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Ultramarine and Pigments Ltd. Vs. the Deputy Collector of Central Excise (Valuation), Madras and anr. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtChennai High Court
Decided On
Case NumberCrl. Misc. Petition No. 7047 of 1982
Judge
Reported in1983(13)ELT926(Mad)
ActsCode of Criminal Procedure (CrPC) , 1973 - Sections 482 and 561-A; Central Excises Act, 1944 - Sections 3 and 33; Central Excise Rules, 1944 - Rules 53, 173(4), 173-Q, 173-Q(1), 210, 216 and 226; Constitution of India - Article 226
AppellantUltramarine and Pigments Ltd.
RespondentThe Deputy Collector of Central Excise (Valuation), Madras and anr.
Appellant AdvocateV. Gopinathan, Adv.
Respondent AdvocateG. Krishnan, Central Government Public Prosecutor
Cases ReferredS. Kaliarajan v. Assistant Collector of Central Excise
Excerpt:
.....of seized items - sections 482 and 561-a of criminal procedure code, 1973, sections 3 and 33 of central excises act, 1944, rules 53, 173 (4), 173-q, 173-q (1), 210, 216 and 226 of central excise rules, 1944 and article 226 of constitution of india - petition sought direction to return of items seized and removed from godowns of petitioner - at time of raid there was unaccounted stock of excisable goods which were in fully manufactured state, packed in cartons and ready for dispatch - items were not entered into rgi register - rules 173-q, 210 and 216 empowers authority to seize goods - adjudication proceedings pending and power to return seized property exercised by criminal court - petition dismissed. - - the petitioner was prepared to offer substantial security or surety or..........before the deputy collector of central excise, madras 34. it was rejected on the ground that the goods seized from the ultramarine and pigments ltd., are considered as material evidence in the departmental adjudication proceedings and hence they cannot be released at that stage. 6. mr. v. gopinathan, learned counsel appearing for the petitioners, contended that under rule 206(3) of the rules, pending orders of the adjudicating central excise officer, the goods seized may be released to the owner on taking a bond from him in the proper form with necessary security. the petitioner was prepared to offer substantial security or surety or bank guarantee for the safe custody of the valuable goods. if the goods are not properly stored, kept and maintained, the quality of the goods would.....
Judgment:
ORDER

1. This is a petition filed under Section 482 Crl. P.C. to direct the return of the items valued to the tune of more than Rs. 3 lakhs, seized and removed from the godowns of Messrs Ultramarine and Pigments Ltd., 25B, Sipcot Industrial Estate, Ranipet. The petition by the Ultramarine and Pigments Ltd. represented by their Manager, R. Krishnaswamy, arises under the following circumstances :

The Synthetic Detergent Division at Ranipet manufacture organic surface active agent, classified as OSAA - Item 15AA in the schedule for purposes of levying and collecting duties of excise on the excisable goods under Section 3 of the Central Excises and Salt Act, 1944. The petitioner is the Manager (Accounts) in charge of the administration of the factory. According to him, all registers, accounts, etc. as required by the Act and the Rules framed thereunder are properly maintained and monthly returns and return on materials used and of goods manufactured in the factory are periodically submitted to the concerned authorities as required by law. The Daily Stock account book RGI is maintained and the stock on hand is being posted daily in the said took.

2. The manufacturing process is carried on in the factory floor while the finished products when made ready for dispatch are entered in the RGI Register and kept in the Bonded warehouse. The finished products to be packed, partly packed and not yet finally packed will all be kept in factory itself. When the packing is completed, the finished goods will be duly posted itself. When the packing is completed, the finished goods will be duly posted in the said register and accounted for and then stored in the Bonded Warehouse. Periodical checks and verifications are being done by the Inspecting authorities of the department. Sometime surprise verifications are also done by the officers of the Preventive Division.

3. During the months of November and December 1982, 28-11-1982 was the last working day and the next working day was 3-12-1982. From 29-11-1982 to 2-12-1982, the factory was kept under lock and key. Plenty of items of partly packed, to be packed and not yet finally packed were left in the floor of the factory to be shifted to the Bonded Warehouse, subsequently, when they were fully packed.

4. On 2-12-1982, the Inspector of Preventive Division of the Central Excise Department raided the factory and searched the goods aforesaid and prepared a mahazar notifying the items with particulars such as the date of manufacture, packing slip and some items which were already noted but not entered in the RGI register i.e., daily stock account. The value of the goods mentioned in the mahazar is to the extent of Rs. 3,81,419.11. The non-posting of these items, according to the petitioner, was because the factory was closed from 19-11-1982 to 2-12-1982. It is admitted that the items were not entered in the RGI register as they would have been entered in the account on the morning of 3-12-1982, before the stocks were removed into the Bonded Warehouse. After effecting the seizure of all items, the Inspecting staff of the Central Excise Department, left the premises and the huge stocks were subsequently removed from Ranipet to Vellore.

5. A petition was filed on 3-12-1982 by the petitioner's Consultant for the return of the seized goods before the Deputy Collector of Central Excise, Madras 34. It was rejected on the ground that the goods seized from the Ultramarine and Pigments Ltd., are considered as material evidence in the departmental adjudication proceedings and hence they cannot be released at that stage.

