TaxTMI 
TaxTMI 
1968 (10) TMI 46
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....lowing lots of diffierent varieties of tobacco. ***** 3. On December 13, 1958 the appellants obtained permission from the Local Central Excise Authorities to mix the above lots of tobacco. The percentage of different varieties of tobacco when mixed would have been as under : Rava — 68.97% Stems Kandi —14.86% Biri Patti — 13.07% Stalk Kandi — 3.00% 4. On December 23, 1958 when the process of mixing was still going on the Superintendent of Central Excise, Preventive Headquarters, Baroda and his party raided the duty paid premises of the appellants. There he seized the entire mixture tobacco weighing Mds. 20004.3 Srs. i.e. 1,64,834.50 lbs. of tobacco. According to that Superintendent when experiments were conducted he found in the above mixture percentage of different varieties as under : Rava — 44.00% Biri Patti — 51.50% Stems Kandi — 3.74% From this he concluded that considerable quantity of non-duty paid Biri Patti tobacco had been utilised in the manufacture of the mixture. Hence notice was issued to the appellants on January 6, 1959 to show cause why action should not be taken against t....
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.... 40 the Collector could not have confiscated the tobacco mixture as it consisted of both, duty-paid tobacco as well as tobacco on which duty had not been paid. His alternative contention was that under any circumstances the Collector could not have confiscated anything more than 60,770 lbs. of the mixture which can be said to represent Biri Patti tabacco on which duty had not been paid. In support of his first contention he heavily relied on the decision of K.T. Desai, J., in M/s. Valimshomad Gulsmhusain Sonavala Co. v. C.T.A. Pillai, 62 Bom. LR 634. 8. The seized tobacco mixture weighed 1,64,834.50 lbs. That included 60,770 lbs. of Biri Patti tobacco on which duty had not been paid. But on the remaining quantity duty had been paid. The tobacco seized was found in the godown licensed to store duty paid tobacco. Hence the appellants were clearly guilty of contravening Rule 40 of the Central Excise Rules which reads : "Except as provided in the proviso to sub-rule (1) of Rule 32 and in Rule 171 no wholesale purchaser of unmanufactured tobacco for the purpose of trade or manufacture and no wholesale purchaser or other unmanufactured products from a curer shall receive into any p....
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....ion laid down by Desai, J. undoubtedly supports the contention advanced on behalf of the appellants. We shall presently show that this statement of the law is not correct but it is necessary to mention at this juncture that in the Sonavala's case, 62 Bom. LR 634 =(AIR 1961 Bom. 48) an innocent third party had purchased the smuggled gold for proper value and mixed the same with unsmuggled gold, which circumstance had an important bearing on the decision of the case. 9. In Institutes of Justinian at page 104 dealing with the topic Commixtio it is observed : "If the things mixed, still remaining the property of their former owners, were easy to separate again, as for instance, cattle united in one herd, when one owner brought his claim by vindicatio his property was restored to him without difficulty but if there was difficulty in separating the materials from each other, as in dividing the grains of wheat in a heap, the obvious mode would be to distribute the whole heap in shares proportionate to the quantity of wheat belonging to the respective owners. But it might happen that the wheat mixed together was not all of the same quality, and therefore the owner of the better kind ....
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....841 - 4 Y & C Ex. 351)." "It has been long settled in our law, that where goods are mixed so as to become undistinguishable, by the wrongful act or default of one owner, he cannot recover, and will not be entitled to his proportion, or any part of the property, from the other owner, but no authority has been cited to show that any such principle has ever been applied, nor indeed could it be applied, to the case of an accidental mixing of the goods of the two owners; and there is no authority nor spuld reasons for saying that the goods of several persons be the property of their several owners, and become bona vacantia." 10. The same principle was again reiterated by the House of Lords in Smurthwaitey v. Hanna, 1894 AC 494. 11. The rules enunciated above are of assistance in finding out a solution to the problem before us though they do not govern the same. In the instant case there is no doubt that the appellants were guilty of an unlawful act in mixing duty paid tobacco with the non-duty paid tobacco but the fact remains that they were the owners of both those lots at the time they mixed them and hence the legal principles set out earlier do not cover such a case. It must....