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1979 Supreme(Mad) 372
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE NATARAJAN & THE HONOURABLE MR. JUSTICE T. RAMAPRASADA RAO
V.A. Ramraj - Appellant
Versus
Collector of Central Excise, Madras - Respondent
Case No : W.A. Nos. 510 of 1976 and 30 and 31 of 1977
Decided On : 14 August 1979
The Central Excise officials have the power to take samples from a bonded warehouse to investigate a suspected substitution of goods.
Headnote:
CENTRAL EXCISE - POWER TO TAKE SAMPLES - SAMPLES OF TOBACCO FROM BONDED WAREHOUSE - WHETHER AUTHORISED - CENTRAL EXCISES AND SALT ACT, 1944, SECTIONS 12, 13, 37, 110, 151(C), 223-A - CENTRAL EXCISE RULES, 1944, RULES 56, 144, 151, 223-A.
Fact of the Case:
The appellants, holders of L-5 licenses under the Central Excises and Salt Act, 1944, challenged the action of Excise Officials in taking samples of tobacco from their bonded warehouses. They contended that there was no express power to take samples from unmanufactured tobacco in a bonded warehouse and that the action was unreasonable and uncanalised.
Finding of the Court:
The court held that the Central Excise officials had the power to take samples from the bonded warehouse to investigate a suspected substitution of goods. The court found that the power to confiscate goods implied the lesser power to take samples and that the taking of samples was a reasonable and necessary step in the investigation process.
Issues: 1. Whether the Central Excise officials had the power to take samples from the bonded warehouse? 2. Whether the power to take samples was unreasonable or untramelled? 3. Whether the analysis of the samples by a panel of traders was unauthorized?
Ratio Decidendi: 1. The court found that the Central Excise officials had the power to take samples from the bonded warehouse under Section 13 of the Central Excises and Salt Act, 1944, read with Rules 144 and 151 of the Central Excise Rules, 1944. 2. The court held that the power to take samples was not unreasonable or untramelled, as it was a necessary step in the investigation process to detect unauthorized substitution of goods. 3. The court held that the analysis of the samples by a panel of traders was not unauthorized, as it was for the authorities to determine what sort of evidence would be sufficient to support the intended prosecution or further statutory action.
Final Decision: The court dismissed the writ appeals, holding that the Central Excise officials had the right to confiscate the goods if they suspected any unauthorized entry of substituted goods into the warehouse and that they also had the concurrent right to arrest the delinquent if they had a reasonable belief that an offence under the Act had been committed.
THE CHIEF JUSTICE.
These three writ appeals are directed against the judgment of Koshal J. who refused to issue a rule in the nature of awrit of prohibition, as against the respondents from taking any further action in pursuance of the samples of tobacco taken by the Excise Officials from the appellants' warehouse. W.A. 501 of 1976 is against W.P. 4328 of 1975, W.A. 30 of 1977 is against W.P. 4327 of 1975 and W.A. 31 of 1977 is against W.P. 4698 of 1975. The facts relevant for our purposes and which are almost similar in all the appeals can be referred to. Each of the appellants is a person holding a L-5 licence under the Central Excises and Salt Act, 1944 read with the rules made thereunder. Under this licence, the petitioners were entitled to keep a bonded warehouse and store tobacco therein, maintain stock registers and be bound by the various rules and regulations in the matter of storage of the tobacco which is admittedly excisable and for removal of such excisable commodity from the bonded warehouse. We are narrating the relevant facts in W.P. No. 4328 of 1975. The stock in the warehouse of the above petitioners was checked and weighed on 17-6-1975. Though the entries in the stock books and accounts were found to be in order on physical verification, an apprehension was entertained in the minds of the Excise Officials that in certain lots, the variety of tobacco found at the time of the check may not correspond to those that should have been actually in stock in the warehouse according to the description in the relevant stock records and other documents. Entertaining a suspicion that there has been an illicit removal and a clandestine replacement of an inferior quality of tobacco, samples were drawn from the stock in the warehouse on the date of inspection and, as is the common practice, the samples were examined by a trade panel for ascertaining whether or not the tobacco found in these lots were the same as the ones that should have been in stock as per the earlier description. Apprehending a further process of such investigation undertaken by the respondents, each of the writ petitioners has come to this court for the issue ofWrit of Prohibitionfrom arresting or prosecuting the petitioner in furtherance of the analytical report on the samples taken and to prevent them from making such inspections as according to the petitioner, they are not authorised by law.
2.The main contention of the appellants is that there is no express power to take samples from unmanufactured tobacco in a bonded warehouse and, if a suspicion is entertained that there is a difference in quality of the tobacco found at the time of check with reference to the tobacco admittedly warehoused by a lawful permit, there is no authority or a specific rule which would empower the Excise authorises to take samples therefrom, to take action against the warehouser. As it is the admitted case that an endorsement has been made on the date of check, that there are no discrepancies in the stock registers, no further action is possible merely because the Excise authorities are subjectively satisfied that there is a difference in quality of the tobacco as compared to the stock found entered therein and action under Section 13 of the Central Excises and Salt Act, 1944 is not possible in law. It is also stated that, even if the power to take samples is traceable to any provision of the main enactment of the rules made thereunder, it is an uncanalised power vested in, the respondents and it is therefore unreasonable and has to he struck down.
3.In the counter affidavit it is stated that the action of the department in having taken samples from the bonded warehouse is justified on the ground that, though duty is leviable on tobacco on its quantity removed from the warehouse, the Department is interested in ensuring that the tobacco received into the warehouse is properly accounted for and does not escape revenues and that no tobacco is illicitly removed or s
