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Ambalal Khodabhai and Co. Vs. R. Prasad, Collector of Central Excise and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtGujarat High Court
Decided On
Judge
Reported in(1970)11GLR765
AppellantAmbalal Khodabhai and Co.
RespondentR. Prasad, Collector of Central Excise and ors.
Cases Referred(Andheri Bus Service v. State of Bombay). In
Excerpt:
- - the plain reading of the rule clearly means that all goods warehoused, removed or concealed in contravention of this rule are liable to confiscation. the only possible construction therefore clearly indicates in this case that the authority to confiscate or to levy penalty is strictly confined to such goods in respect of which either of the offences mentioned in the rule has been committed. now applying the well-established principle of construction of statutory provisions, the only reasonable construction possible is that the penalty can be levied and confiscation can be made only in respect of unmanufured tobacco which is received into any part of the premises or into the custody or possession of a wholesale purchaser for the purpose of trade or manufacture otherwise than under a.....n.k. vakil, j.1. the petitioners in both these writ petitions are messers a.k. and co. who are tobacco merchants and doing business at vadod, district kaira. some common questions of law and facts arise in both and they can be dealt with together in this judgment. in these petitions, the petitioners challenge orders passed by the collector of central excise whereby certain goods of the petitioners are ordered to be confiscated and fine and penalties have been levied. they also challenge the respective orders passed by the central board of revenue in appeal filed against the orders of the collector as also the orders of the government rejecting the revision applications filed by the petitioners. it will be convenient first to refer to the facts of the special civil application no. 348 of.....
Judgment:

N.K. Vakil, J.

1. The petitioners in both these writ petitions are Messers A.K. and Co. who are tobacco merchants and doing business at Vadod, District Kaira. Some common questions of law and facts arise in both and they can be dealt with together in this judgment. In these petitions, the petitioners challenge orders passed by the Collector of Central Excise whereby certain goods of the petitioners are ordered to be confiscated and fine and penalties have been levied. They also challenge the respective orders passed by the Central Board of Revenue in appeal filed against the orders of the Collector as also the orders of the Government rejecting the Revision Applications filed by the petitioners. It will be convenient first to refer to the facts of the Special Civil Application No. 348 of 1965.

2. On the 6th of February 1960, Central Excise Officers went to the petitioners' non-duty paid warehouse at Vadod. The account books and the stocks of unmanufactured tobacco were checked. The officers found that the account entries showed that the following quantities of unmanufactured tobacco were shown to have been taken for processing into what is called 'Rava' (coarse powder);--

---------------------------------------------------------------------------------------Relevant entry No. No. of bags Weight (Net) Mds. Sts. Descriptionand date---------------------------------------------------------------------------------------(1) II/39 348 252-12 Biri Patti28-12-59(2) I/8 155 111-62 Biri Patti22-1-60(3) II48 86 64-20 Tobacco11-1-60 589 428-81 Rawa 18x-20(4) 1/17 22 16-20 Biri Patti(5) 1/18 136 102-00Total 158 118-20Grand Total 747 546-28 1/4

But on a check up on the spot, it was noticed that the last two lots viz. 158 bags weighing 118 Mds. and 20 srs. were not taken for processing. It was also noticed that out of 519 bags of the first three lots above, 847 bags (179 Mds. and 25 1/2 Srs.) of Biri Patti were in tact. So only 256 bags (184 Mds. and 2 3/4 Srs.) of Biri Patti and 86 bags (64 Mds., 20 Srs.) of Rawa were taken in actual processing at the time of the check up. It was found by the officers that the quantity of Rawa found there which was supposed to have been turned out from 184 Mds. 2 3/4 Srs. of Biri Patti was weighing 204 Mds. and 23 1/2 Srs. According to the authorities, such a huge quantity of Rawa can never be processed out of the above said quantity of Biri Patti. Further more it was noticed that there was no dust whatever to be found there which should have been there if Rawa was processed by crushing Biri Patti. They also did not find any remnant of Biri Patti if the process adopted was of serving. They also found that there were no markings or numbers on 8 packages out of the 158 bages of the 4th and the 5th lots mentioned hereabove. It was also found that 70 bags out of 158 bags of the 4th and the 5th lots were removed from the warehouse without payment of duty. The Officers, therefore, believed that the petitioners had contravened the provisions of Rules 151 and 223 of the Central Excise Rules, 1944 (Hereafter referred to as the Rules') and they therefore seized the goods of the petitioners of the following description, weight etc.:

