2016 (6) TMI 1379 - HC - Central Excise

Seizure of goods - Furnishing of cash security/bank guarantee equivalent to 25% of the value of goods - HELD THAT - That part of the goods seized by the department has become trash on account of the fact that the petitioner could not furnish the bank guarantee as sought by the department. For evasion of duty, the department is at liberty to initiate both criminal as well as civil action as per law. The goods which are lying seized in the factory premises/godown of the petitioner be released to the petitioner on deposit of the duty in advance and on furnishing B-11 bond towards future final penalty - the department shall not insist for bank guarantee of 25%of the value of goods. Petition disposed off.

Summary

Issues:
- Modification of communication directing cash security/bank guarantee
- Applicability of previous court decision on similar condition
- Seizure of goods due to failure to provide bank guarantee
- Evasion of duty and initiation of criminal/civil action
- Modification of department's directions regarding release of seized goods

Analysis:
The writ petition sought modification of communications requiring cash security/bank guarantee equivalent to 25% of the value of goods. The petitioner relied on a previous court decision in Century Metal Recycling Pvt. Ltd. v. Union of India, where a similar condition imposed by the Central Excise & Customs Department was nullified. The court directed the return of deposited amount and release of goods without bank guarantee. However, the respondent department claimed total duty evasion, arguing the previous decision did not apply.

Due to the failure to provide a bank guarantee for future final penalty, part of the goods seized became time-barred. The court noted that the department could initiate criminal and civil action for duty evasion. Citing the Century Metal Recycling Pvt. Ltd. case, the court modified the department's directions. It ordered the release of seized goods upon depositing duty in advance and furnishing a B-11 bond for future final penalty, without insisting on a bank guarantee.

In conclusion, the court disposed of the writ petition by modifying the department's directions. It allowed the release of seized goods to the petitioner without the requirement of a bank guarantee, emphasizing the deposit of duty in advance and the furnishing of a B-11 bond. The decision aimed to address the issue of goods becoming time-barred due to the failure to provide the bank guarantee, while also acknowledging the department's right to take legal action for duty evasion.