Posted On by &filed under Bombay High Court, High Court.

Bombay High Court
Kaushalya Bai W/O Sajjandas, … vs Collector Of Cetral Excise, … on 1 January, 1800
Equivalent citations: 1979 (4) ELT 387 Bom
Bench: Shimpi


1. Petitioner Smt. Kaushalya wife of Sajjandas a tobacco dealer from Durgholdig Licence No. L-2 No. 183/66 issued by the Central ExciseDepartmenthas filed this petitio challengig the order pased by therespodents dated 20-31968, 4-1-1969 and 2-11-1969 which are at AnexuresVI, VII and VIII under whcih petitio was asked to pay a penalty of Rs.50/- for having contravened the provision of Rules 32 and 40 of the Central Excise Rules, 1944, and she was further directed to pay demandduty on 101 kg. of Biri-patti tobacco,alleged to have bee transported bythe liceces without the cover of valid transport dovument and the sameorder being upheld in the appellat as well as revisional order. Thefacts, i brief, are as under :-

2. Petitioner purchased Biri-patti tobacco fron a trader as Durg by nameBhai Laxmandas holding Licence o. 2251. Under the first sale-note atSerial No. 160 at Anexure 1, net tobacco purchased was 85 kg. Thesale-note excuted by BhaiLaxmandas in favour of the petitioner showedthat the had recived that tobacco from Tirods region and he mentionedA.R. `Application for removal’ No. 1 No. 129/2 dated 26-7- 1966 as well asthe Transport Permit o. 1 i.e. T.P. 2 No. 545708 dated 26-7-1966 and T.P.No. 344482 dated 21-9-1966. Besides it also cotained the descriptio as tothe umber of package the description of Biri-patti and the rule of dutyat Rs. 3.14, the weight of tobacco with the Bardana ad the net weight oftobacco. It also describes the manner of transport “Togea-by-Road’s”.

3. The petitioner purchased under Sale-note No. 161 dated 25-11- 1966from the name trader net tobacco weighing 110 kg. This is evidence fromAnnexure II of the petition which also mentioned A.R.No 1 and T.P. No. 1.This very tobacco was sold by the petitioner to another licence holder.It appears that the petitioner sold 4 kg. of tobacco to some otherpersons with which we are n9ot concerned but sold 191 kg. tobacco to oneLaxman Ganpat Ganvir. It appears that his correct name is Ganpat LaxmanGanvir. He holds a lecience bearing No. 636 for purchas of tobacco, he isa resident of villega Biaki in Bhandara Range. While effecting thissale-note in favour of Ganpat Laxman Ganvir by the petitioner, thepetitioer mentioned the same A.R. 1 and T.P. 1 permits as were mentionedin the sale-note of Shri Laxmandas under which the petitioner purchasedthe tobacco. This sale i favour of Ganpat was effected on 29-11-1966. Wehave already stated that while effecting this sale-note the name ofGanpat Laxman Ganvir was wrongly written. A correction by over-writin gwas made for which the petitioner was issued a show cause notice.

4. On 20-10-1967 Inspector of Central Excise, Durg Range checked theaccounts maintained by the petitioner in form EB. 3 (Entry Book) andnoticed the over-writing. It was also seen that he told the petitionerafter examining the sale-note that the petitioner commited a breach ofRule 32 of the Central Excise Rules inasmuch as tobacco was transportedwithout valid permit. Thereafter a show cause notice dated 20-12-1967 wasserved on the petitioner. Under this show cause notice the petitioner wasasked to explain why there was over-writing and the name of the consignercame to be changed by the petitioner in sale-note dated 29-11-1966. Itwas also stated that on verification by Excise Authorities it wasrevealed that the duty paying documents mentioned in the sale-note dated29-11-1966 which is Annexure III were wrong inasmuch as A.R. 1 No. 129dated 26-7-1966 was for IAO Khutan-Patti for whcih T.P. 1 No. 545706dated 26-7-1966 was issued whereas T.P. 1 No. 545706 as mentioned in thesale-note was actually issued on 29-7-1966 and not on 26-7-1969 meaningtherby that these documents mentioned in sale-note dated 29-11-1966 donot help the petitioner to show that petitioer tyransported duty [aidtobacco. The petitioner was called upon to show cause why penalty shouldnot be imposed on her under Rules 32 ans 40 of the Central Excise Rulesand why duty should not be recovered from her in respect of tobaccoweighting 1912 kg.