----------------------------------------------------------------------------No. Of Weight Description MarksBags Mds. Srs-----------------------------------------------------------------------------247 179-251 Biri Patti Found in tact without any process267 244-31 Rawa loose Which was bagged later25 25-0 Rawa Filled in bags having no marks andnumbers with their mouths open539 448-29 Grand Total

Thereafter notice dated 21st June 1960 (Exhibit 'A') was given to the petitioners to show cause as to why

(i) penalties should not be imposed upon him under Rules 151 and 223 of the Central Excise Rules, 1944;

(ii) why seized tobacco in respect of which offences appear to have been committed, should not be confiscated under Rule 151 ibid; and

(iii) excise duty at the appropriate rate should not be demanded from them on the following quantities of tobacco removed from their warehouse otherwise than as provided by-the Central Excise Rules, 1955 Mds. Srs.(i) 184 2 3/4 Biri Patti,(ii) 10 12 Biri Patti,(iii) 42 00 Biri Patti.,

3. The petitioners then in reply to the show-cause notice gave their statement and put forward their case explaining the various allegations. We do not find it necessary to state the details thereof at this stage in the light of the contentions raised before us to which we shall refer in due course.

4. The petitioners were given full hearing thereafter. The Collector, however did not accept the explanation given and the contentions raised were rejected and the impugned order was passed giving full details and reasons. We may state here that the Collector inter alia passed the order of confiscation under Rule 151 of 539 bags of tobacco weighing 448 Mds. and 29 Srs. but the petitioners were given an option to pay a fine of Rs. 2,000/- in lieu of confiscation of their goods. The petitioner paid that amount and took away the goods. The Collector had also ordered levy of the following penalties:

(i) Rs. 2000/- (Rupees two thousand only) under Rule 151 of the Central Excise Rules, 1944,

(ii) Rs. 1000/- (Rupees one thousand only) under Rule 223 of the Central Excise Rules, 1944.

The petitioners then filed an appeal to the Central Board of Revenue which was rejected. Thereafter they approached the Central Government under its power of revision but that too was rejected. The petitioners have therefore approached this Court by this petition.

5. It will now be convenient to state relevant facts of Special Civil Application No. 347 of 1968. On the 6th of February 1960 the Central Excise Officers had also visited the duty-paid godown of the petitioners and checked the accounts and stocks of the duty-paid stock of the unmanu factured tobacco. It was noticed that the petitioners had shown in its E.B.-3 Books that 377 bags (344 Mds. and 36 3/4 Srs.) of unmanufactured tobacco of the description and details as given below were taken for the purpose of mixing:

Document under 'No. of Weight Descriptionwhich received bags. Mds. Srs.A.R. 1 No. 1/61 209 155-30 Biri Patti5-260A.R. 1 No. 1/62 56 69-16 Kandi Rawa 18 x 245-2-60A.R. 1 No. 1/63 86 89 3/4 Tobacco Rawa 18 x 24A.R. 1 No. 1/64 4 5-0 Stems Kandi5-2-60T.P. 1 No. 092304 22 24-30 Stalks Kandi15-12-59Total 377 334-36 3/4

When called upon the petitioners produced 317 empty bags from which the tobacco was emptied for the purposes of mixing. It was found that having regard to the marks and numbers shown on the empty bags, only the following quantities of tobacco pertaining to the relevant A.R. -1 forms and T.P. 1 could be allocated:

