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S. Hedayatullah Vs. Government of India and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise;Constitution
CourtChennai High Court
Decided On
Case NumberW.P. No. 2006 of 1977
Judge
Reported in1981(8)ELT672(Mad)
ActsCentral Excise Rules, 1944 - Rules 197, 223 and 223A
AppellantS. Hedayatullah
RespondentGovernment of India and ors.
Appellant AdvocateS. Govind Swaminathan, Adv. for ;K. Raju and ;S.S. Trivedi, Advs.
Respondent AdvocateU.N.R. Rao, Adv.
DispositionPetition dismissed
Excerpt:
- .....in which he contended that the verification of stock between 15-10-1961 and 21-10-1961 amounted to special stock taking, as the usual annual stock taking had already been done on 3-9-1961, that for such special stock taking, the previous instructions of the collector on being satisfied about the need for such special stock taking should have been issued to the inspectors concerned, that no such order of the collector for the said special stock taking was ever issued by the collector and that even the method of stock taking and the weighments shown in the we ighment sheets were not correct. while this enquiry was pending, it appears that a departmental proceeding was initiated against one inspector, who was not the officer, who took the special stock taking and another deputy.....
Judgment:

V. Ramaswami, J.

1. This is a petition for the issue of a writ of certiorari to quash the order of the first respondent dated 16-4-1977. The petitioner is carrying on business in the manufacture and sale of beedies and cheroots in the name and style of'Messrs. Speed Lever Beedi Company'. He has obtained a licence in respect of five warehouses in different streets in Trivellore in which he was stocking beedi, tobacco and cheroot tobacco. There was an usual annual stock taking by the Central Excise officials on 3-9-1961, in all these five warehouses. Two of the Inspectors of the Excise Department attached to the Collector's office at Madras again inspected the warehouses on 15-10-1961,16-10-1961 and 17-10-1961, and checked the stock and continued the same till 21-10-1961. The stocks verified during these inspections from 15-10-1961 to 21-10-1961 were weighed and weighment sheets were prepared on each day and the signature of the petitioner was obtained in each one of these weighment sheets. Finding that there was a large deficiency in the stock and beedi, tobacco and cheroot tobacco were not stored in an orderly manner as required by the Rules, but were found fixed together, the Department issued a show cause notice on 31-10-1962, requiring the petitioner to show cause why two separate penalties should not be imposed on the petitioner under Rules 223 and 223-A of the Central Excise Rules, 1944, and why the duty on the deficiencies should not be demanded under Rule 223A of the Central Excise Rules, 1944. The petitioner submitted his objections on 8-11-1962, in which he contended that the verification of stock between 15-10-1961 and 21-10-1961 amounted to special stock taking, as the usual annual stock taking had already been done on 3-9-1961, that for such special stock taking, the previous instructions of the Collector on being satisfied about the need for such special stock taking should have been issued to the Inspectors concerned, that no such order of the Collector for the said special stock taking was ever issued by the Collector and that even the method of stock taking and the weighments shown in the we ighment sheets were not correct. While this enquiry was pending, it appears that a departmental proceeding was initiated against one Inspector, who was not the Officer, who took the special stock taking and another Deputy Superintendent in regard to certain dereliction in duty and non-compliance with the rules relating to the checking of the petitioner's warehouse prior to the annual inspection and in regard to those deparmental enquiries, the two Inspectors, who took the special stock taking, were also exemined. The petitioner wanted copies of statements of these two Inspectors to be made available to him in connection with the enquiry of deficit stocks and mixing of stock charged against the petitioner. But the enquiry officer refused to make available copies of these statements on the ground that the department did not propose to rely on the said depositions in respect of the charges against the petitioner. Against this refusal, the petitioner preferred an appeal to the Appellate Collector, but without success. In fact, the appeal was dismissed on the ground that there was no appeal against non-supply of copies of depositions. Thereafter the petitioner filed W.P. 971 of 1968 in this court praying for quashing of the rejection order and for directing the department to supply copies of the said statements. The writ petition was dismissed and the petitioner referred W.A. 189. of 1968. While dismissing the writ appeal also even at the stage of the admission, the learned Judges made the following observations :-

