1966 (1) TMI 17 - HC - Central Excise

Remission of Duty on warehoused goods - Writ Jurisdiction - Alternative Remedy - Appeal - Pre-deposit of duty

Summary

Issues Involved:
1. Validity of the excise duty demand on destroyed tobacco.
2. Applicability of Rule 147 and Rule 149 of the Central Excise Manual.
3. Adequacy of inquiry into the accidental nature of the fire.
4. Requirement of formal notice under Rule 147.
5. Availability of an alternative remedy and its impact on the writ petition.

Issue-wise Detailed Analysis:

1. Validity of the Excise Duty Demand on Destroyed Tobacco:
The petitioners challenged the demand for Rs. 51,475.62 as excise duty on the entire stock of tobacco stored in the warehouse, which was destroyed by fire. The petitioners argued that the tobacco was either completely burnt or rendered unfit for use and thus should be exempt from duty under the relevant excise rules. The court examined the facts and found that the local Central Excise officer was present during the fire and supervised the destruction of the unfit tobacco. Consequently, the court held that no duty could be legally demanded from the petitioners for the destroyed tobacco.

2. Applicability of Rule 147 and Rule 149 of the Central Excise Manual:
Rule 147 allows for the remission of duty on goods lost or destroyed by unavoidable accident, while Rule 149 pertains to the destruction of unusable material. The court found that 582 maunds 35 seers of tobacco, which was rendered unfit for human consumption, was disposed of under the supervision of the local Central Excise officer, as per Rule 149. The remaining 706 maunds and 8 chhataks of tobacco were reduced to ashes by the fire, making Rule 147 applicable. The court emphasized that the Collector's discretion under Rule 147 must be exercised judicially and based on facts justifying the refusal to remit duty.

3. Adequacy of Inquiry into the Accidental Nature of the Fire:
The petitioners alleged that the Central Excise authorities did not properly investigate whether the fire was accidental. The court scrutinized the counter-affidavit, which claimed that detailed inquiries were made and the fire was not due to an unavoidable accident. However, the court noted that the counter-affidavit was not sworn according to the rules and lacked personal knowledge. Therefore, the court concluded that the petitioners' allegation that no proper inquiry was made remained unrebutted, and the conduct of the Central Excise officials indicated that they treated the fire as accidental.

4. Requirement of Formal Notice Under Rule 147:
The proviso to Rule 147 requires notice of the loss or destruction of goods in a private warehouse to be given to the officer-in-charge within 48 hours. The court held that since the local Central Excise officer was present during the fire, no formal notice was necessary. Thus, the petitioners were entitled to the benefit of Rules 147 and 149, and no duty could be legally demanded from them.

5. Availability of an Alternative Remedy and Its Impact on the Writ Petition:
The opposite parties argued that the petitioners should have pursued their appeal before the Collector, which they did not do due to the requirement to deposit the demanded duty. The court referred to the Supreme Court's decision in Himantlal Harilal Mehta v. State of Madhya Pradesh, which held that the existence of an alternative remedy does not bar a writ petition when a fundamental right is alleged to be infringed. The court found that the demand for over Rs. 51,000 was an infringement of the petitioners' fundamental rights, making the alternative remedy inadequate. Therefore, the writ petition was not barred.

Conclusion:
The court allowed the writ petition, quashing the order of the Collector of Central Excise dated June 20, 1960, and the subsequent demand notice. The petitioners were awarded costs from the opposite parties.