A.R. 1 or T.P. 1 No. of Weight DescriptionNo. and Date bags. Mds. Srs.A.R. 1 No. 1/151 137 102-30 Biri Patti5-260A.R. 1 No. 1/162 56 69-16 Kandi Rawa 18 x 245-2-60A.R. 1 No. 1/163 19 19-00 Tobacco Rawa 18 x 245-2-60A.R. 1 No. 1/164 4 5-0 Stems Kandi5-2-60T.P. 1 No. 092304 22 24-00 Stalks Kandi15-12-59238 220-06

But then when actual mixture on the spot supposed to have been obtained from the tobacco contained in these empty bags was weighed, it was found to be as under:

No. of Weight DescriptionNo. and Date bags. Mds. Srs.312 231-31 3/4 Mixture of Biri Patti and tobacco Rawa.76 75-24 Mixture of stems kandi, kandi Rawa and stalks kandi388 307-15 3/4 Total

These figures show that there was excess of 86 Mds. and 19 1/4 Srs. of unmanufactured tobacco with the petitioners in their duty-paid godown. The officers therefore believed that the petitioners had received in their duty-paid premises 86 Mds. and 19 1/4 Srs. of tobacco otherwise than under a valid permit showing that duty was duly paid thereon. Prima facie therefore they felt that the petitioner had contravened the provisions of Rules 40 and 226 of the Rules. They thereupon seized tobacco of 312 bags weighing 231 Mds. and 311/4 Srs. They therefore issued show cause notice as to why

(i) penalties should not be imposed upon them under Rules 40 and 226 of the Central Excise Rules, 1944.

(ii) the seized tobacco in respect of which offence appeared to have been committed, should not be confiscated under Rule 40 of the Central Excise Rules, 1944; and

(iii) excise duty at the appropriate rate on Mds. 86-19 1/4 Srs. of Biri Patti tobacco, received in their L2 L3 premises, otherwise than under a valid permit, showing that the proper duty had been paid on it, should not be recovered from them, under Rule 40 of the Central Excise Rules, 1944.

The petitioners were heard after they had put in their full explanation as regards the allegations made against them but the authorities refused to accept the explanation tendered and the contentions raised. The impugned order was therefore passed and the Collector inter alia ordered under Rule 40 confiscation of 312 bage (weighing 231 Mds. and 31 1/4 Srs.) of mixture of Bidi Patti and tobacco Rawa. In this case also however he gave an option to the petitioners to pay a fine of Rs. 2,000/- in lieu of confiscation of their goods and it is an admitted position that the petitioners had exercised the option within the time given, paid the fine and took away the goods confiscated. The Collector also imposed on the petitioners further following penalties:

(i) Under Rule 40 of the Central Excise Rules, 1944, Rs. 1000/- (Rupees one thousand) only,

(ii) Under Rule 226 of the Central Excise Rules, 1944, Rs. 1000/- (Rupees one thousand) only.

6. Mr. M.P. Vashi, the learned Advocate for the petitioners 'in both these petitions raised the following two common contentions in support of the petitions:

I. The orders of confiscation of 539 bags of tobacco weighing 448 Mds. and 29 Srs. and 312 bags weighing 231 Mds. and 31 1/4 Srs. of mixture of Biri Patti and tobacco Rawa are unauthorised and illegal.

II. The orders of the 2nd and the 3rd respondents were against the principles of natural justice in as much as (i) they called for a report from the lower cum subordinate officers viz. the Collector and relied upon it; (ii) Reasons are not given.

7. The first contention raised by the petitioners is that the orders of confiscation in both the matters are beyond the authority of the Collector and are illegal and ultra vires. The contention is based on the ground that Rules 151 and 40 under which the orders of confiscation have been made, authorise the officer concerned to confiscate only such goods in respect of which the breach of the Rules has been made and not any other goods or articles. It was submitted that in both these cases obviously large quantities of tobacco have been confiscated in respect of which admittedly no breach of any provision of law as mentioned in the respective Rules has been committed. It was argued that under the circumstances, the orders in respect of all the goods are wholly invalid. In the alter native it was urged that in any case they are invalid to the extent of confiscation of goods beyond the quantities with regard to which the breach of the provisions of law has been established. We find much force in the submission of Mr. Vashi so far as it relates to that part of the goods which are not the subject matter of any breach of the provisions of law as contemplated by the said Rules.