'Learned Counsel for the writ petitioner strenuously contends that his client is the best Judge of how far these statements will aid him in his defence, and that when he bonafide feels that copies of the statements will assist his defence, it is not in accordance with the principles of natural justice to deny him the simple relief of the grant of copies. We think it is sufficient to observe that there is much to be said for this view as if, the enquiry ultimately resulted in a finding or findings adverse to the writ petitioner, the departmental authorities obviously will not desire that the proceedings themselves could be impugned as vitiated by a failure to observe principles of natural justice. For this reason, we think that the Departmental authorities will do well to reconsider the question of the grant of these copies.'.

2. Thereafter the enquiry in respect of the findings under Sections 223 and 233-A was proceeded with by the department and after hearing the petitioner by an order dated 19-11-1970 it was held that the petitioner had committed gross breach of Rules 223 and 223-A and imposed a duty of Rs. 61201.46 and penalty of Rs. 750. It may be mentioned that during the enquiry, though copies of the statements given by the two Inspectors in the departmental enquiry were not furnished, the enquiring authority offered the two Inspectors, for cross-examination by the petitioner, if he so desired and the petitioner had also cross-examined them. The appeal preferred by the petitioner was dismissed on 23-7-1975 and a further revision to the Government of India was also dismissed on 16-4-1977. It is at this stage that the present writ petition has been filed.

3. It this writ petition the learned counsel for the petitioner had rajsed two contentions. The first contention was thatthe stock taking during the period from 15-10-1961 to 21-10-1961 was not the usual stock taking and as a special stock taking, before any action is taken for such stock taking, the Collector should have exercised his mind at to the need for such stock taking and ordered the same under Rule 223-A and in the absence of such an opinion entertained . by the Collector as to the need for special stock taking, the entire proceedings become illegal. In other words, it is a condition precedent for special stock taking that an order of the Collector directing such stock taking should have been issued. Rule 223-A enables the Collector 'if he deems it necessary or proper to have a stock of excisable goods remaining in a warehouse weighed and measured in the presence of a proper officer; and if the quantity so ascertained is less than the quantity which ought to be found in such premises, the owner of the goods or the keeper thereof, shall, unless the deficiency is accounted for to the satisfaction of the proper officer be liable to pay the full amount of duty chargeable on such goods as are found deficient and also a penalty which may extend to two thousand rupees'. In order to decide this contention, it is necessary- to state a little more detailed facts relating to this stock taking : It appears that two of the Inspectors of the Department, who were returning from an inspection of some other warehouse, made a surprise visit to the petitioner's warehouse on 15-10-1961, and checked its stock and accounts especially with reference to the entries in part II (processing) Regir-ter. Finding certain abnormal features in the stocks in process and shortages, they decided to further weigh the stock in all godowns. They made the weighment on 15-10-1961 and 16-10-1961, and finding abnormal shortage they reported to the Collector, who made an order on file on 17-10-1961, directing to have a special stock taking done in the petitioner's warehouses at Trivellore and this order was communicated to the Assistant Collector of Madras, who in turn, has directed the Inspectors to continue the inspection and conduct the special stock taking. The contention of the learned counsel for the respondents on these facts was that originally the two Inspectors entered the premises for surprise inspection in exercise of their powers under Rule 197 and while so inspecting, finding some abnormal features and shortage in stock, reported the matter to the Collector, who in turn, ordered the special stock taking and, therefore, in the circumstances, the.entire process of special stock taking was in order and covered by Rule 223-A of the rules. I think the learned counsel for the respondents is well-founded in this contention. There could be no doubt that the two officers, who inspected the warehouse, on 15-10-1961, were authorised officers, who could have made special surprise inspections under Rule 197 of the Central Excise Rules. Finding the shortages and abnormal features, they reported the matter to the Collector, which report formed the basis for the Collector entertaining a belief that it is necessary and proper to make a special stock taking done under Rule 223-A. There could be no doubt that such an order was issued by the Collector on 17-10-1961, as the original writing of the then Collector of Central Excise is found in file and in fact during the enquiry on 17-4-1970 a letter was written to the petitioner's consultant when the petitioner raised the question of sanction by the Collector for such stock taking, informing him that on 17-10-1961, the Collector of Central Excise has ordered a special stock taking to be conducted in the above warehouses. Thus, though initially the Officers began checking the stock in exercise of their power under Rule 197, the decision to have a special stock taking was made by the Collector on the 17th October, 1961 and that, therefore, the entire special stock taking was well within the jurisdiction of the Inspectors concerned- The contention of the petitioner that there was no valid proceedings of the Collector to have the special stock taking is, therefore, not acceptable.

