A. LOGANATHAN Vs. THE SECRETARY TO THE GOVERNMENT OF INDIA, MINISTRY OF FINANCE, DEPT. OF REVENUE AND INSURANCE, NEW DELHI AND OTHERS

JUDGEMENT

(1.) The short facts which arise in this writ petition can be stated thus. The petitioner is a wholesale trader carrying on trade in manufacturing non -duty paid tobacco under Central Excise Licence No. 31/64. On 28th May 1965, it is common ground that the Central Excise officials inspected the petitioner's warehouse and according to their check report a quantity of 1730 kgs of tobacco had been substituted and there was a shortage of 5738 kgs of tobacco in the warehouse. Consequently a show cause notice was issued on 21st December 1967, calling upon the petitioner to show cause why 1730 kgs of tobacco said to have been substituted be not confiscated and a penalty imposed under the appropriate rules and duty be levied on 7408 kgs of tobacco which were on a totality of events found to be missing. The petitioner explained. His explanation was accepted in so far as the charge of substitution was concerned. But as regards the alleged shortage, his explanation was rejected. In the result, the petitioner was called upon to pay a duty of Rs. 11000 besides other ancillary penalties levied on the petitioner. The petitioner's appeal to the appellate authority as well as the revisional authority was unsuccessful. But the revisional authority, namely, the 1st respondent, modified the penalty, but we are not very much concerned with the quantum of penalty in this case. Mr. Chellaswami, learned counsel for the petitioner, took up a legal contention, which seems to be formidable, that the proceedings initiated by the department in December 1967 for an irregularity or illegality or contravention of the provisions of the Central Excise Act was beyond the prescribed time and therefore the consequential decision resulting in the imposition of penalty should be deemed to be a nullity in the eye of law and non est for purpose of implementation. He has also raised other factual contentions that the 1st respondent failed to give reason in support of his order and therefore it is non -speaking, he would also state that the decision of the appropriate authorities under the Act, having regard to the peculiar contentions made by the petitioner on the merits, is arbitrary and violative of the principles of natural justice. R.160 of The Central Excise Rules is relied upon. The counsel for the department would state that S.40(2), on which reliance is placed by the learned counsel for the petitioner to sustain his plea of bar of limitation, is not applicable to the proceedings initiated by the department under the Act and therefore the preliminary objection regarding the non -availability of power to take action in December 1967 for a cause of action which occurred in May 1965 is untenable. S.40 of the Central Excise and Salt Act, 1944, prescribes the time limit for institution of suits and other legal proceedings and creates a positive bar for institution of such actions beyond the prescribed limit of time. Inter alia S.40(2) runs as follows: - -