8. The relevant part of Rule 151 is as under:

151. Offences with respect to warehousing. If the owner of goods warehoused, or the warehouse-keeper, by himself or by any person in his employ or with his conni vance, commits any of the following offences namely:

(a)...

(b)...

(c) warehouses goods in or, removes goods, from, a warehouse otherwise than as provided by these Rules; or

(d)...

he shall be liable to a penalty which may extend to two thousand rupees and all goods warehoused, removed, or concealed in contravention of this rule shall be liable to confiscation.

The plain reading of the rule clearly means that all goods warehoused, removed or concealed in contravention of this Rule are liable to confiscation. It is not possible to read the Rule in any other way. The only possible construction therefore clearly indicates in this case that the authority to confiscate or to levy penalty is strictly confined to such goods in respect of which either of the offences mentioned in the rule has been committed. The relevant part of Rule 40 is as under:

Except as provided in the proviso to Sub-rule (1) of Rule 32 and in Rule 171, no wholesale purchaser of unmanufactured tobacco for the purpose of trade or manufacture...shall receive into any part of his premises or into his custody or possession, any unmanufactured tobacco other than tobacco 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 also be liable to confiscation.

Now applying the well-established principle of construction of statutory provisions, the only reasonable construction possible is that the penalty can be levied and confiscation can be made only in respect of unmanufured tobacco which is received into any part of the premises or into the custody or possession of a wholesale purchaser for the purpose of trade or manufacture otherwise than under a valid permit granted by an officer showing that the proper duty has been paid. There can be no manner of doubt that only such tobacco as is received in contravention of the Rules can be confiscated under this Rule also. The mere fact of the offending stock being mixed up with the non-offending goods would not permit confiscation of the whole lot under either of these two rules. Both these Rules are penal provisions and in any case they have to be strictly interpreted. The learned Government Pleader fairly did not try to contend otherwise, on the construction of these two Rules particularly in view of the decision of the Supreme Court in Civil Appeal No. 13 of 1966 decided on October 30, 1968 Motibhai Fulabhai Patel and Co. v. R. Prasad and Ors. It may be mentioned that in the said case also goods were confiscated for contravention of Rule 40. There it was found that the appellant was guilty of mixing the duty-paid tobacco with non-duty paid tobacco. This finding was not challenged nor any dispute was raised about the quantity of non-duty paid tobacco in the mixture. The main contention on behalf of the appellant was that under Rule 40, the Collector could not have confiscated the tobacco mixture as it consisted of both duty-paid tobacco as well as tobacco on which duty has not been paid. It was alternatively argued that under any circumstances, the Collector could not have confiscated anything more than 60, 770 lbs. of the mixture which can be said to represent Biri Patti tobacco on which duty had not been paid. It appears that in the said case reliance was placed on behalf of the appellants on the decision of K.T. Desai J. in Messrs Valimohomad Gulamhussein Sonawala and Co. v. C.R.A. Pillai. The learned Judges of the Supreme Court after considering the language of Rule 40 came 'to the conclusion that in view of the said rule, the legality of the order of the Collector in so far as he levied duty as well as penalty could not be challenged. But so far as the confiscation was concerned it was observed that even according to the finding of the Collector only on 66, 777 lbs. of Biri Patti tobacco the duty had not been paid, but on the remaining tobacco seized, duty had been paid, it was not possible to separate the duty paid tobacco from the non-duty paid tobacco. Hence it was impermissible for the Collector to confiscate the said tobacco under Rule 40 as that rule permitted the confiscation of only non-duty paid tobacco. The learned Judges then examined the decision in Sonavala's case and observed that in the said decision it was held that the right to confiscate smuggled goods under Section 167(8) of the Sea Customs Act, did not carry with it the right to confiscate unsmuggled goods. But the learned Judges of the Supreme Court were not prepared to agree with the broad proposition laid down by Desai J. We need not enter into the reasons why Their Lordships were not prepared to accept the broad proposition laid down in Senavala 's case. Suffice it to say that the Supreme Court came to the conclusion that in the case before them there was no doubt that the appellants were guilty of an unlawful act in mixing duty-paid tobacco with the non-duty paid tobacco but the fact remained that they were the owners of both those lots at the time they mixed them. It must also be remembered that in dealing with a provision relating to forfeiture they were dealing with a penal provision. Therefore it would not be proper for them to extend the scope of that provision by reading into it words which are not there and thereby widen the scope of the provision relating to confiscation. Rule 40 permitted the Central Excise authorities to confiscate only those goods on which duty had not been paid. But did not permit them either specifically or by necessary implication to confiscate other goods. Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture. At the same time Their Lordships felt that no person can be permitted to benefit by his wrongful act and no rule of law should be so interpreted as to permit or encourage its circumvention. If by the wrongful act of a party he renders it impossible for the authority to confiscate under Rule 40 the non-duty paid goods, it was open to those authorities to confiscate from out of the goods seized, goods of the value reasonably representing the value of the non-duty paid goods mixed in the goods seized. Applying that rule to the facts of that case, it was held that the Collector, Central Excise could have confiscated out of the tobacco seized so much of It as could be held to reasonably represent the value of the tobacco on which the duty had not been paid.