4. It is next contended by the learned counsel for the petitioner that all along he he had been questioning the weight shown the weighment sheets and the alleged shortage. In this connection the statement of the two Inspectors given in the departmental proceedings relating to the Inspector and the Deputy Superintendent above referred to would be relevant and he wanted copies of such statements. By non-furnishing of these statements, he has been prejudiced in the enquiry and that, therefore, the entirety of the proceedings is liable to be set aside. In this connection, he also referred to the order in the writ appeal where the learned Judges of this Court while dismissing the petition as premature observed-'The departmental authorities obviously will not desire that the: proceedings themselves could be impugned as vitiated by failure to observe principles of natural justice'. This observation, accord-ding to the learned counsel, impliedly accepted the contention of the petitioner that he is entitled to the copies, as otherwise, it may not be necessary to make tliese observations warning the Department of a possible consequence on not supplying the copies. The writ appeal was dismissed at the admission stage. The respondents had no opportunity of putting forward their case before the learned Judges. The observation, therefore, could not be held as in any way affecting the rights of the respondents in refusing to supply the copies on the ground that they are irrelevant and also on the ground that they are not relying on the said statements. The matter will, therefore, have to be decided on merits as to whether there was any prejudice caused to the petitioner by non-supply of the statements made by these two Inspectors in the departmental enquiry. As already stated, the petitioner wanted ihese statements in order to show that the stock was not properly taken and that the deficiency shown in the weighment sheets was not also correct. But, unfortunately for the petitioner I find that in each of the weighment sheets prepared from 15-10-1961 to 21-10-1961, the petitioner himself has signed, in addition to his agent's signing most of them and also the departmental authorities counter-signing the same. In the face of this signature obtained in the weighment sheet itself, it is too much now to contend that the weighment made were not correct. He had not attested the weighment sheets under protest. He had not stated at the earliest opportunity immediately after the weighments wcie done that the weighments were not correctly taken. It is only done after during the enquiry when he wanted the copies of the statements of the two inspectors in the departmental enquiry, he made an assertion that the weighments were not properly . taken and that deficiency shown in the weighment sheets are not correct In addition to this the Inspectors were offered for cross examination and the petitioner cross examined them in the present enquiry. While I consider that the department could have avoided such a contention by supplying copies of these statements, which, are innocuous and not that much of help to the petitioner, 1 am not satisfied that by reason of not supplying the same, the petitioner was in any way prejudiced in the enquiry. The rules of principles of natural justice could not be supplied mechanically and without reference to the facts. Having regard to the fact that the weighment sheets were signed by the petitioner himself without protest, I cannot now find that the statements of the Inspectors in the departmental enquiry were in any way relevant for the purpose of refuting this written record, which is signed by the petitioner. Therefore, this contention of the petitioner also is not acceptable.

5. No other point arises for consideration in the writ petition. The writ petition accordingly fails and it is dismissed. But there will be no order as to costs.


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