KANDIMALLA RAGHVAIAH Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) THE petitioner is a firm doing business in tobacco having its licenced premise* at Chilakalurpet L. 5 No. 1/51. While obtaining licence for this premises which contained also a thatched shed, the petitioner, gave an undertaking on 15-11-1965 to the following effect: "we are aware that no remission of Central Excise duty will be allowed in case of fire accident in respect of all the tobacco stored or handled in our thatched sheds which have been included in our Central Excise warehouse licence. " On 10-5-1966, there was a major fire accident in the borders of the premises of the petitioner. The fire spread to the petitioner's premises and destroyed some tobacco scrap belonging to the petitioner.

(2.) UNDER Rule 160 of the Central Excise Rules, if any goods are lost or destroyed otherwise than as provided in Rule 143, 147 or 149 the other officer may thereupon demand and the owner of the goods shall forthwith pay, the full amount of duty chargeable thereon, together with all rent, penalties, interest and other charges payable on the account of the goods. In view of this provision the Deputy Superintendent, M. O. R. I. Chilakalurpet issued a notice to the petitioner stating that under Rule 160 the petitioner was to pay duty on 82,839 kgs. of tobacco scrap. The amount of duty was calculated at Rs. 2,60,114. 46p. It was also stated in the notice that the existence of damaged VFC tobacco in these sheds were accepted by the petitioner in the statement dated 23-6-1966 given by the managing partner. It was further stated, that as these two sheds were not approved premises for storage of tobacco the question of remission of any duty on the quantity demaged or destroyed in these sheds cannot be considered. The petitioners gave a reply dated 30-7-1966. They stated that they never stored or deposited any tobacco in the thatched sheds. They objected to the estimate of the quantity of tobacco made in the order. They pointed out that the nature of the accident was so sudden that it was beyond the control of the licensee to stop the fire. They requested the remission may be given and the demand notice may be withdrawn. On 18-3-1969 a show cause notice was issued to the petitioner by the Collector of Central Excise asking them to show cause why duty should not be demanded on 82,839 kgs. of scraps. It was stated in the notice that the petitioner had contravened Rule 140 of the Excise Rules as they stored 82,839 kgs. of scrap in the thatched shed which was alleged to have been involved in the fire accident.

(3.) UNDER Rule 140 the Collector may license private warehouses for the storage of excisable goods and may direct in what parts or divisions of such warehouses and in what manner and on what terms such goods may be stored and how and in what manner such warehouse, or parts or divisions thereof, shall be secured by locks, fastenings or otherwise. The Collector may revoke his approval of a warehouse and upon such revocation all goods warehoused therein must be removed as the Collector directs, and no abatement of duty or allowance shall be made in respect of any such goods for deficiency of quantity, strength or quality after notice of the revocation has been given to the proprietor or occupier of the warehouse. The petitioner replied on 31-3-1969 to the communication that the tobacco gutted was not stored in the rest shed that were gutted. They also stated that the fire accident could not be averted even after best efforts and that with all human efforts they could only save 32,791 kgs. of scarp and the rest of the tobacco scrap weighing 82,839 kgs. was gutted. They, therefore, prayed that the proceedings may be dropped. They requested personal hearing before further action was taken in the matter. A personal hearing was granted. After hearing the petitioner the Collector passed an order dated 29-11-1969. By this order the Collector held that permission to store tobacco in a thatched shed was an extra legal concession. In terms of the undertaking given by the petitioner the balance of 50,048 kgs. of VFC scrap (82,839 kgs. minus 32,791 kgs.) is liable to excise duty. He, however, demanded under Rule 160 of the Rules, excise duty on half of 50,048 kgs. which was destroyed in the outbreak of fire while under storage in thatched shed. The duty so estimated came to Rs. 78,575. 36p.