TMI Blog1978 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... ods fall, the duty leviable on such goods etc., before removing the excisable goods. The appropriate officer approves the list with such modifications as are considered necessary. Accordingly the assessee was submitting the list of goods which is known as "Classification List". According to the petitioner it manufactures Steel Hoops and Steel Strips [Which are sub-items (ii) and (iii) of Tariff Item 26AA] from duty paid Hot Rolled Strips and Steel Skelp which fall under sub-item No. (iii). The skelp which is used by the petitioner as raw material has already suffered excise duty which was paid by the Hindustan Steel Limited which is the manufacturer of skelp. Similarly, in the case of Hoops manufactured from H.R. Strips the duty was already paid by Tata Iron and Steel Company. According to the petitioner therefore, no duty is payable by the petitioner and as auxiliary duty is only a percentage of the Excise duty, no auxiliary duty is payable. On this footing the petitioner was submitting the classification list and removing the goods without paying excise duty. In the petition it is stated that this state of affairs was accepted by the Department without any comment from 1971 onwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition No. 327 of 1977 is that the seizure of the goods and the detention of Plant and Machinery is illegal and contrary to the provisions of the Act and the Rules. Regarding the show cause notice issued, the contention of the petitioner is that no Excise Duty or Auxiliary Duty is leviable in respect of the goods and hence no case is made out for levying the duty or the penalty or for confiscation of the goods, Plant and Machinery. 6. In the counter affidavit it is contended that the classification list which was being subjected was found to be not correct and the duty is payable on the goods. As the goods do not fall within the description contained in items 2 and 3 of Item 26AA. As the petitioner was removing the goods after submitting classification list which contained false description of the goods, the authorities are entitled not only to levy duty on the goods which had been removed but also to impose penalty and direct confiscation of the goods. It is also stated that the authorities were duly empowered under the Act to seize the goods and direct detention of the Plant and Machinery. 7. It is convenient to consider the legality of the action of the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd machinery is concerned. 11. The next question is whether the respondents are entitled to seizure the goods. The learned counsel for the Central Government relies upon Section 110 of the Customs Act which was made applicable in regard to the duties imposed by Section 3 of the Central Excise Act pursuant to a notification made by the Central Government on 4th May, 1963 as amended on 6-2-1965 and 23-3-1968 issued in pursuance of the power conferred under Section 12 of the Central Excise Act which provides that the Central Government to issue notification declaring that any provision of the Sea Customs Act relating to levy on and exemption from Customs duties etc. With such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties imposed by Section 3. 12. Section 110 of the Customs Act is in the following terms : "If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods." The expression 'under this Act' is defined in the notification referred to above "including reference to the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme was introduced it was open to the legislature to have amended the rule to make it clear that even goods which are in the custody of the assessee would be liable to be seized. But no such provisions has been made. It is well settled that penal provisions have to be construed strictly and in favour of the assessee unless the court is compelled by the language to construe it otherwise. I am of the view that the language is very clear and leaves no doubt that what was intended to confer was the power to seize goods which the assessee removes in contravention of any of the rules and the power of seizure does not extend to goods which are still in the factory and which have not reached the stage of removal. 15. Sri Subrahmanya Reddy next relied upon Rule 173-Q (d) which provides for confiscation of goods in respect of which the manufacturer contravence any of provisions of the rules with intent to evade payment of duty. I am also of the view that these goods cannot be considered to be goods in respect of which the petitioner can be said to have contravened the rules with the intent to evade payment of duty. It is no doubt true that the petitioner was submitting classification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound in possession of any person who is in control, or use of any vessel, cart or other means of conveyance which is searched. Rule 200 cannot have any application to goods lying in a factory. I, therefore, agree with the contention of the petitioner that Rule 200 has no application. 17. For all these reasons I am of the view that the seizure of the goods in the present case cannot be justified under any of the provisions of the Act or the rules relied on by the learned counsel for the Central Government. 18. In the result W.P. No. 327/77 is allowed. No. costs. W.P. No. 2542 of 1977 : 19. This petition in directed against the notice to show cause why duty and penalty should not be levied and why the goods should not be confiscated. This is not a matter which can be satisfactorily gone into in a writ petition. Further, I consider the writ petition is premature as the petitioner has approached this court at the stage of a show cause notice only. It is open to him to appear before the authorities and contend before them that the duty, much less a penalty, in not leviable and no case for confiscation is made out. The learned counsel for the petitioner submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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