TMI Blog1999 (1) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... called upon to explain as to why interest and penalty be not imposed. They were further given an opportunity to show cause as to why the plant and machinery be not confiscated and penal action as contemplated under Rule 209 be not taken. Aggrieved by the notice, the petitioners have approached this court through the present petition under Article 226 of the Constitution. They pray that the show cause notice be quashed and that the respondents be restrained from continuing with the proceedings of the case "till such time final decision is arrived at by the Court of Sub Divisional Magistrate, Amloh in FIR No. 113 dated 31-8-1998." The petitioners also pray that the notification issued by the Central Government "whereby provisions of Sections 105(1), 110, 142 and 150 of the Customs Act have been adopted in Central Excise Act" be declared ultra vires. The sequence of Events may be briefly noticed. 2.The petitioners claim that vide letter dated April 20, 1998, a complaint was lodged with the SHO Police Station, Mandi Gobindgarh that "certain documents/papers/invoices signed and unsigned are missing from the factory/office..." On April 22, 1998, at about 8 AM, a raiding party headed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. He had sent a communication on April 23, 1998 retracting from the statement. 3.On the same day viz. April 22, 1998, the "residential premises of Shri Rajiv Puri Ex-Manager in the factory of the petitioners company" were also searched. A number of documents were seized. It is alleged that these documents "have nothing to do with the petitioner company as the same were misappropriated/stolen by Shri Rajiv Puri from the factory during the period he was working in the factory and were kept at his residence for the reasons best known to him." A copy of the Panchnama prepared after the search has been produced as Annexure P. 8. 4.Thereafter, the statements of certain other employees etc. were also recorded by the authorities. Even these persons had subsequently retracted. The petitioners allege that vide letters dated April 28, 1998, May 8, 1998, May 30, 1998, June 8, 1998 and June 16, 1998, respondent No. 4 was requested to supply copies of the "Resumption memo, the statements of staff and Directors, copies of the records resumed." A copy of the letter dated June 16, 1998 has been produced as Annexure P. 15. According to the petitioners, "only a part of the documents...." were s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally adopted various other provisions. The adoption of the provisions "of sub-section (1) of Section 105, Section 110, Section 142 and Section 150 of the Customs Act, 1962" was wholly illegal. The petitioners further maintain that the whole case is based upon the documents stolen by Mr. Rajiv Puri. If the proceedings before the court result in his conviction, the "whole foundation" of the case built by the respondents to levy excise duty on the petitioner-company would crumble. Despite this position, the respondents have not paid any heed "to the request of the petitioner-company to keep the proceedings of the case in abeyance till such time (as) the criminal court arrives at a final conclusion in the case of theft and forgery against Shri Rajiv Puri..." On these premises, the petitioners claim the reliefs as noticed above. 8.A Caveat had been entered on behalf of the respondents. When the petition was listed for preliminary hearing, on December 2, 1998, a request was made for adjournment to enable the respondent to file a reply. Accordingly, time was granted and an affidavit of Dr. Balbir Singh, Assistant Commissioner (Preventive) Central Excise Commissionerate-I, Chandigarh was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other documents as detailed in para 2 of the show cause notice dated 2-9-1998 indicated removal of excisable goods other than those reflected in the Central Excise Statutory records." Thus, the records were resumed vide memo dated April 22, 1998 which was duly signed by Petitioner No. 2. A copy was handed over to him. This was admitted by him in his statement dated April 22, 1998 "tendered under Section 14 of the Act." Thus, the respondents maintain that "no search of the factory premises of Petitioner No.1 was conducted by the Central Excise Staff." However, in pursuance of the information, the residential premises of Mr. Rajiv Puri were searched on the strength of a search warrant in the presence of two independent witnesses. A Panchnama had been prepared which was duly signed by Mr. Rajiv Puri and the two independent witnesses. The respondents maintain that the notification issued by the Central Government under Section 12 of the the Act is legal and valid. The respondents point out that the documents indicate "unaccounted for receipt of raw materials, production and removal of excisable goods which are over and above" the amount accounted for in the Central Excise Statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers that vide letter dated November 14, 1998, a request had been made to Respondent No. 2 to keep the proceedings in abeyance, has been controverted. It has been averred that no such letter has been received in the office of Respondent No. 2. Various averments made by the petitioners have been controverted. It has been pleaded that the show cause notice as also the notification issued by the Central Government under Section 12, are legal and valid. 11.The petitioners have filed a replication. On behalf of the respondents, a supplementary affidavit has been filed by the counsel containing the contentions as well as copies of the decisions on which reliance has been placed. 12.Counsel for the parties have been heard. 13.Mr. Ashok Aggarwal, learned Counsel for the petitioners has contended that the search conducted by the respondents was not in conformity with law. Thus, the show cause notice based on this search and the documents seized at that time, cannot be sustained. Further proceedings on the basis of the show cause notice, cannot be allowed to continue. 