IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 21351 of 2016
DEVRAJ TOBACCO COMPANY
UNION OF INDIA & 3
MR SP MAJMUDAR, ADVOCATE for the Petitioner
MR CHINTAN H DAVE, ADVOCATE for the Respondents
HONOURABLE MS.JUSTICE HARSHA DEVANI
HONOURABLE MR.JUSTICE A.S. SUPEHIA
Date : 16/01/2017
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. By this petition under Article 226 of the Constitution of India, the petitioner seeks a direction to the respondent authorities to immediately de-seal the two machineries sealed by them from the premises of the petitioner, as reflected in the panchnama dated 29.06.2016 (Annexure “A” to the petition). The petitioner also seeks a direction to the respondent authorities to immediately release the raw materials and other materials seized by them, as reflected in the panchnama dated 29.06.2016 (Annexure “A” to the petition), on the petitioner executing necessary bond for this purpose.
2. The petitioner, a partnership firm, is engaged in the business of manufacturing of filtered cigarettes. It is the case of the petitioner that it has been issued excise registration certificate in Form RC-2 for manufacture of cigarettes. A seizure operation was conducted on the unit of the petitioner firm on 29.06.2016, whereby the officers of the Central Excise department seized various raw materials and packaging material from the premises of the petitioner firm. The materials included tobacco, silver foil, plastic sheet outside cigarette cover, carbon box, outer box, etc., total value whereof was assessed at Rs.37,23,103/-. Two machines which were lying in the premises of the petitioner also came to be sealed by the excise officers. Thereafter, a complaint being Investigation No. INV/DGCEI/VRU/33/2016-17 came to be registered with the Gorva Police Station, District Vadodara for the offences punishable under sections 9(1), (b), (bb) and 9(1) (c) of the Central Excise Act, 1994, pursuant to which the deponent of the petition (hereinafter referred to as the “deponent”) who is a partner of the petitioner firm came to be arrested and was subsequently granted regular bail by an order dated 17.10.2016 passed in Criminal Miscellaneous Application No.19605 of 2016, subject to certain terms and conditions. Pursuant thereto, the deponent has deposited an amount of Rs.10,00,000/- within a week from the date of release and it appears that subsequently, an application has been moved for modification of the said order.
2.1 On 02.08.2016, the Central Excise department issued a show cause notice to the petitioner for confiscation of cigarettes valued at Rs.1,17,62,973/- as well as other raw materials and packaging materials and for levying duty amount of Rs.91,66,764/- along with further penalty. It appears that a corrigendum to the said show cause notice came to be issued on 09.11.2016.
2.2 It appears that in the bail application filed by the deponent, the respondent authorities had filed an affidavit-inreply, wherein it was, inter alia, stated that the department has no objection in de-sealing the machines, provided that the petitioner and his newly registered unit at Muli, Surendranagar undertakes to own the liability, pertaining to central excise on M/s Devraj Tobacco Company, Muli, Surendranagar. It is the case of the petitioner that various representations had been made to release the seized raw materials as well as to de-seal the machineries, however, till date the same have not been considered. Being aggrieved, the petitioner has filed the present petition seeking the reliefs noted hereinabove.
3. Mr. S. P. Majmudar, learned advocate for the petitioner submitted that at the time of search and seizure on 29.06.2016, both the machines came to be sealed with a direction to the petitioner not to tamper with or remove the seals without written permission and supervision of the Central Excise Officers. The attention of the court was invited to the show cause notice dated 07.08.2016 issued by the Additional Director General, Directorate General of Central Excise Intelligence, to point out that the same does not contemplate confiscation of the machinery which has been sealed by the authorities. It was pointed out that the scheme of seizure and confiscation, etc., even in relation to the Central Excise Act, 1944 is contained in sections 100 to 110A of the Customs Act, 1962, however, there are no specific provisions vis-a-vis sealing of goods. It was pointed out that under sub-section (2) of section 110 of the Customs Act, where any goods are seized under sub-section (1) thereof, and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of goods, the goods shall be returned to the person from whose possession they were seized. It was submitted that in the present case, despite the fact that no show cause notice has been issued qua the sealed machineries, the same have not been de-sealed though a period of more than six months has elapsed. Moreover, no order has been passed as contemplated under the proviso to sub-section (2) of section 110 of the Customs Act, extending the period of seizure for any further period. Therefore, continuation of the seizure is not legal. The attention of the court was invited to the averments made in paragraph-6 of the affidavit-in-reply filed on behalf of the fourth respondent to submit that the said respondent has vide letter dated 04.01.2017 imposed conditions for de-sealing the two machines, to submit that when there is no power to seal or continue with the seizure of the machines, the question of imposing any conditions would not arise. It was, accordingly, urged that the respondents be directed to forthwith de-seal the two machines unconditionally and to release the raw materials seized, upon the petitioner executing appropriate bond in that regard.
4. Opposing the petition, Mr. Chintan Dave, learned Standing Counsel for the respondents reiterated the averments made in the affidavit-in-reply filed on behalf of the respondents No.2 and 3 and the respondent No.4, and submitted that the action taken by the respondents is just, legal and proper, and does not warrant interference by this court. It was pointed out that as far as de-sealing is concerned, no objection letter dated 23.12.2016 has already been issued by the DGCEI to the jurisdictional Assistant Commissioner, Central Excise Division, Surendranagar, whereas insofar as the release of raw materials is concerned, the same would be subject to the petitioner executing the requisite bond in that regard. As regards the contention raised on behalf of the petitioner that the respondents have no power to seal the machines, the learned Standing Counsel is not in a position to point out any provision which empowers the respondents to seal the machines. Be that as it may, in the light of the view the court is inclined to take in the matter, it is not necessary to enter into the merits of the larger question as to whether or not the respondents have any power to seal the machines as has been done in the present case.
5. From the facts as emerging from the record, it is an admitted position that a period of more than six months has passed since the goods in question have been seized and the two machines in question have been sealed. Therefore, in the light of the provisions of sub-section (2) of section 110 of the Customs Act, since no notice under sub-section (1) thereof has been given in respect of the sealed machines, and no order extending the period of six months has been passed, continuation of the sealing of the machines in question, is clearly without any authority of law. Therefore, the respondents are not justified in not de-sealing the two machines in question despite the fact that the DGCEI has given no objection certificate in that regard. Insofar as imposition of conditions for de-sealing the machines is concerned, when the respondents have no authority to continue with the sealing, the question of imposition of any condition for de-sealing the same would not arise.
6. Insofar as the release of raw materials is concerned, by virtue of the provisions of section 110A of the Customs Act, the respondent authorities are duly empowered to release the goods pending adjudication on taking a bond from the owner in proper form with such security and conditions as the adjudicating authority may require. The deponent has submitted that he is willing to execute such bond as may be required for release of the raw materials. Under the circumstances, there should be no impediment in releasing the raw materials subject to the petitioner executing the requisite bond.
7. In the above view of the matter, the petition succeeds and is, accordingly, allowed. The respondents are directed to forthwith de-seal the two machines of the petitioner sealed by them, as reflected in the panchnama dated 29.06.2016. The respondents are further directed to forthwith release the raw materials seized by them under the panchnama dated 29.06.2016 on the petitioner executing necessary bond for this purpose. Rule is made absolute accordingly with no order as to costs.
(HARSHA DEVANI, J.)
(A. S. SUPEHIA, J.)