Skip to content


Veerabhadraswara Rice and Oil Mill, 1-4 No. 169/56, Vizianagaram City Represented by Power of Attorney Holder Ramniwas Sharma of Sharma and Co. Vs. Collector, Central Excise, Andhra Pradesh, Hyderabad - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. No. 51 of 1959
Judge
Reported inAIR1961AP350
ActsConstitution of India - Articles 19(1) and 226; Central Excise Rules, 1944 - Rules 213 and 225; Central Excises Act, 1944 - Sections 35
AppellantVeerabhadraswara Rice and Oil Mill, 1-4 No. 169/56, Vizianagaram City Represented by Power of Attorn
RespondentCollector, Central Excise, Andhra Pradesh, Hyderabad
Appellant AdvocateP. Kodandaramayya, Adv.
Respondent Advocate3rd Government Pleader
DispositionPetition dismissed
Excerpt:
.....considered full case in length - order pronounced depending upon such facts - such order perfect - oral hearing by appellate authority not mandatory - held, provisions of constitution and act not violated. - - , for failure to maintain r. 2. that the failure to give the petitioner the certified copy of the statement of satyanarayana pantulu is violative of principles of natural justice; in that the petitioner was deprived of presenting his case effectively. 14. the learned government pleader contended that the order passed by the appellate authority contains enough reasons for his decision, that the petitioner cannot complain of any failure of natural justice as firstly, there are no rules with respect to the hearing of the appeals which were violated and secondly the failure to..........violated the statutory duty cast upon him to give the petitioner in person or through counsel an oral hearing. 14. the learned government pleader contended that the order passed by the appellate authority contains enough reasons for his decision, that the petitioner cannot complain of any failure of natural justice as firstly, there are no rules with respect to the hearing of the appeals which were violated and secondly the failure to furnish the certified copy of satyanarayana pantulu's statement, did not as a matter of fact cause any prejudice to the petitioner. it is also contended by him that the assumption of the petitioner's counsel that no punitive action can be taken against the licensee unless the derelictions were accompanied by a mens rea of the licensee is unsound in.....
Judgment:
ORDER

Seshachelapati, J.

1. This is a petition under Article 226 of the Constitution of India to quash the order ot the Collector, Central Excise, Hyderabad dated 24-8-1958 passed in appeal filed by the petitioner before him.

2. The facts necessary and relevant for the disposal of this petition are briefly these:- The petitioner is a power of attorney holder of Sharaun and Co., who were the lessees of Veerabhadreswara Rice and Groundnut Oil Mills. The lessees hold a central excise licence in form L-4 for the manufacture of vegetable non-essential oils. Under Rule 47 of the Central Excise Rules, the manufacturer has to provide a store room as place of storage of the oils for the production of which he holds an appropriate licence. The petitioner's firm duly declared a portion of the premises of Veerabhadreswara Rice Mill as place of storage within the meaning of Rule 47 of the Central Excise Rules.

3. On 20-2-1957 the Inspector of Central Excise is stated to have made a surprise visit to the premises. He found that 12 tins of nigar oil weighing 4251/2 Ibs and 12 tins of groundnut oil weighing 420 Ids were kept in a room which was neither declared nor approved as a store room for the storage of the oil as required under Rule 47(3). Thereupon the further investigation of the case was taken over by the Deputy Superintendent of: Central Excise. The Deputy Superintendent of Central Excise visited the premises in the course of his investigation and seized the 24 tins in the unapproved premises.

A mahzar was prepared attesting the fact of seizure. The Deputy Superintendent in the course of further search of the premises found in a room occupied by the clerk of the petitioner, one Seetharama Sarma, two private account books relating to the purchase of oil seeds, manufacture of oil in the Mill and the disposal of that oil. Under the Excise rules, the licence-holder has to maintain certain statutory accounts including Ex. B-4 registers. The private accounts discovered in Seetharama Sarma's room were compared with thc statutory accounts lawfully maintained by the petitioner's firm. It was found that the two sets of accounts did not tally and that between 1-3-1956 and 8-2-57 actually 216 tons and 1405 Ibs of vegetable non-essential oils were removed from the premises of the mill; whereas thc regular statutory accounts only showed that 156 tons and 810 Ibs were removed for sale after paying the necessary excise duty. There was thus a prima facie case that 60 tons and 593 Ibs of groundnut oils and nigar oils were removed from the declared premises otherwise than as provided under the Central Excise Rules.