6. Mr. V. Gopinathan, learned counsel appearing for the petitioners, contended that under Rule 206(3) of the Rules, pending orders of the Adjudicating Central Excise Officer, the goods seized may be released to the owner on taking a bond from him in the proper form with necessary security. The petitioner was prepared to offer substantial security or surety or bank guarantee for the safe custody of the valuable goods. If the goods are not properly stored, kept and maintained, the quality of the goods would deteriorate resulting in heavy financial loss to the firm. The Department may not have the facility to keep the goods seized from the petitioners and, if they are kept in any open yard, or semi-closed and roofed rooms, the goods are likely to lose their colour, perfume, shape, weight etc. The printing thereon would also get decayed and there is a risk of the entire goods becoming useless and they cannot be subjected to re-processing. If loss is incurred, the amounts invested by the petitioners cannot be reimbursed and the firm which is a public limited company cannot regain the loss so sustained. By directing the return of the goods to be kept and maintained in the godowns of the said firm, the department will not stand to be prejudiced, pending disposal of the adjudication proceedings.

7. Learned Public Prosecutor for the Central Government opposes the petition of the petitioners, supported by an affidavit filed by the Deputy Collector of Central Excise. According to him, there was a check conducted by the Preventive Officers of the Vellore Division on 2-12-1982 of the factory premises of the petitioner. There was unaccounted stock of excisable goods which are in fully manufactured state, packed in cartons and ready for deswatch. On examination of the packing and cartons, it was found that they had marked packing slips bearing the dates of previous months. A perusal of RGI register showed the above described items were not brought into the records. The Officers were satisfied that the said items were unaccounted and were meant for clandestine removal and hence seized the same under a mahazar for taking action under the Central Excise Rules. The petitioner has deliberately contravened the provisions of Rules 53, 173(4), 173-Q(1)(b)(1)(d) and 226 of the Central Excise Rules 1944, inasmuch as he has failed to enter the excisable items viz., detergents under seizure in the RGI register, failed to maintain the accounts in respect of production, manufacture, delivery or disposal of the goods and had not properly maintained the excise records, solely with the intention to evade payment of excise duty. The goods with packing slips etc. are important material objects for the purpose of adjudication and action to be taken under law and, if they are left with the petitioners, they may be tampered. It is submitted that the departmental adjudication proceedings is pending and this petition is not maintainable. Further, there is no criminal proceeding pending in the matter and hence this petition is premature.

8. In support of his contentions, the learned Central Government Prosecutor relied on the decision in Govindasami v. Collector, Central Excise, Madras, 1972 L.W. Crl. 191, wherein Somasundaram J. held when a Collector of Customs seized and retained any goods, he does so in exercise of statutory authority conferred on him by the Act. The proceedings before him are not therefore, criminal in nature. The Court can take cognizance of the offence under the Customs Act when the complaint is actually filed before it by the Officers with the necessary sanction under the Customs Act. If there is no criminal proceeding, the inherent powers of the court could not be invoked, pending the adjudication proceedings. The learned Judge hence dismissed the petition for release of a car involved in transporting smuggled goods.

9. My attention was also drawn to the decision in S. Kaliarajan v. Assistant Collector of Central Excise, Sivakasi, 1973 L.W. 208. This is a case arising, like the case on hand, under the Central Excises and Salt Act, 1944. Approving the decision of Somasundaram J. referred to above, Gokulakrishnan J. observed as follows :-

'The present case on hand is analogous to the one decided by Somasundaram J. It is always open to the petitioner to invoke the jurisdiction of the High Court under Art. 226 of the Constitution in order to see that the adjudication proceedings are dropped or expeditiously disposed of by the Central Excise department. It is also open to the petitioner to file appropriate petition before the authorities of the Central Excise department to get back the match boxes. I do not think that it is correct on the part of this court to order the return of these match boxes under the powers vested by S. 561-A, Crl. P.C. In these circumstances, this petition is dismissed with a direction to the petitioner to take out appropriate proceedings on advice as mentioned above.'

10. The petitioner is a manufacturer of organic surface active agent falling under Item-15 AA of the Central Excise Tariff. The Central Excise department Officials seized goods valued more than Rs. 3 lakhs from the petitioner's factory premises on 2-12-1982. Under Section 33 of the Central Excise Act, power is given for adjudication and under Rules 173 Q 210 the authority has got the power to confiscate the goods. The above stated power of the adjudicating authority is a statutory one. On the strength of the two decisions cited above, pending adjudication proceedings, direction from this court cannot be sought for by the petitioner for the release of the goods. It is admitted, there is no criminal case pending regarding the goods seized in the case. The power to return the property is exercised by the Criminal Court when it is seized of the matter. The property in the instant case is still with the Central Excise department and not in the custody of the Court. Hence, I am of opinion this petition is not maintained.

11. Learned Counsel for the petitioner contended the goods seized are valuable ones and are not easily transportable from Vellore to Madras where the adjudication proceedings are being conducted. The goods in such transit are liable to get damaged. On behalf of the department, the learned Central Government Prosecutor stated it is not necessary to remove the goods from Vellore to Madras for the sake of adjudication proceedings. Even otherwise the department should take necessary safeguards till the disposal of the adjudication proceedings and the department should do well to complete the investigation as early as possible and issue show cause notices to the petitioner within a reasonable short time. The valuable goods seized should not go waste or get spoiled by efflux of time.

12. The petitioner is at liberty to move any other forum as contemplated in the judgment of Gokulakrishnan J. referred to above, to get the necessary relief.

13. With these observations, the petition is dismissed.


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