1979 (8) TMI 85 - HC - Central Excise

Court affirms excise officials' power to prevent tax evasion through sampling unmanufactured tobacco in bonded warehouse.

The court upheld the authority of excise officials to take samples from unmanufactured tobacco in a bonded warehouse to prevent tax evasion. It affirmed ... Samples - Power of arrest - Samples of unmanufactured products - Drawal of - Validity - Prosecution - Writ of Prohibition Issues Involved:1. Authority of Excise Officials to Take Samples2. Power to Confiscate Goods3. Power of Arrest4. Validity of Analysis by Trade Panel5. Issuance of Writ of ProhibitionDetailed Analysis:1. Authority of Excise Officials to Take Samples:The appellants contended that there is no express power to take samples from unmanufactured tobacco in a bonded warehouse. They argued that if a suspicion arises regarding the quality of tobacco, there is no specific rule empowering the Excise authorities to take samples and act against the warehouser. The respondents, however, justified their actions by stating that the Department is responsible for ensuring that tobacco received into the warehouse is properly accounted for, and no illicit removal or substitution occurs. The court examined the Central Excises and Salt Act, 1944, and related rules, concluding that the Act's primary objective is to prevent revenue loss due to irregular or illegal activities by the warehouse keeper. The court held that the excise officials have the power to take samples to verify the quality of the goods in the warehouse, as this is essential to prevent tax evasion.2. Power to Confiscate Goods:The appellants conceded that the power of confiscation is vested in the statutory officials but argued that there is no power to take samples. The court disagreed, stating that the power to take samples is a means to an end, providing an additional opportunity for the alleged delinquent to prove otherwise. The court emphasized that if the excise officials suspect unauthorized substitution of goods, they have the right to take samples to substantiate their suspicion and prevent tax evasion.3. Power of Arrest:The appellants expressed concerns about the threat of arrest. The court clarified that Section 13(1) of the Central Excises and Salt Act expressly provides the power to arrest. If the excise officials have reason to believe that the petitioners substituted goods in their warehouse without permission, they are duly empowered to arrest the person involved in such activity. The court found no merit in the appellants' apprehensions regarding the threat of arrest.4. Validity of Analysis by Trade Panel:The appellants challenged the analysis of samples by a panel of traders, arguing that these traders are competitors. The court held that it is within the authorities' discretion to determine the sufficiency of evidence to support the intended prosecution or further statutory action. The court noted that if the prosecution is based on the panel's opinion and the court accepts it, the appellants cannot complain. The methodology adopted by the investigating agency to sustain their conviction and belief that an offense has been committed under the Central Excise Act cannot be challenged in these proceedings.5. Issuance of Writ of Prohibition:The court emphasized that a writ of prohibition is an extraordinary remedy that can only be sought in cases of total absence of jurisdiction or excessive exercise of jurisdiction by the authority. The court found that neither of these conditions was present in this case. The Central Excise officials had the right to confiscate goods if they suspected unauthorized entry of substituted goods into the warehouse and had the concurrent right to arrest the delinquent if they had a reasonable belief that an offense under the Act had been committed. Therefore, the writ of prohibition was rightly refused by the learned Judge.Conclusion:The writ appeals were dismissed, and the court found no reason to grant leave to appeal to the Supreme Court, as the decision was based on the interpretation of the provisions of the Central Excise Act and the Customs Act, which are self-explanatory and do not raise any substantial question of law of general importance.