Skip to content


Gadagotlu Sitaramaiah Vs. Collector of Central Excise, Hyderabad - Court Judgment

LegalCrystal Citation
SubjectExcise;Customs
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petn. No. 1001 of 1958
Judge
Reported inAIR1960AP294
ActsCentral Excise Act, 1944 - Sections 12, 35, 37, 37(1) and 37(2); Central Excise Rules, 1944 - Rule 215; Sea Customs Act - Sections 189
AppellantGadagotlu Sitaramaiah
RespondentCollector of Central Excise, Hyderabad
Appellant AdvocateP.A. Choudary and ;P. Venkayamma, Advs.
Respondent Advocate3rd Government Pleader
DispositionPetition dismissed
Excerpt:
.....of rule - sections 12 and 37 of central excises and salt act, 1944 and rule 215 of central excise rules, 1944 - validity of rule 215 challenged on ground that no notification was made as contemplated under section 12 of act - rule is enforceable as same was enacted exercising statutory power under section 37 (2) - noncompliance of section 12 is of no material consequence - rule valid. (ii) custom - right to appeal - section 189 of sea customs act, 1878 and section 35 of central excises and salt act, 1944 - condition of payment of duty under section 189 during pendency of appeal was challenged on ground that it takes away right to appeal - right to appeal is not absolute or unfettered - it is created by statute and is not inherent - there may be some limitations or restrictions on..........without reference to section 189 of the sea customs act, 1878 read with rule 215 of the central excise rules 1944. the facts relevant to the disposal of this petition are within a very brief compass.2. the petitioner is a trader in virginia tobacco under the central excise act 1944 and holds a licence (l. 5. 17/49) of chilakaluripet, narasarao-pet taluk, guntur district. on 1-3-1955, the petitioner issued a quantity of 1,11,635 lbs. of v. f. c. tobacco for processing, grading, stripping and re-bundling. on 21-9-1955 when the processing was completed the tobacco was found to weigh 1,05,584 lbs., only showing thereby a deficiency of 6,051 lbs., or about 5.4 per cent of the total quantity.3. by a notice dated 2-11-1957, the deputy collector, central excise, having appropriate.....
Judgment:
ORDER

Seshachalapati, J.

1. This is a petition under Article 226 of the Constitution of India for the issue of a Writ of Mandamus or any other appropriate writ directing the respondent to dispose of the appeal preferred against the order of the Deputy Collector, Central Excise, without reference to Section 189 of the Sea Customs Act, 1878 read with Rule 215 of the Central Excise Rules 1944. The facts relevant to the disposal of this petition are within a very brief compass.

2. The petitioner is a trader in Virginia tobacco under the Central Excise Act 1944 and holds a licence (L. 5. 17/49) of Chilakaluripet, Narasarao-pet Taluk, Guntur District. On 1-3-1955, the petitioner issued a quantity of 1,11,635 lbs. of V. F. C. Tobacco for processing, grading, stripping and re-bundling. On 21-9-1955 when the processing was completed the tobacco was found to weigh 1,05,584 lbs., only showing thereby a deficiency of 6,051 lbs., or about 5.4 per cent of the total quantity.

3. By a notice dated 2-11-1957, the Deputy Collector, Central Excise, having appropriate jurisdiction required the petitioner to show cause as to why the duty should not be demanded from him in terms of the bond executed by him under Rule 140 of the Central Excise Rules with respect to the quantity of 6,051 lbs., of tobacco found deficient. The petitioner in his reply dated 30-11-1957 stated that there was a loss of only 3,619 lbs., due to natural causes and that the balance of 2,432 lbs., represent the weight of the twine obtained during the processing operations. He, therefore, requested that the Department may admit the loss of 3,619 lbs., due to natural causes and offered to produce his warehouse register for perusal.

