1958 (10) TMI 1 - HC - Central Excise

Recovery of excise dues - Attachment of goods pledged with bank - Bonded warehouse - Good faith

Issues Involved:
1. Legality of the attachment of cheroot tobacco for duty payable on beedi tobacco.
2. Alleged breaking of the bank's lock and removal of goods.
3. Liability of the Government for damages due to alleged wrongful detention of tobacco.
4. Good faith of the Excise Department's actions.
5. Bar of suit by limitation under Section 40(2) of the Central Excises and Salt Act, 1944.

Detailed Analysis:

1. Legality of the Attachment of Cheroot Tobacco:
The court examined Rule 215 of the Central Excise Rules, which incorporates Sections 168, 189, and 192 of the Sea Customs Act, 1878, mutatis mutandis. It was determined that the cheroot tobacco was lawfully attached under Section 11 of the Central Excises and Salt Act, 1944, to recover duty due on beedi tobacco stored by Rahamatullah. The court concluded that the Excise Department acted within its legal rights, stating, "Section 11 completely gives power to the Government to take the action it did."

2. Alleged Breaking of the Bank's Lock and Removal of Goods:
The court found that the defendant or its servants did not break open the godown of Rahamatullah. Instead, the transfer of goods to Sundaram Pillai's godown was permitted by the Excise authorities upon application by the surety, Sundaram Pillai. The court noted, "Both the Courts have found that the defendant or its servants did not break open the godown of Rahamatullah and remove the goods."

3. Liability of the Government for Damages Due to Alleged Wrongful Detention:
The court held that the Government was not liable for damages as the attachment of cheroot tobacco was lawful. Furthermore, it was found that the plaintiff bank failed to prove that the Excise Department's actions directly caused the deterioration of the tobacco. The court stated, "The plaintiff completely failed to show that the Department unnecessarily and improperly withheld the tobacco."

4. Good Faith of the Excise Department's Actions:
The court emphasized that the burden of proving lack of good faith lay with the plaintiff bank. The court found no evidence of bad faith on the part of the Excise Department, noting, "The plaintiff has throughout failed to show want of good faith on the part of the Excise Officials." The court also referenced legal definitions of "good faith" to support its conclusion that the actions of the Excise Department were conducted honestly and without intention to deceive.

5. Bar of Suit by Limitation under Section 40(2) of the Central Excises and Salt Act, 1944:
The court concluded that the suit was barred by limitation under Section 40(2) of the Central Excises and Salt Act, 1944, as it was filed more than six months after the cause of action accrued. The court stated, "This suit instituted for an act done or ordered to be done, after the expiration of six months from the accrual of the cause of action... would be barred by limitation under Section 40(2)."

Conclusion:
The court dismissed the second appeal, upholding the decisions of the lower courts. It affirmed that the attachment of cheroot tobacco was lawful, the Excise Department acted in good faith, and the suit was barred by limitation. The judgment concluded, "In the result, this second appeal is dismissed without costs."

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