9. These observations and the conclusions reached by the Supreme Court directly support the view that we have taken. Of course the said decision is only in respect of Rule 40 but as we have pointed out, reading Rule 151 also, no other conclusion can be reached. In Special Civil Application No. 358 of 1965, the figures admitted by the respondents are as follows:

Mds. Srs.Tobacco weighing 448-29 confiscated.Tobacco weighing 229-23 1/2 Goods in respect of which breach of Rule 151 is established.219-06 1/2 The excess quantity of tobacco confiscated in respect of which no breach was established.

Similarly in Special Civil Application No. 347 of 1965, the figures admitted by the respondents are as follows:

Mds. Srs.Tobacco weighing 231-31 1/4 Confiscated.Tobacco weighing 86-19 1/4 Stock in respect of which breach of Rule 40 is established.---------145-12 Excess quantity of Tobacco confiscated.

10. The result of the above discussion is that the order of confiscation made by the Collector (Exhibit 'B') in Special Civil Application No. 348 of 1965 is illegal and unauthorised in so far as it orders confiscation of Mds. 219-6 1/2 Srs. of petitioners' tobacco (non-duty paid). Similarly the order passed by the Collector (Exhibit 'B') in Special Civil Application No. 347 of 1965 is illegal and unauthorised in so far as it orders confis cation of Mds. 145-12 Srs. of petitioners' tobacco (duty paid). Both these orders therefore have to be quashed to that extent. We shall order accordingly,

11. Before we pass over to the next contention of the petitioners, we may make one point clear. Mr. Vashi at one stage seemed to urge that the following line in Order Exhibit 'B' in the Special Civil Application No. 348 of 1965 may be tried to be construed by the authorities to mean that the petitioner has been made liable to pay excise duty even though it may not be otherwise liable to duty under the provisions of the law.

The confiscated tobacco is non-duty paid and proper duty will have to be recovered before it is cleared.

But the learned Government Pleader frankly made it clear that part of the Order did not mean anything of that sort. It only means that as the said stock was non-duty paid goods, it will be liable to pay duty When it was cleared or removed from the warehouse according to the provisions of the Act and the Rules. On a fair reading of this part of the order we agree with the learned Government Pleader that it can only mean as stated by him.