4. The Department examined the ware house registers, Part II and Part III and found that there was actually a loss of 6,051 lbs, of tobacco out of which the loss of only 3,619 lbs., was due to natural causes. The explanation of the petitioner that 2,432 lbs., represent the weight of the twine was found unacceptable. Accordingly, by an order dated 10-5-1958, the Deputy Collector, demanded from the petitioner a sum of Rs. 2,432/- at rupee ope. per pound on the quantity of 2,432 lbs., of tobacco not satisfactorily accounted for in terms of B-4, bond executed by him.

The petitioner preferred an appeal to the Collector of Central Excise, Hyderabad, on 11-8-1958 raising various grounds. By a communication dated 24-8-1958 the Collector of Central Excise, Hyderabad called upon the petitioner to deposit within 15 days from the date of the receipt of that communication the sum of Rs. 2,432/- adjudged to be payable by the petitioner in and by the order of the Deputy Collector under appeal, and that it he failed to do so, the appeal would be dismissed, for non-compliance with the provisions of Section 189 of the Sea Customs Act.

5. The deposit was obviously not made, but instead this petition has been filed to direct the respondent to hear and dispose of the appeal without reference to the provisions of Rule 215 of the Central Excise Rules read with Section 189 of the Sea Customs Act.

6. A writ of Mandamus is a high prerogative writ which is in the nature of a command from the High Court directed to any person, any statutory authority or inferior court requiring to do or to forbear from doing any particular thing in exercise of what is in the nature of public duty. Before a suitor can succeed in obtaining a Writ of Mandamus from this Court, he must establish that he has an enforceable, legal right to compel a public authority to do a particular thing, which under law it is bound to do. In considering the question, whether the petitioner can ask this court to direct the respondent to hear the appeal without reference to Rule 215 of the Central Excise Rules, and Section 189 of the Sea Customs Act it would be necessary to notice a few statutory provisions.

7. Section 35 of the Central Excise Act which confers a right of appeal against the orders made under the Act is in these terms:

35. '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 adjusted 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'.

Section 12 of the Act states as follows :

'The Central Government may by notification in the Official Gazette, declare unit any of the provisions of the Sea Customs Act, 1878, relating to the levy of and exemption from customs duties, drawback of duty, warehousing, offences and penal-ties, confiscation, and procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, he applicable in regard to like matters in respect of the duties imposed by Section 3.'

Section 37 is in these terms:

'The Central Government may make rules to carry into effect the purposes of this Act.

(2) In particular, and without prejudice to the generality of the foregoing power, such rules may--(i) provide for the assessment and collection of duties of excise, the authorities by whom functions under this Act are to be discharged, the issue of notices requiring payment, the manner in which the dutyshall be payable and the recovery of duty not paid;xx xx xxauthorise the Central Board of Revenue or Collectors of Central Excise appointed for the purposeof this Act to provide, by written instructions, forsupplemental matters arising out of any rule madeby the Central Government under this section'.Section 189 of the Sea Customs Act reads as follows:

'Where the decision or order appealed against relates to any duty or penalty leviable in respect of any goods, the owner of such goods, if desirous of appealing against such decision or order, shall, pending the appeal, deposit in the hands of the Customs Collector at the port where the dispute arises the amount demanded by the officer passing such decision or order.

When delivery of such goods to the owner thereof is withheld merely by reason of such amount not being paid, the Customs Collector shall, upon such deposit being made, cause such goods to be delivered to such owner.

If upon any such appeal it is decided that the whole or any portion of such amount was not leviable in respect of such goods, the Customs Collector shall return such amount or portion (as the case may be) to the owner of such goods by demand by such owner'.

By a reference to Rule 215 read with Section 189 of the Sea Customs Act, it would appear that in demanding the deposit of the duty adjudged to be payable by the petitioner the respondent is acting in conformity with the above provisions of law. Mr. Choudary, the learned Counsel for the petitioner has challenged the correctness and legality of the procedure sought to he adopted by the respondent on various grounds.

