JUDGMENT
Bharuka, J.
1. This Writ Petition has been filed by the Excise Commissioner for setting aside the order dated 25.11.1992 passed by the Karnataka Appellate Tribunal whereby it has been directed that the stock of arrack and other articles seized under the provisions of Section 52 of the Karnataka Excise Act, 1965 (the Act, for short) be returned to the first respondent.
2. Admittedly the first respondent was the successful bidder in the excise auction held in the excise year 1987-88 in Taluks of Udupi, Kundapur and Belthangadi of Dakshina Kannada District. On 9.9.1987 the Sub-Inspector of Police for Udupi Town Police Station along with some other officers visited the godown of the contesting respondent (the Licensee, for short) and seized arrack found stored in cans. Subsequently a police case was instituted against him under ‘ Section 34 of the Act in Crime No. 134 of 1987 of Udupi Town Police Station. Seizure was also reported to the Excise Officers as provided under Section 43A of the Act. It appears that thereafter a notice was issued to the licensee under Section 45A of the Act for imposition of penalty. But the licensee instead of contesting the said proceedings preferred to file an application for compounding the offence in terms of Section 45 of the Act without inviting any adjudication on the issue as to whether he has violated any of the provisions of the Act or the Rules framed thereunder or any of the conditions of the licence granted to him. Accordingly, the Deputy Commissioner under his order dated 20.10.1987 (Annexure-A), after noticing the relevant facts and the plea of the licensee, passed the following order:
“The offence committed by M/s Sathischandra Hegde Family Trust is hereby compounded for Rs. 5,000/- (Rupees five thousand only) under Section 45 of the Karnataka Excise Act 1965. The seized bulk arrack be sent to Arrack Bonded Warehouse, Udupi. The metal caps seized be confiscated. The measuring sets be returned to the party on realisation of its value.”
3. It appears that aggrieved by that part of the order passed by the Deputy Commissioner whereby he had directed for sending the seized bulk arrack to the Arrack Bonded Warehouse, Udupi, the licensee preferred an appeal before the first Commissioner under the provisions of Section 61 of the Act. The first Petitioner on appreciating the entire facts held that since the offence has already been compounded, the seized property liable for confiscation can be released on payment of the value thereof as estimated by the designated officer; and, accordingly, he directed the Deputy Commissioner to release the said stock of arrack to the licensee after setting it bottled on payment of the value of the stock seized.
4. The licensee being not satisfied with the said order, went in second appeal before the Tribunal, whereupon the impugned order Annexure-C was passed. The Tribunal has taken the view that since the Deputy Commissioner had initiated the proceeding under Section 45A of the Act by issuing the show cause notice to the licensee and thereupon after considering the application filed by the licensee a penalty of Rs. 5000/- was imposed, no direction could have been issued by the Commissioner for return of seized arrack on payment of the market value thereof.
5. Sections 45 and 45A of the Act read as under:
“45. Compounding of offences:- (1) The Excise Commissioner, the Deputy Commissioner, or any Excise Officer specially empowered in that behalf may accept from any person whose licence or permit is liable to be cancelled or suspended under Clause (a) or Clause ,’b) of Sub-section (1) of Section 29 or who is reasonably suspected of having committed an offence under Sub-section (2) of Section 32, Section 33, Section 34, Section 35, Section 36 or Sub-section (2) of Section 37, a sum of money not exceeding five thousand rupees and subject to such minima as may be prescribed in lieu of such cancellation or suspension or by way of compensation for the offence which have been committed, as the case may be; and in all cases in which any property has been seized as liable to confiscation under this Act, may release the same on payment of the value thereof as estimated by such officer.
(2) On the payment of such person of such sum of money or such value or both, as the case may be, such person, if in custody, shall be set at liberty and all the property seized may be released and no proceeding shall be instituted against such person in any Criminal Court. The acceptance of compensation shall be deemed to amount to an acquittal and in no case shall any further proceedings be taken against such person or properly with reference to the same act.”.
“45A. Imposition of penalty by Excise Officers- (1) If a holder of a licence or permit granted under this Act or an employee of such holder contravenes any of the conditions of the licence or permit or of any rule made under this Act, the Deputy Commissioner, or any other Excise Officer authorised by the State Government in this behalf, may impose a penalty not exceeding Five thousand rupees.
(2) No order imposing a penalty on any person shall be made under Sub-section (1) unless the holder of the licence or permit or the employee concerned,-
(a) is given a notice in writing informing him of the grounds on which it is proposed to impose the penalty.
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of imposition of penalty mentioned therein; and
(c) is given a reasonable opportunity of being heard in the matter.
(3) No person on whom a penalty is imposed under Sub-section (1) shall be liable for prosecution in respect of the same facts for any offence under this Act.”
6. In my opinion, the Tribunal has failed to appreciate the facts of the present case and the respective legal provisions in their proper perspective. As is borne out from the records and is not in dispute that though at the first instance the show cause notice was issued in terms of Section 45A of the Act requiring the licensee to show cause as to why penalty should not be imposed against him but the licensee instead of filing reply to the show cause notice defending himself on merits, preferred to file an application for compounding the offence, since by that time a police case had already been instituted, by pleading guilty. He, it appears, advisedly had done so because keeping the Sub-rule (2) of Rule 2 of the Karnataka Excise (Arrack Vend Special Conditions of Licences) Rules, 1967 (hereinafter, ‘the Rules’ for short) he could have stored the arrack only in sealed bottles or in sealed polythene sachets obtained from a warehouse or depot. Whereas, in the present case, admittedly, the bulk arrack found in the premises was in cans. Therefore, keeping in view the application filed by the assessee, the Deputy Commissioner instead of proceeding to impose penalty under Section 45A of the Act, permitted the licensee to compound the offence by determining Rs. 5000/- as composition fee. As such it is clear that though initially the proceedings were initiated under Section 45A of the Act, but ultimately the order at Annexure-A has been passed under Section 45 of the Act. That being so, the licensee could have got the seized articles including the arrack released only on payment of the value thereof as estimated by the Deputy Commissioner as provided under Section 45A of the Act.
7. Accordingly, for the discussion as aforesaid, in my opinion the impugned order of the Tribunal cannot be sustained, which is accordingly quashed. Writ Petition thus stands allowed.