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Bavaji and Motibhai Vs. Inspector of Central Excise and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 2049(W) of 1973
Judge
Reported in1979CENCUS352D,1979(4)ELT282(Cal)
ActsCentral Excises Act, 1944 - Section 36; ;Central Excise Rules, 1944 - Rules 143, 145, 147, 149 and 160; ;Constitution of India - Articles 31 and 226(3)
AppellantBavaji and Motibhai
Respondentinspector of Central Excise and ors.
Cases ReferredDabur Mr. S.K. Barman Pvt. Ltd. v. State of West Bengal and Ors.
Excerpt:
central fxcise rules, 1944 - rules 147 and 160--theft of tobacco from warehouse--duty demanded under rule 160--held that the word 'lost' in rule 147 would also include theft, that enquiry is necessary for due and effective exercise of powers and that principles of natural justice will have to be followed before taking action. - .....other to be contrary to law and passed on erroneous interpretation of rule 147 of the central excise rules, 1944 (hereinafter referred to as the said rules), framed under the provisions of central excises and salt act, 1944 (hereinafter referred to as the said act).2. the said firm is a dealer in tobacco and carries on business at calcutta and other places in india and holds central excise licences for both duty paid and non-duty paid tobacco. for the said business, the said firm has a private bended warehouse at no. 171a, mahatma gandhi road, calcutta, which they at all material times have used and still are using, for storage of non-duty paid biri tobacco, brought from the growing areas of gujarat and other places. the said warehouse has been claimed to be working since the.....
Judgment:

M.N. Roy, J.

1. The petitioner, Messrs. Bavaji and Motibhai (hereinafter referred to as the said firm), which is registered under the Indian Partnership Act and has its registered office at No. 4, Rup Chand Roy Street, Calcutta, has impeached an order in Annexure 'F', passed by the Central Board of Excise and Customs, claiming the same amongst other to be contrary to law and passed on erroneous interpretation of Rule 147 of the Central Excise Rules, 1944 (hereinafter referred to as the said Rules), framed under the provisions of Central Excises and Salt Act, 1944 (hereinafter referred to as the said Act).

2. The said firm is a dealer in Tobacco and carries on business at Calcutta and other places in India and holds Central Excise Licences for both duty paid and non-duty paid Tobacco. For the said business, the said firm has a private bended warehouse at No. 171A, Mahatma Gandhi Road, Calcutta, which they at all material times have used and still are using, for storage of non-duty paid Biri Tobacco, brought from the growing areas of Gujarat and other places. The said warehouse has been claimed to be working since the imposition of Excise duty on Tobacco in 1943. The said firm has further claimed to be possessing and working the said warehouse under valid licence and authority and to have kept in store there dutiable Tobacco, for sale to customers after payment of Central Excise duty.

3. On 14th February, 1969, there was a theft in the said warehouse between 7 to 8 p.m. Immediately, on receiving information of such theft, the said firm brought the matter to the knowledge and notice of the local Police Station, who- on investigation and enquiry apprehended some persons suspected to be involved in the offence. In fact, some persons were arrested in connection with such theft. It appeared that 32 bags of non-duty paid Biri Tobacco to be lost as a result of such theft.

4. It is the case of the said firm that on 15th February, 1969, the matter was reperted to the Superintendent of Central Excise concerned. It appears that thereafter, on 5th March, 1969, a notice demanding Rs. 3,750.98, as duty, was issued to the said firm for the concerned goods. This, the said firm has alleged, was done without any enquiry about the loss, as was reported on 15th February, 1969. This demand notice was issued under Rule of the said Rules, which is to the following effect : -

'160. If goods are improperly removed from warehouse or allowed to remain beyond time fixed, or lost or destroyed, Collector may demand duty etc....If any goods are removed from the warehouse without permission, or if any goods are not removed from the warehouse within the period during which such goods can be left or are permitted remain in a warehouse under Rule 145 or if any goods are lost or destroyed otherwise than as provided in Rule 143, 147 or 149, or are not accounted for to the satisfaction of the proper officer, that officer may thereupon demand and the owner of the goods shall forthwith pay, the full amount of duty chargeable thereon, together with all rent, penalties, interest and other charges payable on the account of the goods.'

and even without issuing any show cause notice to the said firm. Against such action, the said firm made a representation to the Assistant Collector of Central Excise, Respondent No. 3, for enquiry into the matter and further for remission of duty, in terms of Rule 147 of the said Rules, which is to the following effect: -

'147. Power to remit duty on warehoused goods lost or destroyed. - If any goods lodged in a warehouse are lost or destroyed by unavoidable accident, the Collector may in his discretion remit the duty due thereon;

Provided that if any goods be so lost or destroyed in a private warehouse, notice thereof shall be given to the officer-in-charge of the warehouse within forty-eight hours after the discovery of such loss or destruction.'

in the said representation, it was also contended that the demand as raised or made was improper, void and irregular, as the said firm had no hand or control over the theft as occurred.