4. At the time of this enquiry, a statement from Seetharama Sarma, the clerk was taken. He stated that the oil found in his rooms was actually stolen by him and that he was disposing of the oil without the knowledge of his master, the licensee and that the sale proceeds were being appropriated by him. He stared further that he alone was responsible for not entering the 60 tons in the regular accounts. A statement was also recorded from the petitioner.

In that he stated that he was not aware of the derelictions of his lerk though he admitted that being the licensee, it was his responsibility not to allow such misdeeds even by the subordinates. He requested that his case may be sympathetically considered and that as he was prepared to pay the duty on the deficiency to the Government, no penal action need be taken against him. A Statement was also taken by one M. Satyanavayana Fantulu who is described as the Manager of the Rice Mill. (5) On 20-5-1957 the 'Collector of Central Excise, Hyderabad gave three notices to the petitioner (1) for contravention of Rule 47(3) of the Central Excise Rules; (2), for the contravention of Rule 9(1) of the Central Excise Rules and (3) for the contravention of Rule 226 of the Central Excise Rules. The petitioner was asked to show cause why appropriate action should not be taken against him. In the notices he was also asked to produce at the time of showing cause all the evidence upon which the petitioner's firm intended to rely in support of its defence. The petitioner's firm was further asked to state in the written statements whether it would wish to be heard in person before the case is adjudged.

6. The petitioner submitted a written explanation on 3-6-57 denying the contravention or the Rules referred to in the three notices. In the main his defence was that he placed entire reliance on Seetharama Sarma and that he was absolutely unaware of either the theft of oil by Seetharama Sarma or his keeping false accounts. He-stated in the explanation that he relied upon the following materials which were already in the possession of the Department in support of his explanation.

'1. The statement given by Seetharama Sarma and recorded in February 1957 after the said inspection by your Central Excise Authorities in which he confessed the truth of all my abovesaid submissions.

(2) The account books bearing the regular endorsements made by the local Central Excise Inspecting Authorities which prove that there were never in existence any unaccounted goods in the said Mill premises. Finally he stated that he did not wish to be heard in person and that his written explanation may be accepted'.

(7) By an order dated 2-9-1957 the Deputy Collector of Central Excise passed the following orders:

1. Confiscating under Rule 210, 24 tins of oil or in lieu thereof the payment of fine of Rs. 100/-in addition to the duty payable.

2. For the contravention of Rule 9(2) a penalty of Rs. 600/- for the removal of 60 tons and 595 Ibs of nigar and groundnut oils together with a sum of Rs. 4218-10-0 being the duty payable.

3. For contravention of Rule 226 i.e., for failure to maintain R. C. I. and E. B. 4 properly, a penalty of Rs. 150/-.

8. The petitioner had already made certain advance payments and certain funds belonging to him were in deposit with the Central Excise Authorities. The duty, fines and penalties imposed and levied on the petitioner's firm were directed to be adjusted from out of the advance deposits. When so adjusted a sum of Rs. 20-12-0 was found to be due to the petitioner which was directed to be refunded to him. By reason of that adjustment, the excise duty levied, the fines and penalties imposed upon the petitioner must be deemed to have been fully realised.

9. The petitioner was obviously aggrieved by these orders of the imposition of duty and the levy of fines and penalty. Intending to file an appeal under Section 35 of the Central Excise Act read with Rule 213, the petitioner requested the Appellate Authority, the Collector of Central Excise, Hyderabad to furnish him with certified copies o the depositions of Seetharama Sarma and Satyanarayana Pantulu. He was unformed that he should remit some fee which was duly remitted.