14.On the other hand, Mr. Satish Aggarwal, Counsel for the respondents has contended that there was no search or seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters in respect of the duties imposed by Section 3." Section 14 gives the power to a duly authorised officer to "summon any person" whose attendance is considered necessary "to give evidence or to produce a document..." A person who is so summoned is bound to attend and state the truth. The proceedings of enquiry are deemed to be "a judicial proceeding". Section 18 provides that "all searches...and all arrests made under this Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898, relating respectively to searches and arrests made under that Code." 20.Section 37 empowers the Central Government to make rules "to carry into effect the purposes of the Act." In exercise of this power, the Central Government has framed the rules called the Central Excise Rules, 1944. Rule 197 entitles "any officer duly empowered by the Commissioner" to have "access....to any premises registered under these rules and to any place where excisable goods are grown, processed or stored, sorted or manufactured...for carrying out such scrutiny, verification and checks subject to such conditions and limitations as may be specified in the instructions issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that we are running our factory regularly continuously for the whole day except the peak load hours fixed by the PSEB..." 24.The list referred to in the above statement has also been produced by the petitioners. It is Annexure P. 2 with the writ petition. It is a "Resumption Memo." It is a "list of the records resumed in respect of M/s. Gian Castings (P) Limited...by the Hqrs Preventive Staff on 22-4-1998." If there had been a search and the documents had been seized, the petitioners would have alleged that the documents were not resumed but were seized. A seizure memo would have been prepared. It was not so. Only a memorandum of resumption was prepared. 25.It was pointed out on behalf of the petitioners that Mr. Mohinder Gupta had retracted from his statement. It is so. It is alleged that a communication dated April 23, 1998 had been sent to the Chairman, Central Board of Excise and Customs. A copy has been produced as Annexure P.4 with the writ petition. It does not bear any reference number. In fact, the said number has been left blank. Even the date has not been given in the upper portion of the communication. It is only under the signatures of the petitioner that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the petitioners, there was nothing to prevent them from doing so. However, it appears that they had chosen not to do so as the purpose was only "to scrutinise, verify and check" the record that had been received along with the "information". The `surprise' visit by a team of officers was clearly permissible under Rule 197. There is nothing to doubt the correctness of the assertion made by the respondents that the purpose was the scrutiny, checking and verification of the records. 29.It also deserves mention that in the Anti-Evasion Information Report, it had been inter alia mentioned that the evasion was approximately in crores. The case was based on record. The proposed action was calculated to "recover duplicate records and to process the records furnished by an informer and to ascertain the quantum of duty evasion." Thus, the primary purpose was the cross checking of the records. 30.In view of the above, the plea taken on behalf of the respondents appears to be well founded. The first question is answered accordingly. It is held that there was no raid. There was no seizure. Is the show cause notice issued to the petitionersReg. (Q.2) : vitiated as the respondents had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort indicates the existence of the material on which a reasonable person could be satisfied that there was violation of the provisions of the Act. In this situation, it cannot be said that there were no grounds for believing that there were reasons for search and seizure. 33.The second question is answered accordingly. : Is the notification regarding adoption of theReg : (Q.3) provisions of the Customs Act invalid ? 34.Section 12 of the Act contains the relevant provision. It reads as under :- "Application of the provisions of Act 62 of 1962 to Central Excise Duties : The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the Customs Act, 1962 (52 of 1962) relating to the levy of and exemption from customs duties, drawback of duty, warehousing, offences and penalties, confiscation, and procedure relating to offences and appeals shall, 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. 35.A perusal of the above provision shows that the Central Government can declare by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding missing documents was brought to their notice. In fact, a specific plea has been taken by the respondents that they have read about this report only in the writ petition. Neither orally nor in writing were they ever informed that certain documents were missing. The inevitable conclusion is that the report has been prepared for the purpose of making out a case in this petition. 40.It was also pointed out that a report had been lodged with the police on August 31, 1998. A copy of this report has been produced as Annexure P. 21. We have perused this report. Since the matter is pending before the court, we do not consider it appropriate to make any detailed comments regarding this report. Still, the fact remains that even after knowing that the residential premises of Mr. Rajiv Puri had been searched on April 22, 1998 and documents had been recovered, the petitioners had chosen to wait for more than four months before making any allegation against him. Probably, in an effort to cover up, it was said that a telephone was received from Mr. Rajiv Puri that he wanted Rs. 5 lacs for giving back the documents. Curiously, the day was not specified. Even after that the petitioners had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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