The Commissioner of Central Excise vs Cable Corporation of India Ltd.

V.C. Daga, J.—Heard.

Perused appeal.

This appeal is directed against the order dated 21st September, 2004 passed by the Customs, Excise & Service Tax Appellate Tribunal, Mumbai ("CESTAT" for short) whereby and whereunder the order of the Commissioner of Central Excise (Appeals) has been set aside whereby and whereunder the order rejecting the refund claims was confirmed.

THE QUESTION OF LAW:

The appeal was admitted on 16th January, 2006 to consider the following substantial questions of law:

Whether the CESTAT was correct in allowing the appeal whereas central excise duty is recoverable on declared assessable value as per price lists under Rule 173C in accordance with Section 4 of Central Excise Act 1944 prevailing during the relevant period and no on other assessable value as per respondents free will.

Whether the CESTAT was correct in citing and relying on the decision of the Tribunal in the case of GKN Drive Shafts Inds. Ltd. v. CCE Delhi reported in 2004(62) RLT 389 in as much as the above issue for the period covered is 1998-99 when no price list was submitted?

SUBMISSIONS

At the outset, learned Counsel appearing for the appellant raised a contention contending that the impugned order is in breach of principles of natural justice for want of recording reasons in support of the order. He contends that, from the order, it is not possible as to why the reasoned orders of both authorities were set aside. He, thus, submits that before answering substantial questions of law framed by this Court, it is necessary to set aside the impugned order and restore the appeal to the file of the Tribunal with directions to the Tribunal to decide the appeal by a reasoned order following principles of natural justice.

On being asked, Mr. M.H. Patil fairly conceded to the submission made by the learned Counsel appearing for the Revenue and expressed his no-objection for setting aside the impugned order without examining its merits and/or demerits and prayed for remanding the matter back to the Tribunal for consideration afresh.

CONSIDERATION:

Having heard the Counsel appearing for the parties, the impugned order is liable to be quashed and set aside for want of reasons in support of the view taken by the Tribunal. The Tribunal is expected to know that the orders of the Tribunal are subject to judicial review by the High Court. The Tribunal is also expected to know that while reversing the findings of the lower authorities, it is necessary to deal with them and to record reasons as to why those findings need to be reversed. None of these requirements are followed by the Tribunal while passing the impugned order.

In State of West Bengal Vs. Atul Krishna Shaw and Another, , this Court observed that "giving of reasons is an essential element of administration of justice. A right to reasons is, therefore, an indispensable part of sound system of judicial review."

In State of Uttaranchal and Another Vs. Sunil Kumar Singh Negi, , this Court held as under:

Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before Court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made.

In Raj Kishore Jha Vs. State of Bihar and Others, , this Court observed as under:

Before we part with the case, we feel it necessary to indicate that non reasoned conclusions by appellate Courts are not appropriate, more so, when view of the lower Court are differed from. In case of concurrence, the need to again repeat reasons may not be there. It is not so in case of reversal. Reasons is the heartbeat of every conclusion. Without the same, it becomes lifeless.

In fact, "reasons are the links between the material, the foundation for these erection and the actual conclusions. They would also administer how the mind of the maker was activated and actuated and their rational nexus and synthesis with the facts considered and the conclusion reached." See: Krishna Swami Vs. Union of India and another, .

Therefore, the law on the issue can be summarized to the effect that, while deciding the case, Court is under an obligation to record reasons, however, brief, the same may be as it is a requirement of principles of natural justice. Non observance of the said principle would vitiate the judicial order.

Thus, in view of the above, the order impugned herein is liable to be quashed and set aside. The proceeding is remanded back to the Tribunal for consideration afresh. The Tribunal is expected to pass a reasoned order following principles of natural justice dealing with all contentions of the parties with expeditious despatch at any rate within three months from the date of receipt of copy of this order.

Questions of law are left open. In the result, appeal is allowed. No order as to costs.