A LOGANATHAN Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner is a dealer in tobacco. THEre was a surprise inspection of his bonded warehouse by the Superintendent of Central Excise on three days, namely, 8-12-1969 to 10-12-1969, and a special stock taking was conducted under Rule 223a of the Central Excise Rules. THE stock taking revealed a shortage of 7477 kilograms of tobacco. In respect of the said shortage, the petitioner was called upon to pay duty, as well as penalty of Rs. 750 for violation of Rule 223a. As against the said demand, the petitioner filed an appeal to the Collector of Central Excise, but without success. THEn there was a revision to the Central Government which was also rejected. THE petitioner has, therefore, come to this court seeking a writ ofcertiorarito quash the order of the revisional authority confirming the orders passed by the initial and appellate authorities.

(2.) IN this writ petition mainly two contentions have been advanced. One is that Rule 223a contemplates the passing of an order by the collector directing special stock taking and that in this case, that there being no order by the Collector directing the special stock taking, and that as such the entire proceedings including the levy of the excise duty as well as the penalty are illegal. According to the petitioner, the formation of an opinion by the Collector under Rule 223a before the special stock taking is a must and in this case, there is no material to show that the Collector in fact formed such an opinion as contemplated by Rule 223a before the special stock taking was done. It is also pointed out by the learned Counsel that the ordering of a special stock taking in addition to the annual stock taking interferes with the petitioner's right of ownership and, therefore, before the special stock taking is done, the precondition of forming of an opinion by the collector that such a special stock taking is necessary, is to be satisfied. It is also contended by the learned Counsel that the formation of an opinion by the Collector should be recorded in writing as that alone will safeguard against the arbitrary exercise of the power by the Collector. Rule 223a is as follows :- ". . . Account of stock of goods in a factory or warehouse to be taken and balance to be struck.- As often as the Collector may deem it necessary or proper, and at least, once in every year, the stock of excisable goods remaining in a factory, warehouse or store room licensed or approved for the storage of such goods shall be weighed, measured, counted or otherwise ascertained in the presence of the proper officer, and if the quantity so ascertained is less than the quantity which ought to be found in such premises (after taking into account receipts and deliveries, and making such allowance for waste by evaporation, or other natural causes, as the proper officer may consider reasonable, and as may be in accordance with any instructions issued by the Central Board of Revenue) the owner of such goods or if the premises be a public bonded warehouse the keeper thereof, shall, unless the deficiency by accounted for to the satisfaction of the proper officer be liable to pay the full amount of duty chargeable on such goods as are found deficient and also a penalty which may extend to two thousand rupees. " *

(3.) THE Division Bench in W. P. No. 2609 of 1969 has also expressed the view that it is not possible to lay down with any rigidity certain percentage of driage ought to be allowed as a matter of course throughout the country in respect of tobacco and that it has to depend on so many factors. THE following passage in that judgment is pertinent. "the Central Board of Excise and Customs increased the said margin. We do not find that the authorities have in any way acted arbitrarily as contended by the learned Counsel for the petitioner. But it is argued that certain guidelines should be provided for so as to prompt the authorities to act accordingly. In the nature of things we are of the view that it is impossible to prescribe such guidelines. On the other hand, if such rigid formula is prescribed, it would be arbitrary. THE effect of nature is variable from place to place and it is impossible to lay down with, any rigidity that a certain percentage of driage ought to be allowed as a matter of course throughout the country and wherever the goods are and wherever the bonded warehouse is. It is in this context that the executive has left to the expertise of the authorities concerned who are duly qualified, to weigh the pros and cons and arrive at a reasonable percentage as being due to such natural causes. Such percentage has been ascertained after due enquiry in the instant case and has been granted."