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2015 (6) TMI 620 - BOMBAY HIGH COURT

2015 (6) TMI 620 - BOMBAY HIGH COURT - 2015 (324) E.L.T. 307 (Bom.) - Validity of arrest of Petitioner - Held that:- Summons was served on the petitioner and he was called to Pune to appear before the empowered officer. He failed to comply with this summons. Authorization of arrest was then given. It is submitted for the Department that Excise Officer empowered to arrest person like the petitioner was at Pune and so the petitioner was taken to Pune. Admittedly the petitioner was produced before .....

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o the power of the officer in charge of a police station. Such officer produced the petitioner before the Magistrate of Pune and within the prescribed period. There is provision in the Act like section 22 taking care of search, seizure etc. Thus no relief as claimed by the petitioner can be given in the present case. - Decided against assessee. - Criminal Writ Petition No. 1158 of 2013 - Dated:- 15-4-2015 - T. V. Nalawade And I. K. Jain,JJ. For the Petitioner : Shri R R Mantri, Adv. For the Resp .....

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. Both the sides are heard. 2. The petitioner is share holder of majority shares of one private company by name "M/s Rutuja Ispat Private Limited Company situated at Jalna, Maharashtra". Shri. Shailesh Badjate and Shri. Sushil Badjate, two sons of the present petitioner, are the Directors of the company and on the record they are conducting the business of this company. The petitioner and his two sons are living in the same premises situated in Jalna where the office of the company is .....

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e aforesaid product. There was information that though this activity was not accounted in the returns, a separate record was prepared about the unaccounted manufacture, sale etc. of the aforesaid product and that record was available in the pen-drive and in the computer of the petitioner and his sons. 4. The officers of the Directorate General of the Central Excise and also the officers of Pune and Nasik Commissionorates took action and search of the premises by name "Shreyas", Ahimsa .....

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earch of the premises of few employees of this factory and from them also incriminating material came to be recovered. 5. It revealed during investigation that during the period 1-1-2009 to 7-3-2011 this company had manufacture MS/TNT bars valued more than ₹ 140 crore but this company had submitted returns to the Central Excise Department of the goods manufactured worth ₹ 26.16 crore. Meagre amount of Excise duty on this quantity of goods is paid. The record with regard to raw materi .....

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. This amount is kept by the Excise Department in fixed deposit in a bank. 7. During investigation, the statements of employees of the factory are recorded. There is statement of person like Accountant, Prashant Jadhav and the statement shows that as per the instructions given by Sushil, he had maintained separate record of unaccounted purchase of raw material and unaccounted manufacture and sale of finished material. The statement reveals that separate electronic record was created in respect o .....

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tions were entered only in electronic record. There are statements of employees to the effect that they used to hand over cash directly to the present petitioner also. 9. Shailesh, aforesaid Director contended that Sushil was maintaining record. He showed readiness to pay Excise Duty if there was short payment. The company was formed in the year 2004 and Shailesh was Director of this company right from beginning. Sushil became Director from 2005-06. 10. The officers drew panchanama in presence o .....

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recorded. The statements of persons from whom raw material was collected are recorded and the statements of the persons, concerns to whom the unaccounted finished material was sold are also recorded. They are compared with the aforesaid electronic data. These statements and record seized is in conformity with the case of the Department that there were unaccounted transactions. 12. The statements of the employees of the factory and the record collected by the Department show that benami accounts .....

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. Similarly, in the account of Clerk, Chelmeti, amount of ₹ 46.42 lakh was deposited and the pass book and the cheque book of this account were kept with Sushil or with the present petitioner. Similarly, in the name of another employee, Jadhav, amount of ₹ 33.99 lakh was deposited in the bank. His statement shows that he had withdrawn amounts from the bank and he used to hand over the amounts to the present petitioner. Thus amount of more than one crore rupees was deposited by the pe .....

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Chief Judicial Magistrate on 17-8-2011. Bail was refused to Shailesh and Sushil by the Chief Judicial Magistrate. Even the Sessions Court refused the bail to them. This Court at Principal Seat granted bail to Sushil and Shailesh subject to following conditions:- (a) that they shall not transfer the property of the factory viz Gat No.199/3 of Jalna until adjudication proceeding is completed and liability towards duty and penalty is discharged; (b) They are to give undertaking and security by pro .....

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9 to 7-3-2011. In the initial inquiry the value of the manufactured goods was shown as ₹ 132.71 crores but after making further inquiry it was ascertained that the value of manufactures goods was ₹ 143 crores and most of the goods were cleared without making payment of Duty. There is allegation that the Duty of more than ₹ 15.75 crore is not paid. In respect of shortage of the goods there will be charge of Excuse Duty of more than ₹ 11 lakh, there will be penalty which ca .....

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ted to exempt him from personal appearance. As he avoided to appear, arrest memo was served on 16-8-2011 and he came to be taken in custody at 1.30 hours at Jalna. 17. This Court is considering the contentions made with regard to various reliefs claimed one by one. Petitioner has claimed declaration that he is not liable to aforesaid activities of the private company as he was simply a share holder. It is his case that amount of ₹ 45 lakh taken over from him is not liable to confiscation a .....

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e Central Excise as amended up to 2-9-1997. The Notification shows that as provided under section 12 of the Central Excise Act, Central Government has declared that provisions of Sections 105 (1), 110, 115 (excluding clauses (a) and (e) of sub-section (1)), clause (a) of section 118, sections 119, 120, 121 and 124, clause (b) and sub clause (ii) of clause (c) of sub-section (1) of section 142 and section 150 of the Customs Act shall apply to the matters specified therein for like matters provide .....

