1958 (3) TMI 101 - HC - Central Excise

Summary

Issues: Claim for return of seized tobacco or monetary compensation, applicability of section 40(2) of Act I of 1944, validity of deposit made by plaintiff, jurisdiction of Central Excise Department to sell confiscated tobacco, limitation period under article 62 of the Limitation Act, suit for damages for tort of conversion against Union of India, duty of Union Government to return sale proceeds of confiscated tobacco.

Analysis:

The plaintiff alleged that the Central Excise Department seized an excess quantity of non-duty paid tobacco from their shop, leading to confiscation and imposition of fines. The plaintiff sought the return of the seized tobacco or monetary compensation. The defense argued that the plaintiff did not deposit the fines within the stipulated time, resulting in complete confiscation. However, lower courts ruled in favor of the plaintiff, granting the requested sum as claimed.

The Government Pleader contended that section 40(2) of Act I of 1944 barred the plaintiff's claim. Section 40 provides immunity to the Central Government and its officers for acts done in good faith. However, the court opined that this section did not apply in this case as the sale of confiscated tobacco by the Central Excise Department was deemed ultra vires, falling outside the scope of protection under the Act.

The court found that the plaintiff's deposit of fines was valid and timely. The deposit was made before the sale of confiscated tobacco, which occurred after the plaintiff's compliance. While the suit was framed as a claim for damages due to conversion, precedents established that such suits against the Union of India were not maintainable. Instead, the court held that the Union Government was obligated to return the sale proceeds of the confiscated tobacco to the plaintiff.

Relying on the principle of ex aequo et bono, the court determined that the plaintiff was entitled to a decree for the refund of the sale proceeds amounting to Rs. 650, which had enriched the Union Government. Consequently, the court set aside the lower appellate court's decree and granted the plaintiff a decree for the refund of Rs. 650 along with proportionate costs in all courts, modifying the previous judgment accordingly.