5. Petitioner through her husbund remained present and showed cause. Herhusband gave a statement which is produced as Annexure V. By thatstatement the petititoner made it clear that in the sale-note dated19-11-1966 the petitioner mentioned the same A.K. 1 and T.P. 1 numberwhich were written by Bhai Laxmandas Licence No. 2251 of Durg from whomthe petitioner purchased tobacco under sale-note Nos. 160 ans 161 dated25-11-1966. As regards the over-writing it was stated that it was donethroung mistake.

6. The Superintendent (Administration ) of Central Excise I.D.O.,Raipur, after giving opportunity to the petitioner ans after persual ofthe documents case to the conclusion that A.R. 1 No. 129 dated 26-7-1965mentioned in the sale-note was for Khutan-Patti. He futher haeld thatT.P. 1 No. 544706 dated 26-7-1966 was issued therefor. According to him,the Transport permit was not for Biri-patti as stated by licence but itwas for different tobacco and, thereforem there was a contravention ofrule 32. As regards the over-writing he held did not consider it a veryserious offence and issued a warning as irt was the first case but asthere was contravention of Rule 32 he imposed a penalty of Rs. 50/- andasked the petitioner to pay the duty on 191 kg, of tobacco.

7. Aggrieved by this order, the petitioner filed the appeal which wasdismissed ans thereafter a revision petition was filed to the JointSecrctarty, Government of India, Ministry of Finance. The revision wasdismissed and it has upheld the original order.

8. After hearing the learned Adovocate for the petitioner as well as ShriPalshikar who appeared for the respondents we hold that the orders passedby the respondents cannot be supported for the following reasons.

Before we discuss the submissions, it is necessary to refer to Rule 32 ofthe Central Excise Rules, 1944, of whcih the petitioner is alleged tohave committed a breach. Rule 32 reads as under :-

Reading Rule 32, it is clear that duty paid tobacco may be carried ortransported from the premises of a licensee wholesale dealer to thepremises of another licensed wholesale dealer by they should be carriedunder a cover of a sale-note issued by the consignor and subject to suchother limitations or conditions which are imposed by the Central Board ofRevenue by a written orders. This case relates to the sal-note of theyear 1966. At that time, as it appears from page 227 of the CentralExcise Manual Seventh Edition, the following limitation and conditionshave been imposed on the carriage or transport of duty paid tobacco fromthe premises of a licensed wholesale dealer rto the premises of anotherlicensed dealer under cover of a sale-note issued by the seller, namely:- “(a) The sale-note shall be in duplicate and serially numbered, newseries of numbers being used for each calender year. Books containingblank sale-notes shall be presented to the Range Officer for affixing hisinitials or stamp on each sale-note before the books are brought intouse. The duplicate shall be retained by the seller and the original givento the buyer as substitute transport permit.

(b) Each sale-note shall contain at least the following particulars- (i) Date of issue;

(ii) Name address and licence numbers of (1) seller and (2) consignees ;

(iii) Name and darte of – (1) the transport permit nos sale-note under which the seller receivedthe tobacco and in the latter case, the transport permit number recordedin such sale-note and

(2) the certificate of payment in From D.D.1 or the application in formA.R. 2 under which duty was paid;

(iv) Number abd descripation or package; (v) Marks and numbers; (vi) Variety of tobacco; (vii) Rate if duty paid; (viii) Gross weight; (ix) Net weight; (x) Manner of transport; (xi) Signature of the licensee or his agent .

The rest of the conditions are not material for our purpose.

