2009 (10) TMI 542 - HC - Customs

Goods and trucks seized - contraband in nature - provisional release of the trucks - no excise duty is payable on the goods - availing area based exemption under notification No. 50/2003-C.E - seizure order is wholly arbitrary and illegal Held that - The detention and seizure orders are bad - provisional release of the goods and truck are wholly arbitrary and highly excessive goods be provisionally released.

Summary

Issues:
1. Detention and seizure of goods by Central Excise Department.
2. Provisional release conditions imposed by the Department.
3. Exemption claimed by the petitioner under Notification - General Exemption No. 42.

Analysis:

1. The petitioner, a registered company under the Companies Act, was engaged in the manufacturing of M.S Ingots. Two consignments of M.S. Ingots were intercepted and seized by the Central Excise Department on suspicion of being contraband goods. The petitioner challenged the seizure order as arbitrary and illegal, contending that no excise duty was payable on the goods.

2. The Department demanded bonds and FDRs for the provisional release of the goods and trucks. The Court, in an earlier order, directed the authority to reexamine the petitioner's claim for exemption under Notification - General Exemption No. 42. The subsequent counter affidavit and order revealed that the petitioner was indeed entitled to exemption under notification No. 50/2003-C.E., establishing that the detention and seizure orders were unfounded.

3. Consequently, the Court found the conditions imposed for the provisional release of goods and trucks to be arbitrary and excessive. The terms were modified, allowing the provisional release upon the petitioner furnishing the required bonds and only one FDR of Rs. 50,000. The Court held that the petitioner succeeded in part, granting relief from the excessive conditions imposed by the Department.

This judgment highlights the importance of proper examination of exemption claims under relevant notifications and the need for authorities to ensure that seizure orders are based on valid grounds to prevent arbitrary actions against legitimate businesses.