CARBORUNDUM UNIVERSAL LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE above writ petition has been filed praying for a writ ofCertiorarified Mandamusto call for and quash the proceedings of the third respondent dated 31-5-1982 and consequently directing to refund the amount of Rs. 43, 542. 69 which was adjusted against the claim made by the said respondent.

(2.) THE writ petitioners are manufacturers of Coated Abrasives and Grinding wheels. THE writ petitioners submit that they manufacture several small items and in the process it was inevitable due to the nature and volume of goods handled for certain shortages to occur every year. After annual stock-taking, a statement was filed before the authorities and they were aware of the said shortages. It was pointed out by the petitioner that shortages would be more in the smaller and bulk items, since it depended upon the nature of the goods and the quantity of goods produced and handled. In the year 1980, the Superintendent, Central Excise raised certain demands for the years 1973-1979, and the petitioners submitted their reply that the shortages not exceeding 2%-3% of the annual clearances were marginal and that the claim made by the department was also vague and arbitrary.

(3.) AT the time of hearing, learned Counsel for the writ petitioner raised the following grounds of attack, (a) The impugned order is barred by limitation under Section 11A of the Act since the show cause notice dated 22-11-1980 itself was issued more than 6 months after the relevant date and that even in respect of proceeding under Rule 223-A of the Rules, the limitation under Section 11A will apply; (b) In the absence of any finding that the goods were surreptitiously removed, the Department will have no right to levy and recover duty on mere shortages; and (c) Having regard to the nature of the business, the percentage of shortage found is very marginal and does not call for any penal levy. The order of the third respondent is vitiated by arbitrary and capricious exercise of power.