UNION OF INDIA UOI Vs. BALABHADRA RAMAIAH

JUDGEMENT

(1.) This appeal on behalf of the Union of India, represented by the Secretary to the Government of India, Ministry of Finance, is against the judgment of the Subordinate Judge, Eluru, decreeing the plaintiffs suit, who in turn confirmed the decree passed by the District Munsif of Eluru. The respondent herein is a registered firm carrying on business in unmanufactured country tobacco and holding a licence under the provisions of the Central Excise Rules, 1944, for premises at Eluru and also for a warehouse at Mustabada in Krishna District,Under the licence held by the firm in Mustabada warehouse, the plaintiff stores unmanufactured country tobacco on which duty has not been paid. The procedure adopted in the matter of the storage of the tobacco, the taking of the weight and the final assessment of duty has been according to the rules framed under the Central Excises and Salt Act. The plaintiff used to receive country tobacco from the growers into his arehouse.The procedure that is generally followed is that each consignment of tobacco is weighed in the presence of the Excise Officer immediately they are received, and the weights were noted in the Officers presence in Part I of the register. As the said tobacco does not contain the required moisture and the mellowish colour, it is processed by sprinkling water for a period ranging from seven to fifteen days depending upon the quality of the tobacco.After processing the tobacco is bundled up in bundles of 200 lbs., each. It has to be observed that in the course of the Processing, tobacco absorbs a portion of water as such the weight of the tobacco increases. The net weight of the tobacco taken for processing is entered in the register maintained and the gross weight after processing is also noted. After the processing, the tobacco is allowed to dry and the weight recorded after the evaporation of the water and the actual dryage is noted.This is the process that is adopted and so far as this case is concerned the net weight of the tobacco actually received by the plaintiff into his warehouse for the relevant year i.e., 1945 was 1,40,297 lbs. and soon after processing if weighed 1,68,783 lbs. Therefore, the increase in the weight was to the extent of 28,486 lbs. After this the tobacco delivered out of the plaintiffs warehouse is also noted in the warehouse register and in this case the weight of the tobacco delivered out of the plaintiffs warehouse by 11/12/1945, which was the date of the stock-taking by the officer, was 1,54,834 lbs. as against 1,68,783 lbs., which was the weight immediately after processing.The loss in the increase in weight was therefore 13,969 lbs., this being the difference between 1,68,783 lbs. which the tobacco weighed after processing and its weight after dryage viz. 1,54,814 lbs. The Assistant Collector Central Excise, Vijayavada, while allowing only 5 per cent for dryage, assessed the duty on the difference in weight. Thereby the Collector did not allow any dryage to the extent of 2,469 lbs. and he assessed a duty of Rs. 1,388-13-0.The plaintiff preferred an appeal to the Collector, Central Excise, Madras, who rejected the appeal. The plaintiff preferred a revision to the Government of India, Ministry of Finance, and the same was dismissed. The plaintiff thereupon called upon the defendant to cancel the duty by a notice issued on 20/08/1951, but no reply was received and the defendant collected the amount from the plaintiff. Thereafter the plaintiff issued a notice under Section 80, Civil Procedural Code, demanding refund of the amount with interest at six per cent; per annum.The contention of the plaintiff in the suit was that the alleged loss in weight which was due to evaporation of water-contents was not assessable to any duty and no duty could be levied under the provisions of the Central Excise Act and Rules framed thereunder. The Union Government filed a written statement contending inter alia that the Civil Court had no jurisdiction to try the suit in view of the provisions of Section 40 of the Central Excises and Salt Act.Another plea that was raised was that as the suit was filed after six months from the act complained of, the suit was barred under the aforesaid Act, the Limitation Act and the Madras Revenue Recovery Act, that this case, therefore, turned upon the pure questions of law relating to the right of the Central Excise Authorities to levy the duty and the suit was maintainable. The trial Court as well as the lower appellate court negatived the pleas raised by the Government and decreed the plaintiffs suit holding that the civil court had jurisdiction and the levy was not warranted under the Rules. The Government has now preferred this appeal.

(2.) The two arguments that have been advanced before me on behalf of the Government are that no suit would lie to challenge any act of an Officer under the Central Excises and Salt Act which has been done bona fide in the discharge of his duties and the second argument is that there is a discretion vested in the Officer to allow a certain percentage for dryage or evaporation and if in the exercise of that discretion he allowed certain percentage, the assesses could not as a matter of right claim that the allowance should be more. The section of the Act on which reliance is placed on behalf of the Government, is Section 40 which reads as follows :

(3.) The next argument advanced was that in making the allowance by the Officer for the dryage and evaporation he exercised a discretion vested in him under the Rules and such exercise of discretion could not be interfered with by this Court. The learned counsel invited my attention to a judgment of Satyanarayana Raju, J. in Mohammad Murtuza Hussain Saheb v. Collector of Central Excise, Hyderabad, W. P. No. 823 of 1957(AP). In order to understand what the facts of the case in the writ petition were, I sent for the records in the writ petition and in my opinion the facts of that case are entirely different and the observations of the learned Judge in that writ petition could be distinguished on the ground that the facts in the writ petition were entirely different.That petition was for the issue of a writ of certiorari to quash the notice of demand issued by the Superintendent of Central Excise, Nellore, calling upon the petitioner to pay a sum of Rs. 3,000.00 and odd. The grounds on which the notice of demand was sought to be attacked as set out by the learned Judge in his order, were that there was a contravention of Rule 10 as the revised demand was not made within three months required by the rule, and that the authorities mid have allowed for the entire dryage or evaporation.The further contention raised was that the basis on which the allowance was made on account of dryage and wastage was purely arbitrary and not on any accepted principle. In dealing with the objection raised by the petitioner the learned Judge adverting to Rules 143, 148 read with Rule 223-A came to the conclusion that having regard to the terms of the Act and the Rules, the licensee could not demand as of right the percentage of wastage to be allowed and that if be was dissatisfied with the allowance allowed by the authority tie had a remedy by way of appeal or revision to the higher authorities.In the view that the learned Judge took and on the facts of that case, he dismissed the, writ petition. This case, in my opinion, cannot be called in aid of the contention on behalf of the appellant. It cannot be denied that Excise duties are leviable on the goods and the commodities mentioned in the Schedule in this case is tobacco; Rule 223-A which by reason of an amendment has taken the place of the former Rule 142, reads as follows:-