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ty"; and (3) reference to "goods which are sought to be smuggled" shall be read as goods sought to be removed for evasion of Excise Duty. 19. In view of aforesaid notification and the sections of Excise Act, one needs to keep in mind the provisions of the Customs Act mentioned in the Notification. Provision of section 105(1) of the Customs Act is with regard to the powers of search given to the officers specially empowered. This provision shows that the officer who is authorized a .....

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ase of aforesaid nature and the documents and things of the nature mentioned in section 105. 20. The provision of section 110(2) of the Customs Act shows that when the goods are seized under sub section (1) of section 110 and notice in respect of such goods is not given, under clause (a) of section 124 of Customs Act within six months from the date of seizure, the goods shall be returned to the person from whose possession they were seized. This period can be extended by six more months after fo .....

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te conveyance. This also provides for burden which is cast on the owner to prove that he had no knowledge that his conveyance was being used for carrying the goods in respect of which the offence under the Act is committed. There are provisions with regard to confiscation of package in which goods were found and also confiscate other goods which were used for concealing such goods etc but they need no consideration in the present matter. 22. Provision of Section 121 of the Customs Act, 1962 read .....

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eeds to be given to such person to make representation in writing against the proposed confiscation and imposition of penalty. Reasonable opportunity of hearing is also expected in such a proceeding. However if the person concerned requests, oral representation can also be accepted. 24. The provision of Section 142(b), clause (ii) of clause (c) of the Customs Act shows that there is power to the officers to distrain goods until amount payable is paid. 25. The aforesaid provisions are made applic .....

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egotiable instruments; and (e) any other kind of movable property. 27. On the basis of the aforesaid definition, the learned counsel for the petitioner submitted that, period of six months given in section 110(2) of the Customs Act is applicable to the sale proceed of excisable goods in respect of which there is evasion of estate duty. He submitted that in view of this definition and provisions of Section 121 of the Customs Act read with sections 110 and 124 of the Customs Act, it was necessary .....

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; given in Customs Act. When section 110 of the Customs Act is made applicable, it needs to be presumed that the definition of "goods" given in the Customs Act needs to be read into the words "any goods" given in provisions of sections 110 and 124 of the Customs Act. These words further need to be read with following words like "liable to confiscation under this Act". Thus, all those goods which are liable to confiscation under the Act are covered in section 110(2) .....

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ise Act. At the cost of repetition it needs to be mentioned that in place of "smuggled goods" the words "excisable goods" which have been removed or sought to be removed in contravention of any of the provisions of the Central Excise Act and the Rules" are to be read. (iii) Provisions of Sections 118, 119 and 120 of the Customs Act are made applicable. They show that packages and other goods used for evasion of customs duty on the goods involved are also liable to confis .....

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he learned counsel for the petitioner has placed reliance on following reported cases:- (1) 1983 (14) E.L.T. 1715 (Del.) (Shantilal Mehta v. Union of India; (2) 1982 (10) E.L.T. 273 (Bom.) (Dhirajlal Amritlal Mehta v. Union of India); (3) 1987 (31) E.L.T. 30 (Cal.) (D. Sengupta v. Collector of Customs); and, (4) 1996 (81) E.L.T. 483 (All.) (Krishna Gopal Chander v. Union of India). 28. Though the aforesaid position of law is in favour of the petitioner, the other circumstances of the present cas .....

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erty and this undertaking was given to see that his sons get bail. Liability of payment of duty, penalty and also interest is to be fixed. There are more provisions in the Central Excise Act like provisions of sections 110 and 110-A. While considering the claim of the petitioner in such a case these provisions need to be kept in mind. Circumstance of fraud mentioned in section 11-A (4) of the Central Excise Act is prima facie made out in the present matter. There is prima facie case for evasion .....

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y to see that in such cases information is given to the Income Tax Department also. When such matter comes before Court it is also duty of the Court to see that the Income Tax Department is heard in such a case and intimation of the incident is given to the Income Tax Department also. In view of these circumstances, this Court holds that the amount cannot be returned to the petitioner. Returning of the amount will amount to virtually disposing of the property which can also be attached under the .....

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to make out a prima facie case that he was involved in running of the business and he was collecting money, sale proceeds in respect of the excisable goods. He was actively involved in evasion of the excise duty. Thus the proceeding of confiscation and imposition of penalty can go on against him. The learned counsel for the Department has placed reliance on the following cases reported as Polar Mar (2) AIR 2004 SC 3328 (Commissioner of Customs v. M/s Charminar Nonwovens Ltd.). 30. The submissio .....

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0 lakh (for old provision ₹ 30 lakh) and there is such specific allegation of the Department. When a case is filed in Criminal Court, the Court has also power to forfeit such amount and that can be seen in the provisions of the Code of Criminal Procedure and also section 110 of the Central Excise Act. The learned counsel for the Department has placed reliance on a case of Rajasthan High Court reported as (2006) 202 CTR Raj 231 (Harvest Gold Food (India) Pvt. v. Union of India). 31. The pro .....

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ly with the summons and the conditions of the summons. Provision of Section 18 gives procedure for such an arrest. Provision of Section 19 of this Act runs as under:- "19. Disposal of persons arrested.- Every person arrested under this Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer-in-charge of the nearest police stati .....

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