1979 (4) TMI 30 - HC - Central Excise

Loss by accident whether includes theft - Remision of duty - Scope - Demand raised without show cause notice - Validity of - Alternative remedy - Existence of

Summary

Issues:
Challenge to order passed by Central Board of Excise and Customs under Rule 147 of Central Excise Rules, 1944.

Detailed Analysis:
The petitioner, a partnership firm dealing in Tobacco, challenged an order passed by the Central Board of Excise and Customs, claiming it to be contrary to law and based on an erroneous interpretation of Rule 147 of the Central Excise Rules, 1944. The firm operated a private bonded warehouse in Calcutta for storing non-duty paid Biri Tobacco. Following a theft incident in 1969, the firm reported the matter to the Police and the Superintendent of Central Excise. Subsequently, a demand notice for duty was issued without proper enquiry, leading the firm to make representations for remission of duty under Rule 147. Despite assurances of enquiry, the Collector rejected the firm's representation, which was upheld on appeal by the Central Board of Excise and Customs. The firm contended that the loss of Tobacco should fall under Rule 147 for duty remission.

The Respondents denied the loss of Tobacco and argued that the orders were made after due consideration and within the Collector's discretion. They contended that the Collector's exercise of discretion should not be interfered with, and other statutory remedies like revision under Section 36 of the Act were available. The court noted that while no infringement of Article 31 was pleaded, the availability of other remedies did not bar challenging actions taken without jurisdiction or in violation of principles of natural justice. The court analyzed the firm's actions following the theft, including lodging complaints and representations, and held that the Collector had the power to remit duty for goods lost by unavoidable accident, which included theft. The court emphasized the importance of conducting an enquiry before exercising discretion, even though not explicitly mentioned in the Rule.

The court found that principles of natural justice should have been followed before taking adverse action against the firm, as their rights were prejudicially affected. The failure to provide an opportunity to explain the situation amounted to a violation of natural justice. Therefore, the court held in favor of the firm, making the Rule absolute without costs. The judgment did not prejudice the Respondents from re-evaluating the matter in accordance with the law.

In conclusion, the court ruled in favor of the petitioner, emphasizing the importance of natural justice and proper enquiry before taking adverse actions, even when other statutory remedies are available.