8. The first contention urged is that this is not a case where the appellate authority could demand the payment of duty adjudged. Under Rule 140 when licences are granted to warehouses, it is open to the Collector to require the licensee to furnish a bond on the proper form with such surety or sufficient security, in such amount and under such conditions as he may deem fit. In this case such a bond in form Rule 4 was executed by the petitioner. In that bond the petitioner undertook to abide by all the provisions of the Central Excise Rules 1944.

If in the instant case it is argued, there had been an infringement of the rules, it would amount to an offence under Rule 151, in which case it was not only permissible but obligatory on the part of the departmental officials to enforce the terms of the bond under Rule 161(2) of the Central Excise Rules. In such circumstances, it is contended by Mr. Choudary that there can be no question of the Excise Collector demanding the payment of the full amount of the duty adjudged pending disposal of the appeal.

This argument, to my mind, is founded on a misapprehension. It is not the case of the petitioner that he had asked the Excise Collector to realise the duty by the enforcement of the bond. On the contrary, he has challenged the correctness and validity of that adjudication and has filed an appeal. When once he has filed an appeal under the Central Excise Rules the provisions relating to the appeal are attracted.

Further, this contention in the form in which it has been pressed upon me has not been raised by the petitioner at any time either in the memorandum of appeal that was filed before the Collector of Central Excise, or even in the affidavit filed in support of the present petition. The petitioners cannot now be permitted to raise a point which is not only belated, but entirely without substance.

9. It is next contended that Section 35 of the Central Excise Act 1944 confers upon a party aggrieved a full and unfettered right of appeal which could not be either abridged or whittled down by any notification under Section 12 or by the procedure prescribed under Rule 215. It is also argued that the right of appeal is a substantive right which could not be rendered illusory by prescribing one-lous and burdensome conditions which amount practically to the destruction of that very right.

10. I will now take up the contention of Mr. Choudary regarding Section 12. It is argued by him that the terms of Section 12 of the Central Excise Act in so far as they provide that the Central Government may declare that any of the provisions of the Sea Customs Act relating to the levy of customs duties and etc., and the procedure relating to offences and appeals shall, with such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, conter upon the Central Government an unqualified power to adapt the provisions of another law with such changes as they deem fit, and that it would amount to excessive delegation of legislative power. Assistance was sought to be derived for this contention on the observations of Bose J., in Rajanarain Singh v. Chairman, Patna Administration Committee, : [1955]1SCR290 .

11. After the arguments in the case were over Mr. Choudaiy asked for the case being posted for being spoken to and brought to my notice that us a matter of fact there was no notification by the Central Government under Section 12 of the Act on the relevant date. That fact is not denied by the learned Government Pleader. It seems to me, therefore, that I am relieved of the need to examine in any detail Mr. Choudary's contention as to how far Section 12 would amount to a delegation of legislative power beyond the permissible limits.

12. It is then contended by Mr. Choudary that Rule 215 of the Central Excise Rules is ultra vires. The argument is two fold (1) that the adaptation of the provisions of the Sea Customs Act would only be done by a notification under Section 12 in exercise of the express power conferred on the Central Government under that Section and not under the general rule making power.

It is argued that where there is a special provision pro tanto, it should prevail over a general provision on the principle of generalia spccialibus non derogant; (ii) that the adaptation and application of Section 189 of the Sea Customs Act is not comprehended by one of the enumerated subjects with respect to which the rules could be made under Section 37.

13. The contention that the application of Section 189 and other Sections of the Sea Customs Act could be made only by a notification under Section 12 and not by a rule under Section 37 is, to my mind, not sustainable. It is true that Section 12 does confer upon, the Central Government the power to declare the provisions oi the Sea Customs Act relating, among others, to offences and appeals with modifications, would apply to the duties imposed under the Central Excise Act.

But I am not prepared to accede to the contention that because of the power conferred on the Government under Section 12, Rule 2f5 is rendered not only otiose, but illegal. The real question is whether Rule 215 is validly enacted and is wtthin the scope of Section 37. If it is so the fact that there is no notification under Section 12 is not of any material consequence.