12. The only other contention is that the order of the appellate authority and the Central Government must be quashed. They flagrantly violate principles of natural justice. This is urged on two grounds:

(i) That both the authorities viz. the appellate authority and the Central Gov ernment called, for the report of the Collector sending the memorandum of appeal and the revision application behind the back of the petitioner and they appear to have relied upon them in coming to their respective conclusions.

(ii) Reasons have not been given by either of these authorities in their orders. The petitioners have averred in their petition that after the petitioners presented an appeal before the second respondent, a complete report was called for from the first respondent. As a matter of fact the whole memo of appeal was sent to the first respondent for his comments on the grounds of appeal. It is also alleged that this is a regular practice in the department to call for such a report from the lower authorities. The said report was not made available to the petitioner before the decision was arrived at by the appellate authority which made full use of the said report while disposing of the appeal. It is further averred that the report of the first respondent is in the form of a judgment disposing of the appeal. Similarly the third respondent had also called for a report from the Collector and made use of it while disposing of the revision application. The fact of the report having been called for by both the authorities is not denied. As a matter of fact the learned Government Pleader had very fairly produced before us both the reports in both the petitions and copies have been supplied to the learned advocate of the pensioners. The affidavit in reply, filed on behalf of the respondents by R. Prasad, Collector, Central Excise, Delhi, to say the least is laconic and non-committal. In substance it merely says that the report sent was not in the form of a judgment. There is no denial that the report was not taken into account either by the appellate authority or the Central Government in deciding the appeal and the revision application. As a matter of fact the person swearing the affidavit would not be the right person to say so, even if the assertion contained in the petition was controverted. To us this procedure adopted by the appellate authority and the Central Government appears to be fundamentally against the principles of natural justice. There is no doubt that the appellate authority and the Government when they exercise their respective powers, exercised quasi judicial powers and are expected to act judicially and in consonance with the principles of natural justice. It is true that now it is well-settled that when administrative Tribunals act quasi judicially it will be open to them to collect any data but it is equally well-settled that under the principles of natural justice, before it takes into consideration any such data or facts collected, it must give an opportunity to the party concerned to have his say on such facts collected by the authority and only after hearing him in respect thereof that the decision should be reached. It will be a blatant infringement of the principles of natural justice to take into consideration any fact likely to bear upon its decision which is collected behind the back of the party concerned and whose interest is likely to be prejudiced if no opportunity at all is given to such party to have his say. The petitioners have categorically asserted that such a practice exists in this department to call for such reports and there is no denial made as pointed out in the affidavit in reply. It is also an admitted fact that the said reports were not brought to the notice of the petitioners nor were their explanation, if they had any in respect thereof, invited. It cannot be gain-said that the reports were called for to be read and its contents taken into account before the decision is given by the appellate authority and the Central Government in the revision applications. There is no assertion on behalf of the respondents that though in the routine the office had called for the reports, they were neither perused nor relied upon by the deciding authority. It can never be said with any reasonable certainty that the contents of the reports may not affect or was not likely to prejudice the judgment of the deciding authorities, against the interest of the party concerned. It would be ignoring human nature and hard facts of life to do so. Besides if we turn to the orders of both these authorities, we do not find therein any reasons or points to point discussion, to even with some effort convince one's conscience that no prejudice may have worked on their minds by the reports. It may be that the higher authorities in a given case where any point of dispute arises as to what exactly happened as a matter of fact before the subordinate authority, call for a report as regards the actual happening before it in order to know the exact facts but that is a very different case from the one with which we are concerned where actually the memorandum of appeal and the revision application or their copies were forwarded to the subordinate authorities and his comments were invited on each of the ground made out by the petitioners before the higher authorities. It may be that these comments are invited because the department or the lower authority is not represented before the higher authority but then that cannot be any excuse for adopting the procedure or following this practice as a routine in this department. Nothing can stop the department to have its representative to put forward its case before the higher authority in the presence of the other party. When we turn to the reports themselves, particularly the report made by the Collector in which he has given his own version to the appellate authority we find that the Collector has advanced by way of his comments on each of the important grounds made out by the petitioners. In our view therefore this practice or procedure adopted by the higher authorities in this department of receiving such reports, taking them into consideration without giving opportunity to the party concerned to meet the case made out against them, is highly objectionable and against the principles of natural justice. We are supported in our view by the decision of the Bombay High Court reported in LX Bom. L.R. 1098 (Andheri Bus Service v. State of Bombay). In the said case the objection was that the Appellate Committee of the State Transport had asked for a report of the Secretary of the Regional Transport Authority on the memorandum of appeal that was presented to the State Transport Authority and acted on that report which was never shown to the petitioners. After examining the contents of the report the High Court has observed that the so called report may well have been a judgment disposing of the appeal and the practice that prevailed was tantamount to the appellate Committee resorting to the most objectionable and obnoxious course of getting the Secretary of the Regional Transport Authority to prepare a minute for writing their own judgment in appeal. It was wholly and entirely indefensible and, in so far as the report dealt with facts which were the subject-matter of the controversy and must be determined having regard to the record in the case as well as the grounds of appeal, there has been no attempt to justify the obtaining of such a report. Then the learned Judge observed that there may be some justification if a question arose as to what happened before the Regional Transport Authority and it was relevant to find out what happened. The Appellate Committee may well call for a report as to what happened in the same manner as an appellate Court sometimes calls for a report from a subordinate Court. But such a report, when obtained, must of necessity be made available to all the parties concerned and not looked at or used by the appellate body without their knowledge and behind their back. The learned Judge further observed that therefore he had no hesitation in condemning as entirely unwarranted and obnoxious the practice that prevailed of obtaining a report from the Secretary of the Regional Transport Authority and the sooner it is discontinued the better.

