The Central Excises and Salt Act, 1944 does not bar a suit for the return of goods illegally seized if the goods lose value due to negligence, as established under its provisions.

1 This second appeal at the instance of the defendants is admitted on the following questions of law formulated in the memorandum of second appeal:
"(i) Whether S.40(1) of the Central Excises and Salt Act is not a legal bar to the maintainability of the suit?
(ii) Whether the claim is not barred by limitation prescribed by S.40(2) of the Central Excises and Salt Act, 1944
(iii) Whether the inference drawn by the Courts below that the action taken by the appellants was not in good faith is supportable is law?
(iv) Whether the award of interest by the Courts below is legally sustainable?
and
(v) Whether the plaintiff was not bound to mitigate the damages by applying for possession of the tobacco pending the proceedings and by taking delivery of the same when called upon to do so?"
The learned standing counsel for the Central Government has urged only questions 1 to 3, questions 4 and 5 were not argued in this case.

2 The suit is for the value of 50 bags (2305. 20 Kga.) of I. A. C. Gujarathi Pathi Biri tobacco illegally seized by the 3rd defendant from the plaintiff with interest at 12% from 31-7-1961 to 31-10-1966. The suit was filed on 5-11-1966. The plaintiff was a licencee for dealing in Biri tobacco having warehouse licence No. 29/1960 of Shertallai. The Preventive and Intelligence Inspector of the Central Excise Department, Alleppey checked the stock account of the plaintiff's warehouse between the 29th and 31st of July, 1961 and seized 50 bags of Biri tobacco from the warehouse for the alleged contravention of clauses (c) and (d) of R.151 of the Central Excise Rules, 1944. The second defendant, the Assistant Collector of Central Excise, Trivandrum Division, passed an order under S.33 of the Central Excises and Salt Act, 1944 confiscating the 50 bags of tobacco. The plaintiff was, however, allowed to redeem the seized tobacco on payment of a redemption fine of Rs. 1000/- and a penalty of Rs. 250/-. The plaintiff challenged the order of confiscation in O. P. No. 2566 of 1962 before this Court. A Division Bench of this Court by Ext. P1 judgment dated 22-11-1963 quashed the order of confiscation on the ground that it was in violation of the principles of natural justice leaving the Department free to take further action in accordance with law. There were no further proceedings under S.33 of the Act. The Excise Range Officer on 28-10-1964 ordered the release of the tobacco to the plaintiff directing him to take delivery of the same within ten days from the date of the order. There was a further order Ext. P8 by the 3rd defendant, Superintendent of Central Excise, Alleppey on 9-11-1965 directing the plaintiff to take delivery of the 50 bags of tobacco seized from him within ten days from the date of receipt of the order, failing which, he was informed, he will have no legal claim for the goods or its equivalent in value. He was later informed by Ext. P9 letter dated 7-5-1966 issued by the 3rd defendant that the articles seized will be destroyed. It is the plaintiff's case that he did not take delivery of the goods in pursuance to the notices issued to him for the reason that the goods seized were rendered unfit for use and had become unfit for sale. It is the case of the Department that the goods were auctioned, but there was no purchaser and had to be destroyed. The suit was filed on 5-11-1966 for the value of the goods illegally seized, or its equivalent in value " with damages calculated at 32% interest from the date of seizure till the date of the suit.

3 The suit was resisted on the ground that it is not maintainable for the reason of the provisions contained in sub-section (1) of S.40 of the Central Excises and Salt Act, 1944. There is a further contention that the suit is barred by limitation under sub-section (2) of S.40 of the Act. The Trial Court overruled the plea based on sub-sections (1) and (2) of Sec, 40 of the Act and decreed the suit for the value of the goods seized. The claim for damages by way of interest at 12% was n