14. Even assuming that the rule could not have been made under Section 37 of the Act by reason of the provisions of Section 12, the rule is still referable to a statutory power. Before a rule is cut down, it would be necessary to see whether that rule has been made not only under the particular section under which it purports to have been made, but whether there is no power at all to make such a rule.

In Secy, of State v. Appa Rao, 45 Mud LJ 156: (AIR 1924 Mad 92) Krishnan J. had to consider a case where the Governor-in-Council framed certain rules under Section 303(2)(b) of the District Municipalities Act, when they should have been really made under Section 303(2)(c) of the Act. The argument was that the rule was made under a wrong provision and, therefore ultra vires. Krishnan J., held as follows :

'Before a rule framed by a rule snaking authority is declared ultra vires, the Court must be satisfied not only that it had no power to act under the power under which it purported to act, but also that it had no power at all under any law to so act. If power can be found elsewhere Irom the section quoted, the rules will be referred to that power and held not to be ultra vires'.

In the view he took, the learned Judge followed the principle of the decision of the Full Bench of the Madras High Court in Rajam Chetty v. Seshayya, ILR 18 Mad 236 (FB) and of the. Allahabad High Court in Queen Empress v. Ganga Ram, ILR 16 All 336 (FB). This decision of Krishnan J., was approved by a Bench of the Madras High Coutt in Thimma Reddi v. Secy. of State for India, 46 Mad LJ 60 at p. 63: (AIR 1924 Mad 523 at p. 526). The fact, therefore. Rule 215 was not made by means of a notification under Section 12, to my mind, is of little consequence, because the provision though in the form of a rule, is certainly referable to a statutory power,

15. It is next contended that even as a rule made under Section 37 of the Act, Rule 215 is ultra vires, for the reason that it cannot be brought in under clauses 1 to 20 of Section 37(2). There is no substance in this contention. As the language of Section 37 goes, the real foundation of the rule making authority is to be sought in Sub--section 1 and not in the enumerated clauses of Sub--section 2 which are only illustrative and by no means restrict or abridge the amplitude or the generality of the power confided under Sub--section (1). In Emperor v. Sib-nath Benerji, AIR. 1945 PC 156 at p. 160 the Privy Council held as follows:

'In the opinion of their Lordships, the function of Sub--section (2) is merely an illustrative one; the rule, making power is conferred by Sub--section (1) and 'the rules' which are referred to in the opening sentence of Sub-section (2) arc the rules which are authorised by, and made under, Sub--section (1); the provisions of Sub-section (2) are not restrictive of Sub--section (1) as indeed is expressly stated by the words 'without prejudice to the generality of the powers' conferred by Sub--section (1).'

The principle of this decision has been affirmed by the Supreme Court in Santosh Kumar Jain v. State : 1951CriLJ757 . 1 therefore, hold that Rule 215 is by no means ultra vires of the rule making power of the Government.

16. It is then contended that even it the rule is valid and the induction of Section 189 of the Sea Customs Act to proceedings under the Central Excise Act and the rules is permissible, Section 189 of the Sea Customs Act has no application to the instant case. It is argued that Section 189 of the Sea Customs Act, in its context, refers to cases where there had been a confiscation or withholding of such goods, in cases where there is no security bond which could be -enforced.

This contention, to my mind, is wholly untenable. What is inducted by Rule 215 is the procedure with regard to the deposit of the duty pending the appeal. It does not in fact and cannot in law mean that Section 189 can only be applied in cases where there has been a confiscation or withholding of the goods as provided for in the Sea Customs Act.

17. It is then argued that the adaption of Rule 189 of the Sea Customs Act to the appeals under the Central Excise Act destroys the unfettered right of appeal conferred under Section 35. It is contended that the right of appeal is a substantive right which could not be frustrated and nullified by a rule. Reliance is placed on the decision of the Supreme Court in Hoosein Kasam Dada v. State of Madhya Pradesh, : 1983(13)ELT1277(SC) , in support of the contention that a right of appeal is not merely a matter of procedure, but is a substantive right. The observation of the Supreme Court must be understood in the context of the facts of that case.