13. We are quite clear in our mind that the practice as alleged is prevailing and the procedure adopted in the present matters of obtaining the reports from the Collector behinding the back of the party concerned and making use of it without making the report available to the party concerned, does violate the principles of natural justice and we have no hesitation in upholding the contention that on that ground the order of the appellate authority as well as the Central Government in revision in both the petitions must be quashed.

14. In the light of the decision we have reached on one leg of the submission of Mr. Vashi as regards non-compliance of the principles of natural justice, by both the superior authorities, we do not think it necessary to decide the second ground of that attack as to whether reasons should be given by the appellate as well as the revisional authority or not and that if reasons are given by the appellate authority, they could be said to be adequate reasons.

15. The result is that both the petitions are allowed. The orders of confiscation made by the Collector on the 4th of April 1961 in both the petitions are quashed to the extent and only in respect of the stock of tobacco weighing 219 Mds. 6 1/ 2 Srs. and 145 Mds. 12 Srs. respectively. The appellate orders passed by the Central Board of Revenue on 25th June 1963 in both the petitions are set aside. Consequently the order dated 17th December 1963 passed by the Central Government in revisions filed by the petitioners in the respective petitions are also set aside. We direct that the proceedings be sent back to the Central Board of Revenue to rehear the appeals de novo according to law and in the light of the evidence and the observations made by us herein. As we are sending the proceedings to the appellate authority to be heard de novo we do not decide as to whether the whole or any part of the fine recovered in lieu of confiscation of goods of the petitioners should or should not be refunded and if refunded to what extent. This also shall be decided by the appellate authority. We would also like to make it clear that we have quashed the orders of confiscation of the Collector partially in respect of the excess quantity of tobacco on an assumption that the tobacco of the petitioners in respect of which offences were alleged, the authorities had succeeded in proving the charges. However as the appeals are to be heard a fresh, it would be open to the petitioners to urge that the said findings of the Collector were erroneous and the appellate authority will be entitled to decide that question also. Respondent No. 3 shall pay the costs of the petitioners in both the petitions. Rule in the respective petitions made absolute to the extent stated hereabove.


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