TMI Blog1972 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... re of goods in the hands of bona fide purchaser for value, as it is claimed, who had paid the excise duty thereon to the manufacture of such goods, that even if there was such a provision, it would be violative of Article 19(1)(f) and (g) of the constitution, and that Rule 9(2) of the rules would have no application to a case like this, where the goods were not in possession, custody or control of the manufacturer. 2.The petitioner is a dealer in yarn and cloth at Madurai, and in its usual course of business, purchases yarn from various Textile Mills, including Kaleeswarar Mills Ltd., Kalaiyarkoil. On October 16, 1971, the Assistant Collector of Central Excise on a check of the stock and accounts of Kaleeswarar Mills, noticed a shortage of 34,504.7 kg. of cotton yarn of various counts in stock with reference to the Central Excise statutory account in Form R.G. 1 maintained by the Mill showing the daily production, clearance and closing stock of the factory. Rule 52A provides for removal of excisable goods from a factory duty covered by a gate pass after debiting the appropriate duty in the personal ledger account as required under Rule 173G(1). The Assistant Collector found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Excise Duty paid by it had been duly accounted for in the invoices. Beyond this precautions, it says, it would not be humanly possible for the purchaser to exercise any further check, or control to see whether the manufacturer had actually paid the duty or not, and so, according to the petitioner, the seizure and detention effected by the respondent of the goods in its hands and its agents, of which it was the owner, on the allegation of non-payment of excise duty by the manufacturer thereof amounted to penalizing an innocent and bona fide purchaser for value for no fault on its part. 3.Section 3 of the Central Excises and Salt Act, 1944 charges duty of excise on all excisable goods at the rates set forth in the First Schedule, and yarn is among such goods. Chapter II of the Act contains other provisions relating to restriction on possession of excisable goods, power of Courts to order forfeitures, recovery of sums due to Government, offences and penalties as well as for application of the provisions of Act VIII of 1878, of Central excise duties. Section 12 authorises the Central Government to declare by notification in the Official Gazette that any of the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining the permission of the proper officer on the form. Sub-rule (2) of this rule, which is important for this case, says that if any excisable goods are, in contravention of sub-rule (1) deposited in, or removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made by the proper officer and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation. Under Rule 52 when the manufacturer desires to remove goods on payment of duty, either from place or a premise specified under Rule 9 or from a store-room or other place of storage approved by the Collector under Rule 47, he shall make application in triplicate to the proper officer in the proper form and shall deliver it to the officer at least twelve hours before it is intended to remove the goods, and then the officer shall assess the amount of duty due on the goods, and on production of evidence that this sum has been paid, allow the goods to be cleared. Rule 52A directs that no excisable goods shall be delivered from a factory except under a gate pass in the proper form. The rule env ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e removed from the factory without such debit entry, they will be treated as non-duty paid. All removables of excisable goods from a factory or a warehouse to which the Self Removal Procedure applies, should be covered by a Gate Pass, delivery note, dispatch advice, invoice etc. The rate and amount of duty assessed and paid by the assessee on each consignments has to be shown on the Gate Pass. It should also be signed by the assessee, or by his duly authorized agent. But the Gate Pass is not required to be countersigned by any Central Excise Officer at any stage either before a blank book is brought into use, or at the time of clearance of the goods. Under the Self Removal Procedure, therefore, the Gate Pass constitutes the basic document on which the goods can be cleared from the factory without any physical supervision whatsoever of the Central Excise Officers. The documents recovered from the petitioner's premises, as it is stated, do show that excise duty had been paid on the goods concerned at the time of their clearance. But, according to the respondent, actually no corresponding debit entries had been made against clearance of the relative consignment in the Personal Ledger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to confiscation an absolute one, not depending on the mens rea of any one. 5.The provisions in Chapter III of the Excises and Salt Act do envisage powers of the Excise officers to search and seize offending goods, that is to say, excisable goods which have been removed from the premises of their production, or manufacture without payment of duty thereon. In fact, Section 22 provides for remedy against vexatious search and seizure by Excise Officers. As we noticed earlier, Section 12 enables the Central Government by notification to adapt for purposes of the Central Excise Duties the provisions of the Customs Act, 1962, and that in exercise of this power, Section 110 of the Customs Act, among other provisions, has been adapted by the Central Government for purposes of the Excises and Salt Act. Under that section, if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize goods. This is the power which the respondent has invoked, and we think rightly so in this case. There is, therefore, no substance in the petitioner's contention that the seizure of the goods was illegal. 6.We also think that there is no force in the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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