1977 (6) TMI 29 - HC - Central Excise

Special Stock taking - Tobacco - Deficiency due to natural causes - Extent of losses admissible

Summary

Issues:
1. Whether the special stock taking conducted in the petitioner's bonded warehouse was legally valid under Rule 223A of the Central Excise Rules.
2. Whether the direction for special stock taking by the proper officer needed to be in writing as per Rule 223A.
3. Whether the percentage of driage allowed by the Collector was arbitrary and whether the petitioner's claim of natural driage was justified.

Analysis:

1. The petitioner contended that the special stock taking conducted in their warehouse was illegal as there was no written order by the Collector directing such action, as required by Rule 223A. The petitioner argued that the formation of an opinion by the Collector before special stock taking is mandatory. However, the court disagreed, stating that the Collector's power to direct special stock taking can be delegated under Rule 5 of the Central Excise Rules. The court found that a proper authority had instructed the stock taking, thereby validating the process.

2. Another argument raised was whether the direction for special stock taking needed to be in writing. The petitioner insisted that a written order was necessary, while the court held that Rule 223A does not explicitly require the direction to be in writing. The court opined that an oral direction by the proper officer suffices, and there was no mandate for a written formation of opinion by the Collector.

3. The petitioner also challenged the percentage of driage allowed by the Collector, claiming that the entire deficiency was due to natural causes. The court referred to a previous case where it was held that determining the normal percentage of driage requires expertise and consideration of various factors. The court emphasized that the authorities are best positioned to decide the percentage of driage based on the specific circumstances. In this case, the petitioner failed to provide conclusive evidence to support their claim of natural driage, leading the court to reject their contention and uphold the impugned order.

In conclusion, the court dismissed the writ petition, ruling against the petitioner on all grounds. The judgment highlighted the delegation of powers for special stock taking, the absence of a written order requirement, and the discretion of authorities in determining driage percentages based on expertise and relevant factors.