N K PARAMASIVAM Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner is a licensed dealer In tobacco and held a licence No. L. 5 No. 6/67. He also owned a private bonded warehouse at Coimbatore. On 13-3-1969 the Officers of the Central Excise Department inspected the petitioner's warehouse and examined the stock of tobacco from 13-3-1969 to 17-3-1969 in respect of stock card No. 93/1961-Part II item No. 9. THE stock card showed that varieties stored were 'Choodi' and 'Thindu' and the aggregate weight of the stock of 129 bundles was 7, 627 kilograms. But on actual weighment at the time of inspection it was found that 129 bundles, which were stocked, measured only 4, 561 kilograms. When questioned about the shortage in weight the petitioner explained that the shortage might be due to natural causes, such as dryage. THE authorities did not accept the petitioner's explanation, but doubted whether the tobacco found stocked in the warehouse at the time of the inspection was the same stock as has been recorded in the stock card. To find out whether it is the same stock as was originally stored, three traders of the locality were constituted as a trade panel and their opinion was sought as regards the variety of the existing stock. THE trade panel met and the petitioner's power agent also participated during the discussion. Ultimately, the trade panel gave its opinion that the stock found on the date of the inspection in the petitioner's warehouse was a particular variety which was different from the one which was originally stocked in the warehouse.

(2.) THE third respondent, based on the said opinion of the trade panel, issued a show cause notice to the petitioner on 4-6-1969 stating that the petitioner has contravened the Central Excise Rules by unauthorisedly removing the old stock and substituting new stock. THE petitioner filed his objections on 4-81969, and contended that he did not remove any goods, that there was no substitution of the goods, that the shortage in the weight was due to natural causes, such as dryage etc., and that there was no evidence of removal and substitution of goods. After considering the objections the third respondent passed an order holding that the stock existed on 13-3-1969 was different from the stock which was originally kept in the warehouse, and that the shortage in weight was occurred due to the substitution of inferior variety of tobacco in the place of tobacco which was originally stored. In that view, he levied a penalty of Rs. 250 for contravention of the Rules, ordered confiscation of the stock of 4, 561 kilograms of tobacco and to release the same on condition of his paying a fine of Rs. 1, 000 and also levied a duty on the entire quantity of 7, 267 kilograms which was originally stored.

(3.) IT is contended by the petitioner that according to Rule 23A of the Central Excise Rules, the third respondent is bound to give a reasonable allowance for the dryage and that in this case the imposition of excise duty for the entire stock without allowing for any dryage cannot be sustained. IT is also contended by the learned counsel for the petitioner that the authorities had ordered confiscation of the goods that were available on the date of the inspection on an erroneous basis, that there has been removal of tobacco which was stored and substitution of another variety of tobacco in its place, while, in fact, there was no removal or substitution. IT is further contended by the learned counsel that the constitution of a trade-panel to give opinion or advice to the third respondent as regards the quality of tobacoo is illegal, in that the third respondent which is a quasi-judicial authority, cannot seek the opinion of the so-called trade panel, which is practically a third party to the dispute and that, therefore, the third respondent is not justified in taking the opinion of the trade penal and finding that there has been a substitution of the tobacco.