting any further opportunity of cross-examining the Chief Chemist or of personal hearing to the petitioner. It was submitted that the reply dated 23rd March, 2015 was only in response to the letter dated 18th January, 2015 and was not a re....
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....pportunity of cross-examining the Chief Chemist as well as has been denied the opportunity of a personal hearing prior to passing of the impugned order. It was submitted that, therefore, despite there being an alternative remedy available to the petitioner, the present writ petition against the order of the adjudicating authority is maintainable. In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of M.R. State Agro Industries Development Corpn. Ltd. and Another v. Jahan Khan, (2007) 10 SCC 88, wherein the court has held that there is no gainsaying that in a given case, the High Court may not entertain a writ petition under Article 226 of the Constitution on the ground of availability of an alternative remedy, but the said rule cannot be said to be of universal application. The rule of exclusion of writ jurisdiction due to availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of the availability of an alternative remedy, a writ court may still exercise its discretionary jurisdiction of judicial review, in at least three contingencies, namely, (i) whe....
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....be entertained in view of the law laid down by the Supreme Court in various decisions. It was submitted that the grievance of the petitioner is that the adjudicating authority has not duly complied with the order passed by the Commissioner (Appeals), for this purpose, it is not necessary to approach this court and that such directions could also be obtained by filing an appeal before the Commissioner (Appeals). On the merits of the impugned order, the learned counsel referred to the directions issued by the Commissioner (Appeals) in the order dated 12th July, 2006, to submit that the same stand substantially complied with. The attention of the court was invited to the impugned order and more particularly, paragraph 22 thereof, to submit that the petitioner was duly afforded an opportunity of hearing and it was only after hearing the learned advocate for the petitioner, that the adjudicating authority has passed the impugned order. It was submitted that the submissions advanced by the learned counsel for the petitioner have been duly considered by the adjudicating authority who has given reasons for not accepting the request of the petitioner for cross-examination of the Chief Chemi....
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....t observed that the assessee did not carry the matter in appeal to the Commissioner but straightway proceeded with the writ petition which was allowed by the High Court. The court was of the view that in the facts of that case, the approach of the High Court was wrong and that the High Court should not have interfered with the order and should have directed the assessee to exhaust the statutory remedy. It was, accordingly, urged that there being an efficacious alternative remedy available by way of appeal before the Commissioner (Appeals), this court ought not to interfere in exercise of powers under Article 226 of the Constitution of India. 8. In rejoinder, Mr. Paresh Dave, learned advocate for the petitioners invited attention to the impugned order to submit that after the directions were issued to the petitioner to file its response to the letter dated 18th January, 2015, no opportunity to file a reply on merits had been given. It was pointed out that in June, 2014, when the written submissions were furnished, the petitioners could not have given any reply till further directions were carried out. It was submitted that as per the directions issued by the Commissioner (Appeals....
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....thority once again decided the case without following the directions of the Commissioner (Appeals) and confirmed the duty demand. By an order dated 17th October, 2012, the Commissioner (Appeals) dismissed the appeals preferred by the petitioner against the order passed by the adjudicating authority. Against the order of Commissioner (Appeals), the petitioner went in appeal to the Tribunal which, by an order dated 15th January, 2014, remanded the matter to the adjudicating authority with the following observations: "5.1 As the issue involved lies in a narrow compass, therefore, after allowing the stay application the appeal itself is taken up for disposal. It is clear from the earlier order dt. 12.07.2006 passed by the first appellate authority that it was directed that the lower authorities will send two conflicting test reports to Chief Chemist, Central Revenue Laboratory, New Delhi for his opinion alongwith the defence of the appellant and that any adverse report of the Chief Chemist received should also be made available to the appellant. This order dt. 12.07.2006 has not been appealed against by the Revenue and has become final. However lower authorities at this stage ....
