2009 (9) TMI 753 - HC - Central Excise

Summary

Issues: Detention of inputs/raw materials by Central Excise authorities, question of levy of duty, permission to utilize detained inputs/raw materials, furnishing security in the form of bank guarantee

Detention of Inputs/Raw Materials:
The High Court observed that the Central Excise authorities had conducted stock verification of inputs and finished products of the petitioner's company. Samples of non-dutiable and dutiable inputs and finished products were taken and sent for testing. The Court noted that since the verification had already been done and samples sent for testing, there was no valid reason to continue detaining the inputs/raw materials. It was emphasized that under the guise of a detention order, authorities cannot impede business operations or manufacturing activities.

Question of Levy of Duty:
The judgment highlighted that the issue of levy of duty or any further verification was yet to be decided by the Central Excise authorities. It was made clear that the detention order should not be misused to halt the business activities of the petitioner. The Court emphasized that the authorities must follow due process and adjudicate on the matter appropriately.

Permission to Utilize Detained Inputs/Raw Materials:
In the final decision, the High Court disposed of the writ petition by directing the respondents to allow the petitioner to use the detained inputs/raw materials. However, this permission was subject to the condition that the petitioner furnishes security of two lakh rupees in the form of a bank guarantee in favor of the concerned authority. Once the bank guarantee was provided, the detention order on the goods would no longer be valid. It was explicitly stated that cooperation in the adjudication proceedings was mandatory for the petitioner.

This judgment by the Allahabad High Court addressed the issues of detention of inputs/raw materials by Central Excise authorities, the pending levy of duty, granting permission to utilize the detained goods, and the requirement of furnishing a bank guarantee as security. The ruling emphasized the importance of following due process, conducting necessary verifications, and ensuring that business activities are not unduly disrupted by detention orders.