Bombay High Court
Shrimati Kaushalya Bai W/O Sajjandas vs Collector Of Central Excise And Ors. on 17 October, 1975
JUDGMENT Shimpi, J.
1. Petitioner Smt. Kaushalya wife of Sajjandas a tobacco dealer from Durg holding Licence No. L-2 No. 1831/66 issued by the Central Excise Department has filed this petition challenging the order passed by the respondents dated 20-3-196-8, 4-1-1969 and 2-11-1969 which are at Annexures VI, VII and VIII under which petitioner was asked to pay a penalty of Rs. 50/- for having contravened the provisions of Rules 32 and 40 of the Central Excise Rules, 1944, and she was further directed to pay demand duty on 101 kg. of Biri-patti tobacco, alleged to have been transported by the licences without the cover of valid transport document and the same order being upheld in the appellate as well as revisional order. The facts, in brief, are as under : -
2. Petitioner purchased Biri-patti tobacco from a trader at Durg by name Bhai Laxmandas holding Licence No. 2251. Under the first sale-note at Serial No. 160 at Annexure I, net tobacco purchased was 85 kg. The sale-note executed by Bhai Laxmandas in favour of the petitioner showed that he had received that tobacco from Tirods region and he mentioned A.R. 'Application for removal' No. 1 No. 129/2 dated 26-7-1966 as well as the Transport Permit No. 1 i.e. T.P. 1 No. 545708 dated 26-7-1966 and T.P. No. 344482 dated 21-9-1966. Besides it also contained the description as to the number of packages the description of Biri-patti and the rate of duty at Rs. 3.14, the weight of tobacco with the Bardana and the net weight of tobacco. It also describes the manner of transport "Togra-by-Road's".
3. The petitioner purchased under Sale-note No. 161 dated 25-11-1966 from the name trader net tobacco weighing 110 kg. This is evident from Annexure 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 other persons with which we are not concerned but sold 191 kg. tobacco to one Laxman Ganpat Ganvir. It appears that his correct name is Ganpat Laxman Ganvir. He holds a licence bearing No. 636 for purchase of tobacco, he is a resident of village Binaki in Bhandara Range. While effecting this sale-note in favour of Ganpat Laxman Ganvir by the petitioner, the petitioner mentioned the same A.R. 1 and T.P. 1 permits as were mentioned in the sale-note of Shri Laxmandas under which the petitioner purchased the tobacco. This sale in favour of Ganpat was effected on 29-11-1966. We have already stated that while effecting this sale-note the name of Ganpat Laxman Ganvir was wrongly written. A correction by over-writing was made for which the petitioner was issued a show cause notice.
4. On 20-10-1967 Inspector of Central Excise, Durg Range checked the accounts maintained by the petitioner in form EB. 3 (Entry Rook) and noticed the over-writing. It was also seen that he told the petitioner after examining the sale-note that the petitioner committed a breach of Rule 32 of the Central Excise Rules inasmuch as tobacco was transported without valid permit. Thereafter a show cause notice dated 20-12-1967 was served on the petitioner. Under this show cause notice the petitioner was asked to explain why there was over-writing and the name of the consigner came to be changed by the petitioner in sale-note dated 29-11-1966. It was also stated that on verification by Excise Authorities it was revealed that the duty paying documents mentioned in the sale-note dated 29-11-1966 which is Annexure III were wrong inasmuch as A.R. 1 No. 129 dated 26-7-1966 was for IAO Khutan-Patti for which T.P. 1 No. 545706 dated 26-7-1966 was issued whereas T.P. 1 No. 545706 as mentioned in the sale-note was actually issued on 29-7-1966 and not on 26-7-1969 meaning thereby that these documents mentioned in sale-note dated 29-11-1966 do not help the petitioner to show that petitioner transported duty paid tobacco. The petitioner was called upon to show cause why penalty should not be imposed on her under Rules 32 and 40 of the Central Excise Rules and why duty should not be recovered from her in respect of tobacco weighting 191 kg.
5. Petitioner through her husband remained present and showed cause. Her husband gave a statement which is produced at Annexure V. By that statement the petitioner made it clear that in the sale-note dated 19-11-1906 the petitioner mentioned the same A.R. 1 and T.P. 1 numbers which were written by Bhai Laxmandas holding Licence No. 2251 of Durg from whom the petitioner purchased tobacco under sale-note Nos. 160 and 161 dated 25-11-1966. As regards the over-writing it was stated that it was done through mistake.
6. The Superintendent (Administration) of Central Excise I.D.O., Raipur, after giving opportunity to the petitioner and after persual of the documents case to the conclusion that A.R. 1 No. 129 dated 26-7-1965 mentioned in the sale-note was for Khutan-Patti. He further held that T.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 licencee but it was for different tobacco and, therefore, there was a contravention of Rule 32. As regards the over-writing he did not consider it a very serious offence and issued a warning as it was the first case but as there was contravention of Rule 32 he imposed a penalty of Rs. 50/- and asked the petitioner to pay the duty on 191 kg. of tobacco.
7. Aggrieved by this order, the petitioner filed the appeal which was dismissed and thereafter a revision petition was filed to the Joint Secretary, Government of India, Ministry of Finance. The revision was dismissed and it has upheld the original order.
