Judgment

HEGDE, J. :- In this appeal by certificate though several contentions were raised in the memo of appeal only two of them were pressed at the time of hearing. They are: (1) under the circumstances of the case the confiscation ordered by the Collector, Central Excise is illegal and (2) under any circumstances he could not have confiscated the entire quantity of tobacco used in the mixture.

2. The appellants are tobacco merchants in Dashrath village near Baroda in Gujarat State. At the relevant time they were holding Central Excise licence in from L-2 and L-5 for the purpose of storing, selling and processing duty paid and non-duty paid tobacco. They had their own duty paid and non-duty paid godowns. In about December 1958 according to their books they possessed the following lots of different varieties of tobacco.

Variety of tobacco Quantity Rate of duty

Biri Patti Bmds. 251.8 Rs. 1.20 np per lb

Stems Kandi " 287.20 Rs. 0.50 -do-

Rava " 1326.14 Rs. 0.50 -do-

Stalk Kandi " 57.20 Rs. 0.06 -do-

3. On December 13, 1958 the appellants obtained permission from the Local Central Excise Authorities to mix the above lots of tobacco. The percentage of different varieties of tobacco when mixed would have been as under :

Rava - 68.97%

Stems Kandi - 14.86%

Biri Patti - 13.07%

Stalk Kandi - 3.00%

4. On December 23, 1958 when the process of mixing was still going on the Superintendent of Central Excise, Preventive Headquarters, Baroda and his party raided the duty paid premises of the appellants. There he seized the entire mixture tobacco weighing Mds. 2004.3 srs. i.e., 1,64,834.50 lbs. of tobacco. According to that Superintendent when experiments were conducted he found in the above mixture percentage of different varieties as under:

Rava - 44.00%

Biri Patti - 51.50%

Stems Kandi - 3.74%

From this he concluded that considerable quantity of non-duty paid Biri Patti tobacco had been utilised in the manufacture of the mixture. Hence notice was issued to the appellants on January 6, 1959 to show cause why action should not be taken against them under Rule 40 of the Central Excise Rules 1944 inasmuch as they brought into duty paid premises 60,770 lbs. of Biri Patti tobacco without payment of duty. It was also alleged in that notice that the appellants had removed certain quantity of Rava tobacco from L-2 premises. The appellants submitted their reply on 13-3-1959. At the hearing before the Collector as the appellants challenged the correctness of the experiments conducted by the Superintendent. Central Excise, the Collector himself in the presence of the appellants conducted a fresh experiment. On the basis of that experiment he came to the conclusion that the results obtained by the experiment conducted by the Superintendent, Central Excise are by and large correct.

5. By his order dated April 13, 1959, the Collector, Central Excise held the appellants guilty of contravening Rule 40 and consequently levied on them a penalty of Rs. 2,000/- as well as the duty payable under law. He also ordered the confiscation of the seized tobacco weighing 1,64,834.50 lbs. But he gave an option to the appellants of redeeming the same on payment of a fine of Rs. 1 lac. The appellants paid the amount of fine under protest and got the goods released.

6. Thereafter they moved the High Court of Bombay under Article 226 of the Constitution for quashing the order of the Collector but that application was withdrawn as the appellants first wanted to exhaust their remedy under the Central Excise Act. The appellants unsuccessfully went up in appeal and thereafter in revision under the Central Excise and Salt Act, 1944 against the order of the Collector. After the 3rd respondent dismissed their revision petition they filed in the High Court of Punjab at Delhi Civil Writ No. 557-D of 1961 challenging the legality of the order made by the Collector of Central Excise on 13-4-1959. That petition was dismissed by a Division Bench of that Court on January 13, 1964. This appeal is