2016 (2) TMI 17 - HC - Central Excise

Arrest of the petitioner for alleged evasion of excise duty - Authorization - Validity of extension of remand - The main thrust of argument of learned counsel for the petitioner is with respect to Section 9A(1A) of the Act by suggesting that only if the opposite parties come to a conclusion that the evasion of excise duty was to the tune of more than ₹ 1 crore, the offence can be treated to be a non bailable and cognizable offence. The second part of argument is with respect to non confirming with the provisions of Sections 19, 20 and 21 of the Act. Held that - It does not appear from the facts of the case that evasion of excise duty as alleged touches on the border line to enable the petitioner to claim that the offence is bailable and non cognizable in nature. The prima facie assessment on scrutiny of the documents and on physical verification of the materials indicate evasion of excise duty at almost ₹ 10 crores. Such tentative assessment would not give any benefit to the petitioner as the same is almost ten times to the ceiling, by which the offence can be construed to be a bailable or non bailable offence. Procedure - Section 19 very categorically states that every person arrested under this Act shall be forwarded without any delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate. In absence of any authorization to act in terms of Sections 19 and 21 of the Central Excise Act, 1944, the remand of the petitioner pursuant to the prayer made by an officer not authorized to forward the petitioner for remand, the consequent order of remand dated 21.12.2015 automatically gets vitiated. It has been submitted at the Bar by the learned counsel for the petitioner that the remand of the petitioner is being extended from time to time without there being any such prayer made by the prosecuting agency. Be that as it may, since it has already been held that the impugned order dated 21.12.2015 is not in accordance with law and the remand being contrary to the provisions of Central Excise Act enumerated above, I am inclined to allow this application. Accordingly, this application is allowed and the impugned order dated 21.12.2015, passed by the learned Special Judge, Economic Offence in C-2-1/2015 is hereby quashed and consequently the petitioner is directed to be released forthwith.

Summary

Issues:
Petitioner's arrest and remand legality under Section 41A of Cr.P.C.

Analysis:
The petitioner, a Director of an Industrial Unit, was arrested following a search operation by Central Excise Intelligence officers. The petitioner alleged full cooperation during the investigation, questioning the legality of his arrest and subsequent remand. The petitioner contended that final quantification of alleged evasion was not completed, challenging the remand as the offense was non-cognizable and bailable until proven otherwise. The petitioner argued a violation of procedural safeguards under Sections 19, 20, and 21 of the Central Excise Act.

The respondent justified the arrest based on substantial evidence of excise duty evasion exceeding Rs. 1 crore, categorizing the offense as non-bailable and cognizable. The respondent highlighted the petitioner's involvement in the evasion and lack of cooperation during the investigation. The respondent obtained approval from the Additional Director General of Central Excise Intelligence before the arrest, following due process under Sections 19, 20, and 21 for remand.

The court analyzed Section 9A(1A) of the Act, emphasizing that the tentative assessment of evasion around Rs. 10 crores outweighed the threshold for a non-bailable offense, justifying the remand. Regarding the legality of remand, the court referred to Sections 19, 20, and 21, requiring Central Excise Officers to be empowered for such actions. The court noted that the Intelligence Officer lacked authorization to remand the petitioner, rendering the remand order invalid.

Consequently, the court allowed the application, quashing the remand order dated 21.12.2015, and directing the immediate release of the petitioner. The judgment highlighted the necessity for proper authorization and adherence to procedural requirements under the Central Excise Act for arrests and remands, ensuring legal compliance and safeguarding individual liberties.