MOTIBHAI FULABHAI PATEL & CO. versus M/S. R. PRASAD AND ORS.

Citation: [1969] 2 S.C.R. 580 · Decided: 30-10-1968 · Supreme Court of India · Bench: S.M. SIKRI · Disposal: Case Partly allowed

Judgment (excerpt)

580 
MOTIBHAI FULABHAI PATEL & CO. 
A 
v. 
MIS. R. PRASAD AND ORS. 
October 30, 1968 
[S. M. SIKRI, R. S. 'BACHAWAT AND K. S. HEGDE, JJ.] 
B 
Central Excise Rules, 1944, r. 40-Appe/lants guilty of violating '" 40 
for mixing duty .. paid tobacco with quantity of tobacco on which no duty 
had been paid-Collector confiscating entire mixture and levying fine on 
.,._ 
its value-Whether collector could confiscate only so 111uch of the 1nixture 
on which no duty paid, 
The appellants were tobacco merchants in Baroda in Gujarat State 'and 
were holding Central Excise licence in Forms L-2 and L-5 for the purpose 
of storing, selling ancl processing duty paid and non-duty paid tobacco. 
On December 23, 1958 while the process of mixing some tobacco was 
going on in a godown where duty-paid tobacco was kept, the Superinten-
dent of Central Excise, Preventive Headquarters, Baroda and his party raid-
ed the premises of the appellants and seized a mixture of tobacco weighing 
1,64,834.50 lbs. tobacco 
This mixture included 60,770 lbs. of tobacco 
on wnich duty had not been paid. After the ·appellants were issued a 
show-rause notice why action should not be taken against them under rule 
40 of the Central Excise Rules, 1944, and after they had filed their reply, 
the Collector, Central Excise, by his order dated April 13, 1959 held the 
appellants guiitv of contravening rule 40 levied on them a penalty 
of 
Rs. 2,000 a< well as the duty payable under the law, and also ordered 
the confiscation df the entire quantity of the tobacco seized. As he gave 
the appellants the option of redeeming the same on payment of a fine of 
Rs. I lakh, they paid the fine under protest and secured release of the 
tobacco. The appellants' appeal as well as revision against the Co]]ector's 
order under the provisions of the Central Excise and Salt Act, 1944, were 
both dismissed. The appellants then filed a writ petition under Art. 226 
of the Constitution challenging the legality of the Collector's order but 
this was dismissed by the High Court. 
c 
D 
E 
F 
In appeal to this Court the only challenge was to the Collector's 
order of confiscation. It was contended, relying on the decision in Messrs, 
Valimahomed Gulamhusain Sonavala & Co. v. C.T.A. Pillai, (1960) 42, 
B.L.R., p. 634, that 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, the altornative contention was that the Col-
lector could not in any event have confiscated more than 60,770 lbs. of 
mtxture which could be' said to represent tobacco on which duty had not 
G 
been pa.id. 
HELD : Rule 40 permits the Central Excise authorities to confiscate 
only those goods on which duty had not been paid. It does not permit 
them either specifically or by necessary implication to confiscate 
other 
goods. 
Therefore it was not permissible for the Collector to confiscate 
the entire· tobacco mixture. At the same time no person can be permitted 
H 
to benefit by his wrongful act. No rule of law should be so interpreted 
as to pem1it or encourage its circumvention. 
If by the wrongful act of 
a party he renders it impossible for the authorities to confiscate under 
• 
' ' • 
.... 
A 
B 
c 
D 
E 
F 
G 
H 
MOTIBHAI v. R. PRASAD (Hegde, J.) 
581 
rule 40 the non-duty paid goods, it is open to those authorities to confis-
cate from out of the goods seized, goods of the value reasonably 
re-
presenting th~ value of the non-duty paid goods mixed in the goods seized. 
Applying that rule to the facts of the present case it follows that althuough 
the appellants were guilty under Rule 40 of an unlawful act in mixing 
duty-paid tobacco with non-duty paid tobacco, the Collector could have 
confiscated out of the tobacco seized so much of it as can be held to 
reasonably reoresent the value of the tobacco on which the dutv had not 
been paid. [586 G-581 Bl 
As the parties were agreed that the value of the tobacCI'.> used in the 
mixture for which no duty had been paid could be fixed at Rs. 35,000, 
the fine to be levied on the appellant in lieu of the confiscation that could 
have been ordered had to be fixed at Rs. 35,000. 
The Collector there-
fore had to refund to the appellant a sum of Rs. 65,000. 
Institutes of Justinian, p. 104; Williams on Personal Property ( 18tlz 
edition) p. 50; Spence and Anr. v. The Union Ma1ine Insurance Co. Ltd., 
Law Reports (Common Pleas) 3, 1867-68 and Smurthwaite and Ors. v

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