P P PITCHAYYA Vs. COLLECTOR CENTRAL EXCISE HYDERABAD

JUDGEMENT

(1.) In this writ petition, the petitioner challenges the legality of a notice issued by the Collector of Central Excise, Hyderabad, under section 189 of the Sea Customs Act read with rule 215 of the Central Excise Rules. The notice runs thus :

(2.) The petitioner is a wholesale dealer in tobacco of Kavali Range in Nellore Circle, holding an L-2 licence. In the year 1952 he received into his L-2 premises a quantity of 8,330 lbs. of I.A.C. tobacco purporting to be duty-paid and purporting to be covered by two T.P.-1 permits. After receiving the quantity, the petitioner sold it away. Those two T.P-1 permits were issued by one Sri A.V. Chalapathirao, the then Central Excise Range Officer, Vijayawada Town Range. In the course of verification of the permits it was discovered that the above permits were bogus ones and that the tobacco covered by the said permits was not duty-paid tobacco. One of the two consignors denied all knowledge of the transaction and denied having received the quantity or having supplied it to the petitioner. The second consignor was non-existent. Thus it would appear that with the connivance of the Range Officer, the permits in question had been fraudulently obtained by the petitioner and his accomplices for transporting non-duty paid tobacco and for passing it into consumption as duty-paid. The particulars of payment of duty mentioned in those permits were found to be false. According to the Department, this was a case of receipt of non-duty paid tobacco, not covered by a valid permit in terms of rule 40 of the Central Excise Rules, 1944. For the issue of these bogus permits the Range Officer Was dismissed from service on 5th May, 1956.

(3.) The case against the petitioner was in due course adjudicated by the Deputy Collector of Central Excise, Hyderabad, after issuing a show-cause notice to which the petitioner filed his reply. The petitioner denied that it was a fraudulent transaction and protested his ignorance of the bogus nature of the permits. After taking into consideration the explanation offered by the petitioner, by an order dated 23rd January, 1958, the Deputy Collector imposed a penalty of Rs. 750 on the petitioner under rule 40 of the Central Excise Rules for the offence of receiving 8,330 lbs. of non-duty paid I.A.C. tobacco into his L-2 premises without a valid permit, and duty on the said quantity of 8,330 Ibs., viz., Rs.31123-75 nP. was demanded from the petitioner. The petitioner did not pay the penalty and the duty but preferred an appeal to the Collector of Central Excise, Hyderabad, on 23rd May, 1958. The appeal was filed under section 35 of the Central Excises and Salt Act, 1944. Thereafter on 7th June, 1958 the Collector of Central Excise issued the impugned notice extracted above under section 189 of the Sea Customs Act, 1878, read with rule 215 of the Central Excise Rules, 1944, calling upon the petitioner to deposit the duty and the penalty imposed on him pending consideration of his appeal. He was also informed by that notice that if the amounts demanded were not paid within fifteen days of the receipt of the notice, his appeal would be dismissed for non-compliance with the provisions of section 189 of the Sea Customs Act.