1.The plaintiff's suit having been decreed by the lower appellate court holding the order of the Assistant Collector, Central Excise, dated May 31, 1962, as illegal and inoperative and restraining the Union of India from recovering the fine and duty imposed and for direction for return of the confiscated goods, the Union of India has filed this appeal.
2. There is no dispute that under the transfer permit, Ex. 38, whose copy and counterfoil are at Ex. Now. 44 and 60, the plaintiff got the goods in question from one A. J. Chaudhari. The said permit was for Chpadia Patti with Kandi. Even when the panchnama was made, there was no dispute that the goods found with the plaintiff were in conformity with this permit. There is equally no dispute that the permit is issued by the competent authority and it showed the duty, which was paid for the goods at Rs. 1.20. There is further no dispute that the duty for Chpadia Patti on that date was Rs. 1.20. Because there is a finding of fact, which cannot be challenged in this appeal. Therefore, on the said footing, it is obvious that, so far as the plaintiff is concerned, he has received the goods under a valid permit granted by a competent authority showing that proper duty has been paid. On that footing the plaintiff could never be held liable for contravention of rule 40 of the Excise Rules, which runs as under :-
'Except as provided in the proviso to sub-rule (1) of rule 32 and in Rule 171, no wholesale purchase of unmanufactured tobacco for the purpose of trade or manufacture and no wholesale purchaser of other unmanufactured products from a curer shall receive into any part of his premises or into his custody or possession, any unmanufactured tobacco or other unmanufactured products, imported from a foreign country, otherwise than under a valid permit granted by an officer showing that the proper duty has been paid; and every such wholesale purchaser who receives or has in his custody or possession any such goods, in contravention of this rule, shall in respect of every such offence, be liable to pay the duty leviable on such goods, and to a penalty which may extend to two thousand rupees and the goods shall be liable to confiscation.'
3. The prohibition under rule 40 is that the plaintiff cannot receive these goods into his premises otherwise than under a valid permit granted by an officer showing that the proper duty had been paid. Once such a permit by a competent officer showing proper duty payment was obtained by the plaintiff, there was no contravention of rule-40. Therefore, the latter part of rule 40 that every such wholesale purchaser who receives or has in his custody or possession any such goods, in contravention of the rule, shall suffer the penalty and be laible for confiscation, cannot apply.
4. Mr. Nanavati, however, vehemently argued that, there being the short duty paid, whoever has such goods, on which no proper duty is paid, must suffer the penalty and must be held liable for consequences. Whether the duty has not been properly paid is itself the presumption of the Department. The department had certified, by issuing the permit, that proper duty at Rs. 1.20, which was applicable in this case, had been paid. And, if the plaintiff obtained the goods, under such a valid permit, he does not contravene rule 40. Mr. Nanavati pointed out that Kantilal Patel, who had obtained the original permit, Ex. 72, on January 11, 1962, had only 4 bags of Chpadi Patti, while the rest of the goods were of Stalks Kandi and Stalks Dust. Therefore, the goods, which attracted lower duty, had been substituted, when ultimately they came to the plaintiff. The substitution must be by A. J. Chaudhary, as found by the Department in its order. We need not go into this aspect, because the material question, which is to be decided, is whether rule 40 was attracted, so far as the plaintiff was concerned. The plaintiff got the goods under a valid permit. If the authority wrongly certified payment of duty, the authority, for their fault, cannot hold the plaintiff liable, if, according to the Department, the plaintiff was innocent. In any event, rule 40 was wrongly invoked by the Department. Therefore, the lower appellate Court was right in decreeing the suit. No ground has been made out justifying interference in this appeal. This appeal, therefore, fails and is dismissed with costs.