8. After hearing the learned Advocate for the petitioner as well as Shri Palshikar who appeared for the respondents we hold that the orders passed by the respondents cannot be supported for the following reasons.
Before we discuss the submissions, it is necessary to refer to Rule 32 of the Central Excise Rules, 1944, of which the petitioner is alleged to have committed a breach. Rule 32 reads as under :- -
* * * * Reading Rule 32, it is clear that duty paid tobacco may be carried or transported from the premises of a licensee wholesale dealer to the premises of another licensed wholesale dealer but they should be carried under a cover of a sale-note issued by the consignor and subject to such other limitations or conditions which are imposed by the Central Board of Revenue by a written orders. This case relates to the sale-note of the year 1966. At that time, as it appears from page 227 of the Central Excise Manual Seventh Edition, the following limitations and conditions have been imposed on the carriage or transport of duty paid tobacco from the premises of a licensed wholesale dealer to the premises of another licensed wholesale dealer under cover of a sale-note issued by ,the seller, namely : -
"(a) The sale-notes shall be in duplicate and serially numbered, new series of numbers being used for each calender year. Books containing blank sale-notes shall be presented to the Range Officer for affixing his initials or stamp on each sale-note before the books are brought into use. The duplicate shall be retained by the seller and the original given to 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) Number and date of -
(1) the transport permit of sale-note under which the seller received the tobacco and in the latter case, the transport permit number recorded in such sale-note, and (2) the certificate of payment in Form D.D. 1 or the application in Form A.R. 2 under which duty was paid;
(iv) Number and description or package;
(v) Marks and numbers;
(vi) Variety of tobacco;
(vii) Rate of 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 examine the sale-note either executed by Bhai Laxmandas in favour of the petitioner in favour of Ganpat Laxman Ganvir we find that they have complied with all the provisions. The descriptions of the tobacco is stated. The net weight of the tobacco as well as the gross-weight of Barden is stated. The application for removal its number and date is mentioned. The name of the seller as well as his licence number. Similarly, the licence number of the purchaser, their place of business is also mentioned. Rate of duty is mentioned, packages or bundles are also stated and the treasury number is stated. The sale-notes apparently, therefore, comply with the limitations stated above and the case of the petitioner squarely fails under the proviso to Rule 32. However, it appears from the order passed by the Superintendent as well as the show cause notice issued to the petitioner that certain facts which are mentioned in the application of removal form or transport permit form of Bhai Laxmandas appeared to have taken into consideration. Apart from the typographical mistakes it is seen from the show cause notice that some other A.R. Numbers and T.P. Numbers are mentioned which the learned Advocate for the respondents was unable to explain as to how they have a bearing to the present case. It is seen from the order and it was admitted before us that Bhai Laxmandas was not examined nor the duplicate copies maintained by Bhai Laxmandas were produced in the enquiry conducted against the petitioner. The main ground, in which the order is based and on the basis of which it is stated that the petitioner has contravened the provisions of Rule 32, is that the description of the tobacco does not tally with the description of the tobacco mentioned in the sale-note dated 29-11-1966 executed by the petitioner in favour of Ganpat. It is seen from the order of the Superintendent that he has relied upon certain documents for holding that the tobacco was of Khutan-Patti. The learned Advocate for the respondents was unable to produce these documents for our inspection because we find from the conditions imposed that the seller has to mention application of removal number as well as transport permit number as well as the description of the tobacco and in the instant case petitioner relies upon the two sale-notes executed by Bhai Laxmandas in her favour. From the first sale-note the description of tobacco of 85 kg. is 'Biri-patti' and the description of the tobacco in second sale-note is 'processed-patti' and 'Kandi'. The petitioner while effecting a sale-note in favour of Ganpat Laxman described the tobacco as Biri-patti mixed Kandi. We, therefore, do not find any mistake in the description of tobacco as per the documents produced before us. But it does appear that reliance is 'placed on behalf of the department as is seen from the order on the description of the tobacco given in application of removal form as well as transport permit form. That would show that those documents are prepared in favour of Bhai Laxmandas by the seller from whom Bhai Laxmandas purchased it. It is the case of the petitioner that the petitioner relied upon these sale-notes executed in her favour by Bhai Laxmandas and she relied upon them for the description of the tobacco as well as the application for removal and transport permit. We, therefore, find that if the department is right in arriving at a conclusion that A.R. 1 No. 129 dated 26-7-1966 was for Khutan-Patti tobacco and not for Biri-patti, then Bhai Laxmandas along with the petitioner ought to have been charge-sheeted and a full enquiry should have been made as to who was responsible and whether, in fact, Bhai Laxmandas had paid duty on that tobacco or not. We have already stated that neither the documents were produced nor anybody was examined but statements are made that the office of the Superintendent verified from the documents on the record. Even the numbers of the application of removal form and transport permit mentioned in the order of the Superintendent do not tally with the number of those numbers mentioned in the show cause notice. Under such circumstances we find that there is no proper enquiry in the matter as to whether duty paid tobacco was transported or not by Bhai Laxmandas while effecting the sale-note in favour of the petitioner. We, therefore, pass the following orders :
10. The petition is allowed. The orders passed by the respondents Nos. 1, 2 and 3 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 the provisions of Rule 32, if any, against the petitioner as well as Bhai Laxmandas, considering the circumstances of the case, there would be no order as to costs. Penalty paid be refunded to the petitioner.