1. The petitioner is a licensed dealer in tobacco and held a licence No. L. 5 No. 6/67. He also owned a private bonded warehouse at Coimbatore. On 13-3-1969 the Officers of the Central Excise Department inspected the petitioner's warehouse and examined the stock of tobacco from 13-3-1969 to 17-3-1969 in respect of stock card No. 93/1961-Part II item No. 9. The stock card showed that varieties stored were 'Choodi' and 'Thindu' and the aggregate weight of the stock of 129 bundles was 7,627 kilograms. But on actual weighment at the time of inspection it was found that 129 bundles, which were stocked, measured only 4,561 kilograms. When questioned about the shortage in weight the petitioner explained that the shortage might be due to natural causes, such as dryage. The authorities did not accept the petitioner's explantion, but doubted whether the tobacco found stocked in the warehouse at the time of the inspection was the same stock as has been recorded in the stock card. To find out whether it is the same stock as was originally stored, three traders of the locality were constituted as a trade panel and their opinion was sought as regards the variety of the existing stock. The trade panel met and the petitioner's power agent also participated during the discussion. Ultimately, the trade panel gave its opinion that the stock found on the date of the inspection in the petitioner's warehouse was a particular variety which was different from the one which was originally stocked in the warehouse.
2. The third respondent, based on the said opinion of the trade panel, issued a show cause notice to the petitioner on 4-6-1969 stating that the petitioner has contravened the Central Excise Rules by unauthorisedly removing the old stock and substituting new stock. The petitioner filed his objections on 4-8-1969, and contended that he did not remove any goods, that there was no substitution of the goods, that the shortage in the weight was due to natural causes, such as dryage etc., and that there was no evidence of removal and substitution of goods. After considering the objections the third respondent passed an order holding that the stock existed on 13-3-1969 was different from the stock which was originally kept in the warehouse, and that the shortage in weight was occurred due to the substitution of inferior variety of tobacco in the place of tobacco which was originally stored. In that view, he levied a penalty of Rs.250 for contravention of the Rules, ordered confiscation of the stock of 4,561 kilograms of tobacco and to release the same on condition of his paying a fine of Rs. 1,000 and also levied a duty on the entire quantity of 7,267 kilograms which was originally stored.
3. The petitioner preferred an appeal against the order of the third respondent to the second respondent, but without any success. Thereafter he filed a revision to the first respondent which was also dismissed on 10-3-1972. The petitioner has now approached this court to quash the original order passed by the third respondent as confirmed by the respondents 1 and 2.
4. It is contended by the petitioner that according to rule 23A of the Central Excise Rules, the third respondent is bound to give a reasonable allowance for the dryage and that in this case the imposition of excise duty for the entire stock without allowing for any dryage cannot be sustained. It is also contended by the learned counsel for the petitioner that the authorities had ordered confiscation of the goods that were available on the date of the inspection on an erroneous basis, that there has been removal of tobacco which was stored and substitution of another variety of tobacco in its place, while, in fact, there was no removal or substitution. It is further contended by the learned counsel that the constitution of a trade panel to give opinion or advice to the third respondent as regards the quality of tobacco is illegal, in that the third respondent which is a quasi-judicial authority, cannot seek the opinion of the so- called trade panel, which is practically a third party to the dispute and that, therefore, the third respondent is not justified in taking the opinion of the trade penel and finding that there has been a substitution of the tobacco.
5. There is no dispute in this case that the weight of the goods originally stored in the warehouse as per the stock card was 7,627 kilograms as on 13-3-1969. But on that day the stock was weighed and it was found to measure only 4,561 kilograms, the difference bing 3,066 kilograms. According to the petitioner, the entire shortage in the weight was due to natural causes. But according to the respondents the entire stock weighing 7,627 kilograms which was originally stored in the warehouse had been clandestinely removed and a fresh stock of inferior variety tobacco weighting 4,561 kilograms had been substituted in its place and that accounted for the shortage in weight.
6. Thus the main point of difference between the petitioner and the respondents is not so much about the shortage in weight, but as to the variety of tobacco found on the date of the inspection. In the stock card the variety stored has been recorded as 'choodi' and 'thindu'. According to the respondents, these names do not represent the quality, but they represent only the mode of bundling, and, therefore, the petitioner has not given the variety or the quality of tobacco in the stock card. The respondents, therefore, stated that it was not possible for them to easily find out as to what was the variety or the quality of the tobacco that was stored originally. It is in view of this difficulty the authorities felt that reputed and experienced tobacco dealars might be able to determine the variety of tobacco, which was originally stored as well as that was subsequently found on the date of the inspection. They, therefore, constituted a trade panel for giving opinion as to the quality of the tobacco which was available on 13-3-1969. The trade panel consisted of three prominent dealers in tobacco and they, after due deliberation in the presence of the brother and power agent of the petitioner, one Mr. Manickam, gave the opinion that the variety of tobacco found on the date of inspection was not the one which was originally stored. Based on this opinion of the trade panel, the petitioner was given a show cause notice and the petitioner had ample opportunity to dispute and challenge the opinion given by the trade panel. In fact, the petitioner filed his objections questioning the opinion of the trade panel on various grounds. Taking note of the petitioner's objections, the third respondent ultimately held that there has been a substitution of the tobacco after clearing the entire stock of 7,267 kilograms of old tobacco.
7. The petitioner's learned counsel would contend that instead of referring the matter to the trade panel the tobacco should have been sent to the eseabt-shed research institution. Even though such a procedure could have been adopted I do not see any error in the third respondent considering the opinion of the trade persons who were already on the field as regards the quality of the tobacco found in the warehouse on the date of the inspection. It is not as if the third respondent who was a quasi-judicial authority has delegated his function through the trade panel. Here he merely asked the trade panel to find out the variety of tobacco. Merely because the trade panel is asked to give its opinion on the variety of the tobacco, it cannot be said that the trade panel has been asked to decide the question whether there has been clandestine removal and substitution of the stock of tobacco. The petitioner might object to the opinion of the trade panel being taken into account by the authorities, if he was not put on notice of the. opinion, and his objections were not called for. But in this case, the constitution of the trade panel and its deliberations were known to the petitioner and the petitioner's brother and power agent took part in the deliberations of the trade panel. Subsequently the opinion of the trade panel was also put to the petitioner and his objections were called for. In these circumstances, I do not see any illegality in the third respondent acting on the opinion of the trade panel, in the absence of any material to indicate that the opinion is in any way erroneous. If the petitioner wanted to challenge the opinion of the trade panel, he could have had samples of tobacco tested by some independent research bodies as suggested by him and placed it before the third respondent. In these circumstances, the point urged by the petitioner in relation to the constitution of trade panel and the opinion got from it cannot be accepted.
8. On the finding given by the authorities that there has been a clandestine removal of the old stock and substitution of the fresh stock, the question whether the petitioner is entitled to any allowance of dryage does not arise. Once the original stock of 7,627 kilograms is found to have been clandestinely removed, the levy of excise duty on that quantity will be justified. If the stock is substituted contrary to the Central Excise Rules, the authorities are entitled to confiscate the same under Rule 161 of the Central Excise Rules.
9. The writ petition is therefore dismissed. There will be no order as to costs.