Eventually by a letter dated 11-12-1957 the petitioner was informed that only the statement of Seetharama Sarma could be given to him. The petitioner thereupon filed an appeal on 11-12-1957 with an additional statement dated 12-12-1957 that since the prescribed time for filing the appeal was due to expire, he was filing the appeal tentatively and that he was reserving the right for submitting additional grounds of appeal after the receipt of the certified copy of the other statement asked for by him.

10. On 28th February the petitioner was informed by the collector that whatever copies that could be furnished to him were already furnished and that if he chose, the petitioner might file the additional grounds of appeal within 10 days from the date of the receipt of that letter. On 7-3-1958 the petitioner submitted, the additional grounds stating inter alia that on the receipt of the statement of Satyanarayana Pantulu he would submit a further memorandum of grounds; and that even otherwise he was innocent and that he was not aware of either the stealing by his clerk or his manipulation of the accounts and that in law and justice, no vicarious liability could be fastened to him. In the circumstances of the case he prayed that his innocence might be affirmed and the duty, the penalty and the fines imposed upon him be set aside.

11. On 7-3-1958 the petitioner was informed that he was not entitled to the statement of Satyanarayana Pantulu as the evidence contained therein was not made use of either before issuing the show cause notice or subsequently while adjudicating the case. After the receipt of the communication dated 7-3-58 rejecting the petitioner's request for the copy of Satyanarayana Pantulu's statement, the petitioner filed another petition before the Appellate Authority, the Collector of Central Excise, Hyderabad requesting that Satyanarayana Pantulu's statement was necessary and essential for the purposes of this appeal and that the refusal to grant the copy of the statement amounted to denial ot justice.

12. Eventually by an order D/- 24-3-1958 the Collector rejected this appeal. It is this order passed in appeal that is assailed in this petition. Mr. Kodandaramayya in the course of an able argument has raised before me four principal contentions.

1. That the Order of the Collector is brief, laconic order. In other words it is not a speaking order.

2. That the failure to give the petitioner the certified copy of the statement of Satyanarayana Pantulu is violative of principles of natural justice; in that the petitioner was deprived of presenting his case effectively.

3. That the fastening of liability vicariously on the petitioner for offences and derelictions for which he was not responsible, is not only opposed to justice and equity but would operate to impinge upon his fundamental right to cany on any trade or profession guaranteed under Article 19(1)(g) of the Constitution. In that sense Rule 225 is challenged as being opposed to the provisions of part HI of the Constitution.

13. The last but by no means the least strenuous of the contentions was that the Collector violated the statutory duty cast upon him to give the petitioner in person or through counsel an oral hearing.

14. The learned Government Pleader contended that the order passed by the Appellate authority contains enough reasons for his decision, that the petitioner cannot complain of any failure of natural justice as firstly, there are no rules with respect to the hearing of the appeals which were violated and secondly the failure to furnish the certified copy of Satyanarayana Pantulu's statement, did not as a matter of fact cause any prejudice to the petitioner.

it is also contended by him that the assumption of the petitioner's counsel that no punitive action can be taken against the licensee unless the derelictions were accompanied by a mens rea of the licensee is unsound in principle and unsupported by authority. Therefore it is argued that there' as no substance at all in the contention that Rule 225 is an infraction of the fundamental right guaranteed under Article 19(1)(g) of the Constitution. Lastly it is urged that neither Section 35 of the Central Excises Act nor Rule 218 contemplate an oral hearing.

15. The Central Excises and Salt Act, 1944 and the Rules made thereunder are for providing for the law relating to the levy of the central duty of excise on goods and manufacture or production in certain parts of India and to salt. Under Section 37 a large number of rules have been made for carrying out the purposes of the Act. The various provisions of the Act and the Rules made thereunder are for the purpose of carrying out the purposes of the Act. These rules are made with particularity and precision and cover a variety of subjects and are to be read as if enacted in the Act.

16. The first objection of Mr. Kodanda-ramayya is that the order is not a speaking order, in Rex v. Northumberland Compensation Appeal Tribunal, Ex parte Shaw, 1951-1 K. B. 711, Lord Coddard C. J. pointed out that where the order of a Tribunal was a speaking order and the reasons given in that order in support of the decision were bad in law, a certiorari could be granted. Now the need of the speaking order in cases like this is that when from that order an appeal or revision is provided for, the appellate or the revisional authority may know upon what grounds the judgment impugned was rendered.