5. In reply, the said firm was informed on 5th June, 1969, by the Superintendent of Central Excise that the Assistant Collector of Central Excise has ordered for realization of the duty in question, as non-duty paid Tobacco, has since been passed into consumption. Against this, the said firm made a further representation to the Collector of Central Excise, for remission of duty arising out of the loss of the concerned Tobacco. The said firm has alleged that no enquiry was initiated earlier and even after this representation in terms of Rule 147 of the said Rules. It has further been alleged that the Collector concerned assured the said firm that an enquiry would be held if the demand as raised is paid or deposited and on such assurance, on the basis of installments as granted, they have been paid the demand as raised. It has also been alleged that even in spite of the assurances as mentioned above and due compliance with the same, the Collector of Central Excise, rejected the representation of the said firm, by an order dated 17th July, 1971, holding, inter alia, others that the precautionary measures were inadequate as otherwise, such theft, as in this case, could not have happened in the early hours of the evening. It has also been mentioned in the said order that no clue to establish the case of theft was available and furthermore, the stolen goods could not be recorded even after a man who was reported to have aided in commission of the offence, was apprehended. From such determination, the said firm preferred an appeal to the Central Board of Excise and Customs, New Delhi, who, after hearing them, rejected the appeal and confirmed the decision as made earlier. This order was made on 27th November, 1972 and it was, inter alia, amongst others held that the loss of Tobbacco as involved, would not come under or within the meaning of Rule 147 of the said Rules.

6. The Respondents, in their return to the Rule, apart from denying the material facts and allegations including the loss of 32 bags of non-duty paid Tobacco,, con tended that there was an enquiry and on such inquiry, the determinations as impeached, have been appropriately made in accordance with law and the requirements of the said Act and the said Rules. Such order, they have also contended to have been made after due consideration of the representations of the said firm. This apart, it has been contended that after due appreciation and consideration of relevant facts, the discretion, which was left with the Collector of Central Excise, was not exercised in favour of the said firm and such due exercise of discretion, could not be interfered with or allowed to be agitated in this jurisdiction, apart from contending that in view of other remedy available in the Statute by way of revision under Section 36 of the said Act, no interference in this jurisdiction should also be made in terms of the provisions of Article 226(3) of the Constitution of India.

* * * * *

12. It is true that in this case no infringement of Article 31 has been pleaded. In terms of the determinations in Dabur Mr. S.K. Barman Pvt. Ltd. v. State of West Bengal and Ors., AIR 1967 S.C. 1269 an application of this nature would not ordinarily be maintainable in view of Article 226(3) of the Constitution of India If there are other remedies under the statute, and availability of the procedure for 'Revision' would come within the purview of 'other remedy'. But the existence of such 'other remedy' would not be a bar in case where amongst others, the power has been exercised without jurisdiction, authority or competence and in capricious use of them or where the proceedings as initiated, are void ab initio or against principles of natural justice. Thus, if the case of the said firm ultimately appears to be falling or coming within the, categories as mentioned above or any one of them, the same would not bus hit by the provisions of 'other remedy' as mentioned in Article 226(3) of the Constitution.

13. Let us now see if this case falls or comes within the categories as mentioned above. As evidenced from the pleadings, the said firm, immediately on detection of theft, duly lodged a complaint not only with t

Annexure 'F', to include 'theft' and furthermore in my view the word 'lost' as mentioned in the said Rule would also include 'theft' and as such the application as filed by the said firm, was competent and the same was required to be determined by the proper officer, as the same was also filed within time. It is true that this Rule 147 speaks of remission of duty by the use and exercise of discretionary power by the Collector and is silent about any enquiry. But such enquiry may be presumed, as when the Collector is required to exercise his discretion, he is also expected to act on some materials for the purpose of forming the opinion as to whether such discretion as mentioned in the Rule should be exercised or not. So construing the Rule, I find that although the holding of enquiry is not stipulated there, such enquiry is required and is necessary for the due and effective exercise of powers and discharge of obligations. In fact, such an enquiry was held in this case, apart from the fact that the concerned Police report was also perused and considered. I find that for the use of discretion as mentioned in the Rules, opinion is required to be duly formed and such opinion must be based on reasons of a reasonable man. The steps under Rule 160, in my view, would be available, if on such reasons, it is opined that goods are improperly removed from the warehouse or allowed to remain beyond time. Before taking action under this Rule, although there is no mentioning of any further opportunity or enquiry, yet on the basis of the principles as enunciated in the determinations as cited at the Bar, it was expected and that too on application of principles of natural justice, that the person or authority, here in this case the said firm, when they would be prejudicially affected by the order as made, should have been given some opportunity to explain the position or conduct, even though under the Scheme of the said Act and the Rules framed thereunder, i.e., excisability depends on manufacture and consumption, it was and is the obligation of the said firm to pay. I further hold that principles of natural justice, which is implied under the said Act and the Rules, will have to be followed before taking action as in this case and the more so when, the such action would affect the said firm prejudicially. Such steps not having been taken, there was or has been admitted violation of the principles of natural justice and as such, the application would come within the exceptions as mentioned above and as such would also be maintainable even in spite of the existence of other remedy as mentioned above. Such principles of natural justice, if not embodied in the said Act or the Rules, would be implied on due and necessary interpretation.

14. Thus, this Rule succeeds and the same is made absolute. There will be no order as to costs.

15. This will not however prejudice the Respondents from proceeding afresh in the matter and to make appropriate determination in accordance with law.


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