YEAST ALCO ENZYMES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This is an appeal from an order of the High court of Gujarat dated 1/02/1978. The appellant was debarred from the benefits of a compounded levy of excise duty for a period of nine months under Rule 92-E (iii) for his having violated the conditions in terms of which he was given permission to run a Centrifugal Sugar Crushing Machine at a concessional rate of excise duty. There is no dispute that there was a violation of the conditions subject to which the permission was granted. Originally the debarment under Rule 92-E (iii) was for a period of two years. That order came up before the Gujarat High court which, by an order dated 6/05/1977, pointed out that in imposing a disqualification for a period of two years the authorities had failed to consider the impact and whether the penalty would be out of all proportion to the default in question. When the matter thus went back, the government of India, after considering the revenue impact, directed the reduction of the period of debarment from two years to nine months. It is against this order, which has been confirmed by the High court, that the appellant has preferred this appeal.

(2.) The only point made by Shri Dutta, learned counsel for the appellant, is that the order of debarment, translated into figures, has resulted in a demand of Rs. 4.21 lakhs from the appellant. It is submitted that, since the potential revenue at normal rates from one centrifugal machine has been estimated by the government of India as Rs. 1.5 lakhs, the debarment in financial terms for two machines cannot exceed Rs. 3 lakhs at most. It is therefore, contended, that the effect of the debarment imposed is out of all proportion to the loss inflicted on the Revenue.

(3.) We are unable to interfere in this matter. Under Rule 92-E (iii) , the authorities concerned can debar the offending sugar unit from availing of the special procedure for concessional duty prescribed under the rules for such period as the Collector may deem fit. The period for which such debarment should be ordered is a matter of discretion with the concerned authority. No doubt, as pointed out earlier by the High court in this case, the disqualification should not be out of all proportion to the injury inflicted on the Revenue. But, at the same time, it is difficult to accept the contention that the period of debarment should be precisely worked out so as to correlate to the revenue loss which would have otherwise been the result of the offence. Besides, the provision in Rule 92-E (iii) also envisages an element of deterrence so that the sugar unit may not repeat its delinquencies or breaches of the conditions on which permission is granted. It is difficult, in the circumstances of the present case, to say, merely because there is some difference in the figures referred to by the government as a potential loss and the actual loss of revenue, as eventually calculated, that the discretion has been arbitrarily exercised. It is to be remembered that while government of India's order of debarment is based on a rough estimate, the potential figures are based on actual both in regard to the quantity as well as in regard to value. We have, therefore, come to the conclusion that though there is some difference between the figures mentioned in the government order and the demand made against the appellant eventually, there is no arbitrariness in the determination of the period of debarment whichcan give room for interfering under Article 136 of the Constitution after the High court has upheld the period of debarment.