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....ed by the Commissioner (Appeals) have been to send to the Chief Chemist our defence that the item was not activated; and this direction was with reference to the permission allowed to us to produce the parameter/reports which would substantiate our claim that item manufactured by us was not activated. Now, we have submitted on record reports of two independent agencies viz. IIT, Mumbai and also Vaibhav Enviro Consultant of Ahmedabad in support of our claim that the item manufactured by us was not activated. We have also submitted detailed notes and replies in support of our claim that the item was not activated. But, our defence and the reports of IIT, Mumbai and Vaibhav Enviro Consultant do not appear to have been sent to the Chief Chemist, CRCL along with two reports of Chemical Examiners of Vadodara Laboratory. There is no reference In the letter dated 25.02.2015 sent by the Director, CRCL to the reports of above referred two independent agencies and also to our defence replies and submissions; but the only reference in this letter of the Director CRCL is to two different test reports from Central Excise and Customs Laboratory, Vadodara. 3. Therefore, we request you to ....
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....end two conflicting reports for your opinion. In addition, the defense reply dated 25.11.2011 along with its Annexure is also enclosed for your ready reference. 14. By a communication dated 23rd March, 2015, the petitioner submitted its comments on the letter dated 19th January, 2015 raising various objections and requesting the adjudicating authority to send to the Chief Chemist the report of the IIT, Bombay and Vaibhav Enviro Consultant with specific request to the Chief Chemist to state whether the parameters considered by these two esteemed bodies indicate that Bleach- 9 was activated earth. The petitioner also submitted that after a report/opinion is received from the Chief Chemist, CRCL in this regard, it may have to cross-examine him in case it was found that the opinion/report was still not proper and adequate, or that the parameters of the product and natural clay and also the reports/opinions of IIT, Bombay and Vaibhav Enviro Consultant, Ahmedabad were not considered properly, and if the report of the Chief Chemist was at variance with the report of the above referred two esteemed bodies on chemical analysis. The petitioner also requested for a personal hearing before ....
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....s in the ultimate outcome of these proceedings would be the report of the Chief Chemist. The record further reveals that the report of the Chief Chemist is adverse to the petitioner. It is further the case of the petitioner that the material furnished by it has not been considered at the time of preparing such report. Under the circumstances, it cannot be said that the petitioner was not justified in seeking to cross-examine the Chief Chemist, which opportunity has been denied by the adjudicating authority under the specious plea that the petitioner does not want to pay the excise duty. 18. At this juncture, reference may be made to the following decisions:- 18.1 In Lachhman Das, Tobacco Dealers v. Union of India, (supra), the Delhi High Court held thus:- "4. The main attack of the learned Counsel was based on denial of natural justice as discussed in the earlier part of the judgment. In my opinion, denial of an opportunity to examine the Chemical Examiner constitutes such violation of natural justice as will entail the setting aside of the impugned orders. The petitioner was entitled to examine the Chemical Examiner to find out the basis of his report and also the t....
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....pugned order and request the adjudicating authority to pass a separate order on the petitioners' application/request letter for granting crossexamination of the named witnesses. We are conscious that the Commissioner has already decided such an issue, however, since we are quashing the order, this part of the order would also not survive and hence, the requirement of a fresh order. We are informed that the same officer continues to hold the office of the Commissioner of Customs & Central Excise, Surat-II. It would therefore, be not necessary to separately hear the petition once again before passing any such order. This would, however, not preclude the Commissioner from requiring the petitioners to show relevance for seeking cross-examination of the witnesses." 18.3 The Supreme Court in the case of Ayaaubkhan Noorkhan Pathan v. State of Maharashtra and others, (2013) 4 SCC 465, has held thus:- "24. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Waishampayan held that the rules of natural justice require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opp....