There the question was whether a right of appeal which had vested in a party under the Central Provinces and Berar Sales Tax Act 1947 can be destroyed by a subsequent amendment of that Act. Following the principle of the Privy Council in Colonial Sugar Refining Co. Ltd. v. Irving, 1905 AC 369 their Lordships of the Supreme Court held that the pre-existing light of appeal which had vested in the appellants on the date of the passing of an enactment cannot be abridged or nullified by the provisions of a subsequent enactment, unless, they are expressly or by necessary implication made retrospective in their operation. It is in that context that their Lordships of the Judicial Committee and the Supreme Court observed that the right of appeal is not merely one of procedure.

18. But that is entirely different Irom a ease where a right of appeal is accompanied by certain limitations and conditions. The right of appeal is not an inherent right. It is not something in the nature of a fundamental right. It is but the creature of a statute, In Sandback Charily Trustees v. North Staffordshire Rly. Co. (1877) 3 QBD 1 Lord Brain well stated as follows:

'An appeal does not exist in the nature of things. A right of appeal from any decision of any tribunal must be given by express enactment.'

In Rangoon Botatoung Co. Ltd. v. Collector, Ran-goon, ILR 40 CaL 21 (PC) Lord Macnaghlen speaking for the Privy Council followed the observations of Lord Bramwcll in (1877) 3 QBD 1 and held that a right of appeal can only be conferred by a statute and that was not a matter of implication.

It is open to the legislature not to provide for a right of appeal at all or to confer only a special and limited right of appeal as in the case before the Privy Council arising from the Land Acquisition Act. It, therefore, seems to me that there is nothing intrinsically illegal in a rule which prescribes certain limitations to the right of appeal.

19. Further the demand for the payment of the entire duty cannot be construed as a condition of filing the appeal. As pointed out by Satayanarayana Raju J. in Jagannadham Naidu v. Supdt. of Central Excise, W.P. No 1022 of 1957 all that Section 189 of the Sea Customs Act says is that the duty should be paid during the pendency of the appeal and not as a condition precedent to its fiting.

20. By way of analogy a reference to Order 41, Rule 10 C.P.C. may well be made. Under that provision the appellate court may in its discretion either before the respondent is called upon to appear and answer or afterwards on the application of the respondent demand from the appellant security for thecosts of appeal or of the original suit or both. Itcannot be contended that such a rule is destructiveof the light of appeal.

We can also imagine certain other limitations on what is called the unfettered right of appeal; such for example is the law of limitation and the requirement to pay a particular court tee. There is therefore, nothing like an absolute inherent, and unfettered right of appeal. It is open to the very statute that confers the right of appeal to hedge it with conditions and when one invokes the right he must also submit to the conditions attaching tothat right.

21. It is argued that the condition requiring the payment of the entire duty pending the appealis so burdensome and onerous that it renders the right of appeal ineifective and illusory. A reference is made to the decision of the Supreme Court in Himmatlal Harilal v. State of Madhya Pradesh : [1954]1SCR1122 . As pointed out by Wanchoo. C. J. in jethmal Ramswaroop v State in the case Before their Lordships of the Supreme Court, the fundamental rights of a party were affected and there was no question to recourse to an alternative remedy prescribed under the statute.

That being so, the observation as to the natureof the alternative remedy were really obiter. In Baroness Wilhelmine Von Maltazan v. Collector of Customs 1957-2 Andh WR 207: (AIR 1958 Andh Pra 122) there are similar observations as to the burdensome character of the provisions of the Sea Customs Act. In that case the decision was rendered actually on the merits and the observations as to Section 189 must, if I may say with respect, be deemed as merely obiter.

22. On a careful consideration of all the contentions raised and argued before me, I am unable to hold that this is a case in which the discretionary jurisdiction of this Court could be exercised ingranting the Writ of Mandamus in the manner prayed for.

23. In the result, the petition fails and is dismissed with costs. Advocates fee Rs. 100/-.


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