Can it be said that the order now in question of the Collector is not a speaking order in the sense that it is a peremptory decision without reference to the reasons that led up to it? I am unable to accept the contention of the learned counsel for the petitioner. The Collector has stated that the main case of the appellant is that the clerk who was managing the Mill, committed the alleged offences and that therefore it was not just to penalise him for the irregularities done by the clerk.

The main case put forward by the petitioner as to the injustice of holding him vicariously responsible was as a matter of fact considered by the Collector. It is true that the order of the Collector is brief. Brevity of the order does not mean that it is necessarily bad any mote than prolixity makes for soundness. The only question is whether the reasons have been given for the decision or not and I am, satisfied that the Collector has given reasons for the decision. There is no force therefore in the first contention of the learned counsel.

17. The next contention is that the Collector should have given him the certified copy of Satyana- rayana Panlulu's statement. It may be stated at once that there are no rules of procedure governing the hearing of appeals by the appropriate Authorities under the Central Excise Rules except Rule 215. There is no rule that at the time of the appeal ot before the filing of appeal, the petitioner (appellant) is entitled to ask for certified copies of statements that were recorded at the time of the oral enquiry.

But the objection is sought to be sustained not on the ground of violation of any statutory rule but on the infraction of principles of natural justice. It is argued by Mr. Kodandaramayya that denial of opportunity to defend is denial of justice; that it is not for the appellate authority or this court to consider what use the petitioner would have made of that document. The refusal per se it is contended is enough to constitute the violation of natural justice,

To a proposition so widely stated, I find it extremely difficult to assent. Whether in a case the refusal of a document has in fact caused prejudice or not, will depend upon the nature of the Tribunal, the character of the enquiry, the contents of the document asked for and all other relevant circumstances. Even in cases where there are certain statutory rules governing the procedure of enquiries, the mere violation of such rules will not give a party a cause of action, unless there has been, in consequence, prejudice caused (vide Joga Rao .v. State. 1956 Andh WR 97S: (AIR 1957 Andh Pra 197) and also Valayya Pantulu v. Govt. of Andhra, AIR 1958 Andh Pra 240.

Now, in this case what is the prejudice that She petitioner has suffered by his not getting the statement of Satyanarayana Pantulu? That evidence is obviously in his favour. Otherwise, it is extremely unlikely that he would have asked for a copy of the statement. Before the primary authority, the petitioner did not make any attempt either to ask for a certified copy of Satyanarayana Pantulu's statement or examine him orally, which he had a right to do, winch, however, he declined to exercise. In these circumstances, I am unable to hold that the failure to supply the certified copy of the statement of Satyanarayana Pantulu caused him (the petitioner) in the case such prejudice that I should held that the principles of natural justice have been violated in this case.

18. The third contention of Mr. Kodandaramiah is that the provision casting vicarious liability on the petitioner apart from being inequitable is destructive of his fundamental right guaranteed under Article 19(1)(g) of the Constitution. Rule 225 of the Central Excise Rules, which has been put in challenge in this petition is in these terms:

'If any excisable goods are, in contravention of any conditions prescribed in these rules, removed by any person from a place where they are produced, manufactured or warehoused, the purchaser or manufacturer or licencee or the keeper of the warehouse, shall be held responsible for such removal and shall be liable to be dealt with according to the provisions of the Act or the Rules as if he had removed the goods himself.'

19. Mr. Kodanda Ramiah states that a man cannot be penalized for a wrong which is not of his making, especially, when such penalization, would impinge upon one's right to carry on one's trade or business. To put the case in that form is, to my mind, to oversimplify it. When a licensee takes licence under the various forms prescribed, he undertakes certain commitments. It is on the faith of those representations that the licence is given to him. One of the conditions in the licence is that the licensee will abide by the Excise rules.