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....ent grievance raised by him, stating that no opportunity of cross-examination was provided to him, specially when the same was not requested, and there was no dispute regarding the veracity of the statement. (See also Union of India v. P.K. Roy and Channabasappa Basappa Happali v. State of Mysore.) In Transmission Corpn. of A.P. Ltd. v. Sri Rama Krishna Rice Mill, this Court held: "9. In order to establish that the cross-examination is necessary, the consumer has to make out a case for the same. Merely stating that the statement of an officer is being utilised for the purpose of adjudication would not be sufficient in all cases. If an application is made requesting for grant of an opportunity to cross-examine any official, the same has to be considered by the adjudicating authority who shall have to either grant the request or pass a reasoned order if he chooses to reject the application. In that event an adjudication being concluded, it shall be certainly open to the consumer to establish before the appellate authority as to how he has been prejudiced by the refusal to grant an opportunity to cross-examine any official." 28. The meaning of providing a reasonable ....
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....reme Court after referring to various authorities in this regard, has held that if an inferior court or Tribunal at first instance acts wholly without jurisdiction or patently in excess of jurisdiction, or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice, and all accepted rules or procedure and which offends the superior court's sense of fair play, the superior court may quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the court or the Tribunal at first instance, even if an appeal to another inferior court or Tribunal was available and recourse was not had to it. In C.I.T. v. Chhabil Dass Agarwal (supra) on which reliance had been placed by the learned counsel for the respondent, the Supreme Court held thus:- "15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, o....
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....rameters was correct or not. A request was also made to request the Chief Chemist, CRCL to specifically state whether there was any "steam activation" in respect of Bleach-9, that is to say, whether any activation was brought about by applying steam/heat to natural clay because the specific case of the revenue while passing two adjudication orders previously had been that the petitioner had applied steam and Bleach-9 was activated earth obtained by steam activation. The petitioner also requested that it be conveyed to the Chief Chemist, CRCL not to be guided by literature like Indian Minerals Year Book and IS 6186-1971 in view of the revenue's specific case against them about steam activation and to confine its report/opinion only to the issue whether on consideration of parameters of natural clay and Bleach-9 could it be said that Bleach-9 was activated earth, because it is the specific direction of the Commissioner (Appeals) at para 8 of the Order-in-Original dated 12th July, 2006. The petitioner had further stated that after a report/opinion is received from the Chief Chemist, CRCL in this regard, they may have to crossexamine him in case it was found that the opinion/report....
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....es not want to pay central excise duties. The adjudicating authority has further recorded that over and above, the assessee still wants to cross-examine the Chief Chemist, as in their opinion, the report sent is not proper and has found that this is nothing but an attempt on the part of the assessee to keep themselves away from the liability to pay central excise duty and has proceeded to confirm the payment of duty. Thus, the request of the petitioner to refer the matter to the Chief Chemist to submit a report keeping in view the parameters as referred to hereinabove as well as the request to cross-examine the Chief Chemist has been turned down on the ground that it was an attempt to evade the liability to pay central excise duty and the request for personal hearing has also been ignored. As discussed hereinabove, nongrant of opportunity of cross-examination is violative of the principles of natural justice. Moreover, no opportunity of personal hearing has been granted despite specific request having been made in that regard. As rightly submitted by the learned counsel for the petitioner, if the adjudicating authority was of the view that the actions taken were in accordance with ....
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....g. The department had then classified the product under chapter heading 3802 of CETA 1985 and confirmed the demand against the said assessee. The matter is subjudice and CESTAT, Ahmedabad has directed to send two conflicting reports for your opinion. In addition, the defense reply dated 25.11.2011 along with its Annexure is also enclosed for your ready reference. Since it is an old issue, urgent action in the matter will be highly appreciated." Reading the aforesaid communication in juxtaposition with the directions issued by the Commissioner (Appeals) in the order dated 12th July, 2006, makes it amply clear that while opinion of the Chief Chemist has been called for pursuant to the directions issued by the Commissioner (Appeals), the true purport of the directions issued by the Commissioner (Appeals) has not been conveyed to the Chief Chemist. Under the circumstances, the Chief Chemist has not applied his mind to the matter in the light of the directions issued by the Commissioner (Appeals). The adjudicating authority, having regard to the directions issued by the Commissioner (Appeals) was required to furnish the operative part of the order passed by the Commissioner (Appeals)....