9. In the light of these limitations and conditions imposed if we examinethe sale-note of Ganpt Laxman Ganvir we find that they have complied withall the provisions. The discriptions of the tobacco is stated. The netweight of the tobacco as weel as the gross-weight of Barden is stated.The application for removal its number abs date is mentioned. The name ofthe seller as well as his licence number. Similarly, the licence numberof the purchaser, their place of business is also mentioned. Rate of dutyis mentioned, packages or bundles are also stated ans the treasury numberis stated. The sale-note apparently, therefore, comply with thelimitations stated above and the case of the petitioner squarely failsunder the proviso to Rule 32. However, it appears from the order passedby the Superintendent as well as the show cause notice issued to thepetitioner that certain facts which are mentioned in the application ofremoval form of transport permits form of Bhai Laxmandas appeared to havetaken into consideration. Apart from the typographical mistakes it isseen from the show cause notice that some othe A.R.Numbers and T.P.Numbers are mentioned whcih the learned Adovocate for the respondents wasunable to explain as to how they have a bearing to the present case. Itis seen from the order and it was admitted before is that Bhai Laxmandaswas not examined nor the duplicate copies maintained by Bhai Laxmandasdwere produced in the enquiry conducted against the petitioner. The mainground, in which the order is based and on the basis of which it isstated that the petitioner has contravened the provisions of Rule 32, isthat the description of the tobacco does not taly with the description ofthe tobacco mentioned i the sale-note dated 29-11-1966 executed by thepetitioner in fav our of Ganpat. It is seen from the order of theSuperintendent that he has relied upon certain documents for holding thatthe tobacco was of Khutan-patti. the learned Advocate for the respondentswas unable to produce these documents for our inspection because we findfrom the conditions inposed that the seller has to mention application ofremoval number as well as transport permit number as well as thedescription of the tobacco and in the instant case petitioner relies uponthe two sale- notes exceuted by Bhai Laxmandas in her favour. From thefirst sal-note the description of tobacco of 85 kg. is `Biri-patti’ andthe description of the tobacco in second sal-note is `processed-patti’and `Kandi’. The petitioner while effecting a sale-note in favour ofGanpat Laxman describeed the tobacco as Biri-patti mixed Kandi. We,therefore, do not find any mistake in the descriprtion of tobacco as perthe documents produced before us. But it does appear that reliance is`placed on behlf of the department as is seen from the order on thedescription of the tobacco given in application of removal form as wellas transport permits form. that would show that those documents areprepared in favour of Bhai Laxmandas by the seller from whom BhaiLaxmandas purchased it. It is the case of the petitioner that thepetitioner relied upon these sale-notes executed in her favour by BhaiLaxmandas and she relied upon them for the description of the tobacco aswell as the application for removal ans transport permit. We, therefore,find that if the department is right i arriving at a conclusion that A.R.1 No. 129 dated 26-7-1966 was for Khutan-Patti tobacco and not forHiri-patti then Bhai Laxmandas along with the petitioner ought to havebeen charge-sheeted and a full enquiry should have been made as to whowas responsible ans whether, in fact, Bhai Laxmandas had paid duty onthat tobacco or not. We have already stated that neither the documentswere produced nor any-body was examined but statement are made that theoffice of the Superintendent verified from the documents on the record.Even the numbers of the aplication of removal form and transport permitmentioned in the order of the Superintendent do not tally with the numberof those numbers mentioned in the show cause notice. Under suchcircumstance we find that there is no proper enquiry in the matter as towhether duty paid tobacco was transported or not Bhai Laxmandas whileeffecting the sale-note in favour of the petitioner. We, therefore, passthe following orders :

10. The petition is allowed. The orders pased by the respondents Nos. 1,2 and dated 20-3-1968, 4-1-1969 and 3-11=1969 respectively are quashed.the department is free to institute enquiry about the breach of theprovisions of Rule 32, if any, against the petitioner as well as BhaiLaxmandas, considering the circimstance of the case, there would be noorder as to costs. Penalty paid be refunded to the petitioner.

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