Now there is no question of any penal offence in this case, for what the petitioner has undertaken, and what the section provides is that, if certain contraventions of the rules are committed, the ultimate responsibility is that of the licensee himself. I am not able to perceive the relevency of one of the decisions and authorities, which Mr. Kodanda Ramiah presented upon me in this connection.

A similar question as to the vicarious responsibility of an owner for the acts of his servant or employee came up for consideration in connection with the Motor Vehicles Act in Gopala Krishna Motor Transport Co. Ltd., v. Secy. Regional Transport Authority, Krishna District, 1957-2 Andh WR.196 : (AIR 1957 Andh Pra 882). In that case there was overloading of the vehicle and one of the terms of the permit was therefore violated, The question was whether the owner of the bus, who was not present at the scene of, or at the time of, the overloading could be held liable and the permit be suspended. It was held by a Bench of this Court:

'The liability to suspend the permit does not depend upon the person who contravenes the conditions, but only it can be suspended on the contravention of the condition. The owner takes a permit subject to the condition and it is his duty to see that the condition is not contravened. If the condition is contravened, the permit is cancelled or suspended as the case may be, and it is immaterial whether the agent of the owner does it of his own accord or with the permission of the owner. The owner who has taken the permit subject to a condition cannot complain if the permit is suspended for breaking the condition.'

I am of the view that the principle of this decision is directly applicable to the present case for under the license, which had been granted to the petitioner, it was his duty to conform to the conditions of the licence; in other words, to see that there was no violation of the various excise rules. If there was infringement, petitioner cannot be allowed to say that he was not personally liable.

20. The last contention of Mr. Kodanda Ramiah is that, in any view of the matter, the order of the Collector should be set aside for the reason that the petitioner was not given an oral hearing. This allegation is not put in the affidavit with the same clarity and urgency with which it was pressed before me. But, in any case, since, it was a question of law, I permitted Mr. Kodanda Ramiah to address arguments. The learned counsel's contention is that the phraseology employed in Section 35 of the Act read with Rule 213 makes it clear that an oral hearing is contemplated. Section 35 is in these terms:

'Appeals:-(1) Any person deeming himself aggrieved by any decision or order passed by a Central Excise Officer under this Act or the rules made thereunder may, within three months from the date of such decision or order, appeal therefrom to the Central Board of Revenue, or, in such cases as the Central Government directs, to any Central Excise Officer not inferior in rank to an Assistant Collector of Central Excise and empowered in that behalf by the Central Government. Such authority or officer may thereupon make such further inquiry and pass such order as he thinks fit confirming, altering or annulling the decision or order appealed against:

Provided that no such order in appeal shall have the effect of subjecting any person to any greater confiscation or penalty than has been adjudged against him in the original decision or order. (2) Every order passed in appeal under this section shall, subject to the power of revision conferred by Section 36, be final.'

Rule 213 is as follows :

'Appeals : (1) An appeal against an order or decision of an officer not above the rank of a Deputy Collector shall lie--

(i) If the appeal is against an order or decision of a superintendent:

(a) Where there are Deputy Collectors, to the Deputy Collector to whom such superintendent is subordinate; and

(b) where there are no Deputy Collectors, to the Collector;

(ii) if the appeal is against an order or decision of an officer other than a superintendent, to the Collector to whom such officer is subordinate; Provided that if, between the date of the order or decision appealed against and the date of the hearing of the appeal the officer who passed the order or decision is promoted to he the Dy. Collector or the Collector to whom the appeal lies under the foregoing provisions, the appeal shall be heard:

(a) if such officer is promoted to be the Dy. Collector by the Collector;

(b) if such officer is promoted to be the Collector by the Central Board of Revenue.

(2) An appeal against an original order passed by a Collector shall lie to the Central Board of Revenue'

21. So far as the language of Section 35 goes there Is no indication that an oral enquiry is contemplated. The learned counsel draws my attention to the expression 'such further enquiry' as the appellate authority thinks fit. These words need not necessarily mean oral hearing of the appeal. The enquiry may be of many kinds. The appellate authority may ask for further explanation; It may send for papers and examine them. There is nothing to warrant that the expression 'such further enquiry' means and can only mean the oral enquiry.

