1979 (6) TMI 39 - HC - Central Excise

Summary

Issues:
1. Petition for writ of certiorari to quash order of respondents regarding duty levy on tobacco stock shortage.
2. Interpretation of Rule 151 and Rule 223A of Central Excise Rules.
3. Discretionary power of proper officer in determining shortage due to natural causes.
4. Validity of Rule 223A in providing guidelines for determining normal standard of shortage.

Analysis:
1. The petitioner, a tobacco dealer, filed a writ petition seeking to quash an order by the Central Excise Department regarding the levy of duty on a shortage of tobacco stock found during a special stock taking. The Department considered clandestine removal or shortage due to natural causes as possible reasons for the stock deficit. The Collector, after investigation, held the petitioner liable for duty on a portion of the shortage and confirmed this decision was upheld by the Central Board of Excise.

2. The petitioner argued that the shortage could be due to various reasons and contended that the deficiency should have been considered under Rule 223A, which deals with shortages due to natural causes. However, the court held that once a shortage is established, it is the petitioner's responsibility to explain the circumstances leading to the deficit. The court further emphasized that the proper officer has the discretion to determine whether the shortage is normal or abnormal, and the entirety of the shortage may not be permitted as a deduction for excise duty.

3. Additionally, the petitioner challenged the validity of Rule 223A, claiming it confers arbitrary power on the proper officer due to the lack of specific guidelines for determining the normal standard of shortage. The court rejected this argument, stating that the rule requires the warehouse keeper to provide satisfactory explanation for the deficiency, which serves as a method of proof. The court highlighted that the rule's flexibility is necessary to accommodate unique circumstances that may warrant a higher percentage of shortage allowance.

4. Ultimately, the court dismissed the writ petition, upholding the decision of the authorities regarding the levy of duty on the tobacco stock shortage. The judgment emphasized the discretion of the proper officer in evaluating shortages due to natural causes and the necessity of providing satisfactory explanations for deficiencies in stock.