Reasonable allowance for natural wastage upheld where excise discretion is controlled by facts and arbitrariness is not proved.

Rule 223-A of the Central Excise Rules, 1944 was read as requiring the proper officer to make a reasonable allowance for waste by evaporation or other natural causes, so the Collector's discretion was not arbitrary merely because no general CBEC instructions had been issued. The standard of reasonableness controlled the power, and the rule was held not violative of Article 14. On the tobacco shortage dispute, the warehouse owner bore the burden of explaining the deficiency, and the Collector was entitled to consider storage duration, varying loss percentages and the absence of evidence supporting a higher allowance. No arbitrariness or unreasonableness was shown to justify interference.

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Issues: (i) Whether Rule 223-A of the Central Excise Rules, 1944 vested arbitrary power in the Collector because no instructions had been issued by the Central Board of Excise and Customs for making allowance for waste by evaporation or other natural causes; (ii) Whether the excise authorities' determination of permissible deficiency in tobacco stock was unreasonable or arbitrary so as to warrant interference.

Issue (i): Whether Rule 223-A of the Central Excise Rules, 1944 vested arbitrary power in the Collector because no instructions had been issued by the Central Board of Excise and Customs for making allowance for waste by evaporation or other natural causes.

Analysis: The rule requires the proper officer to make a reasonable allowance for waste by evaporation or other natural causes, and the reference to instructions of the Central Board of Excise and Customs is not the sole source of power. The discretion is primarily vested in the Collector, who must assess reasonableness on the facts of each case. The absence of general instructions does not extinguish or invalidate that power, and the standard of reasonableness itself operates as a control on the discretion.

Conclusion: Rule 223-A does not confer arbitrary power and is not violative of Article 14 of the Constitution of India.

Issue (ii): Whether the excise authorities' determination of permissible deficiency in tobacco stock was unreasonable or arbitrary so as to warrant interference.

Analysis: The burden to explain shortage lay on the owner of the warehouse goods. In the case of tobacco, loss by driage or evaporation may occur, but the Collector was entitled to consider the duration of storage, the varying percentages of loss in different lots, and the absence of material showing that a higher allowance was justified. Interference under Article 226 was not warranted merely because a larger allowance might also have been arguable; arbitrariness had to be shown, and none was established.

Conclusion: The allowance fixed by the Collector was not shown to be arbitrary or unreasonable.

Final Conclusion: The appeal failed, the administrative determination of shortage allowance was sustained, and no ground for judicial interference was made out.

Ratio Decidendi: A statutory discretion to make allowance for natural wastage is not arbitrary where the rule itself requires a reasonable assessment by the proper officer, and a deficiency assessment will not be interfered with unless arbitrariness or unreasonableness is affirmatively shown on the facts.

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