22. Now, turning to the language of Rule 213 1 am unable also to assent to the contention of Mr. Kodanda Ramiah that the language postulates an oral hearing. Considerable emphasis was laid on the words 'the date of hearing' and 'shall be heard'. But in the setting in which they are employed, they simply provide for the disposal of the appeal by an authority who had been promoted from the rank of a Deputy Collector to that of a Collector. If it was the intention of the rule makers to confer upon an appellant the right of oral hearing, language more clear and peremptory should have been employed.

But assuming that these two expressions viz., 'the date of hearing' and 'the appeal shall be heard' are indicative of a possibility of an oral hearing, the question still remains whether such oral hearing is obligatory by the appellate authority. The expression 'shall be heard' has been construed by Courts of highest authority as not necessarily implying an oral hearing. (Vide Local Government Board v. Arjidge, 1915 A. C. 120, New Prakash Transport Co. Ltd.. v. New Suwarna Transport Co. Ltd., : [1957]1SCR98 and Nagendra Nath Bora v. Commissioner of Hills Division, : [1958]1SCR1240 .

23. The learned Government pleader has relied strongly upon a decision of Satyanarayana Raju, J. in Narasimha Raju v. State Transport Authority, 1938 Andh LT 627. The learned Judge there was considering the scope of Section 64 of the Motor Vehicles Act. There also the expression 'shall be heard' is used. The learned Judge held that the failure to give an oral hearing did not vitiate the proceedings, because in the absence of any such rule one cannot import preconceived ideas of natural justice.

Mr. Kodanda Ramiah has subjected this decision to the criticism that what the learned Judge was considering there was the scope of natural Justice and not whether the statutory obligation had been discharged or not. Assuming there is some force in this criticism there are other decisions which hold that the expression 'shall be heard' does not necessarily mean an oral hearing. The learned Government pleader invited my attention to a well-considered judgment of Mohd. Ansari, J. in W. P. No. 938 of 1953, where the learned Judge had to consider the scope of Section 5(a) of the Land Acquisition Act, wherein it is clearly stated that the order shall be passed after hearing the party in person or by his pleader.

Even in such a case, the learned Judge held, that an oral hearing is not an inexorable requirement. Mr. Kodanda Ramiah drew my attention to a number of cases of the several courts, which he says, have taken a contrary view with respect to Section 5(a) of the Land Acquisition Act. These decisions have been referred to in Justice Ansari's judgment, and 'I see no reason why I should differ from the conclusions arrived at by the learned Judge.

24. The petitioner, to my mind is labouring under imaginary grievances. At the time of enquiry before the primary authority, he could well have availed himself of an opportunity given for an oral hearing. He expressly declined to have any such hearing. The complaint now is that the appellate authority should have given him an oral hearing. It is not the case of the petitioner that he asked for an oral hearing and the appellate authority declined to give him one.

If be had desired an oral hearing it is quite possible that he might have been given one. When I said that it is not mandatory on the part of the appellate authority to give an oral hearing, I should not be understood as saying that it has no power to give an oral hearing. It has certainly the power to make such further enquiry as it thinks fit. Those words are of sufficient amplitude to take in an oral hearing also.

I have no doubt whatever, that in appropriate cases, the appellate authority may give an oral hearing. The petitioner, not having asked for an oral enquiry before the appellate authority and expressly declined to have the oral enquiry before the primary authority when he was asked whether he would desire to have one, cannot now complain that he has not been given an oral enquiry and mat, therefore, the terms of Section. 35 of the Act and Rule 213 of the Excise Rules have been violated.

Nor, is there any valid ground for making a complaint of not being given a copy of the statement of Satyanarayana Pantulu. He did not ask for it before the primary authority. In fact, in the written statement filed by him he expressly stated that he relied for his defence only on the statement of Seetbarama Sarma and the accounts that were seized by the authorities. The present complaint is, therefore clearly an after-thought.

25. In these circumstances, I am far from being persuaded that the petitioner is under the stress of any injustice that he need the assistance of this court under Article 226 of the Constitution.

26. The petition fails and is dismissed with costs. Advocate's fee Rs. 100/-.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //