2007 (7) TMI 215 - HC - Central Excise

Assessee s case is that in spite of repeated requests, the documents which were not relied upon, were not returned to them - Some of the non-relied documents appear to have been given subsequent to the orders passed by the respondent no. 2 (commissioner) Commissioner is directed to make available the copies of the data recovered from the assessee s seized computers, which have become the basis of the conclusion of undervaluation assessee s petition allowed

Issues Involved:
1. Seizure of documents and computers by the Department of Revenue Intelligence (DRI).
2. Alleged undervaluation and misdeclaration of imported goods.
3. Denial of access to seized documents required for defense.
4. Compliance with government circulars regarding the return of non-relied documents.
5. Violation of principles of natural justice.
6. Availability of alternative remedy through appeal.

Detailed Analysis:

1. Seizure of Documents and Computers by the Department of Revenue Intelligence (DRI):
The first petitioner, a partnership firm running a 100% export-oriented unit, was raided by the DRI on 24-8-2004 based on intelligence reports of undervaluation and evasion of customs and excise duty. During the raid, computers and voluminous records were seized. Statements were recorded under Section 108 of the Customs Act, wherein the petitioner admitted to undervaluation of imported goods. The data retrieved from the computers contained incriminating evidence supporting the undervaluation claims.

2. Alleged Undervaluation and Misdeclaration of Imported Goods:
The DRI concluded that the petitioner misdeclared the value of imported goods, reporting it as Rs. 16.91 crores instead of the actual Rs. 57.99 crores. The DRI issued a show cause notice on 10-3-2006, questioning the undervaluation and proposing to revise the value, deny benefits under the beneficial notification, impose duty, confiscate imported materials, and impose central excise duty with interest and penalties.

3. Denial of Access to Seized Documents Required for Defense:
The petitioners claimed that despite repeated requests, the seized documents necessary for their defense were not made available. They relied on a government circular dated 2-2-1996, which mandates the return of non-relied seized documents within six months if no show cause notice is issued. The petitioners argued that the documents were essential for filing their reply to the show cause notice.

4. Compliance with Government Circulars Regarding the Return of Non-relied Documents:
The petitioners cited a subsequent circular dated 8-9-2006, reiterating the requirement to return non-relied documents and allow photocopies of relied documents. The respondents contended that many non-relied documents were needed for other investigations and offered photocopies instead. The respondents provided letters indicating that copies of non-relied documents were offered to the petitioners, who collected them after the impugned order was passed.

5. Violation of Principles of Natural Justice:
The petitioners argued that the principles of natural justice were violated as they were denied the opportunity to defend themselves adequately. They emphasized that the non-relied documents were relevant for their defense, even if not relied upon by the Department. The petitioners pointed out that their request for adjournment was ignored, and the impugned order was passed without considering their plea for documents.

6. Availability of Alternative Remedy Through Appeal:
The respondents argued that the petitioners had an alternative remedy to file an appeal with the Central Excise Service Tribunal. The court noted that while exhaustion of alternative remedies is a principle of self-limitation, it is not a pre-condition for writ jurisdiction. In exceptional circumstances, certiorari may be issued without exhausting statutory remedies, especially when government circulars binding on the Department are involved.

Conclusion:
The court found merit in the petitioners' claims regarding the violation of natural justice and the need for documents to defend themselves. The court directed the respondents to make available the copies of the data retrieved from the computers and return the four CPUs. The petitioners were instructed not to encumber their property, which would remain charged to the Revenue until the decision on the show cause notice. The impugned order dated 28-2-2007/13-3-2007 was quashed, and the show cause notice was revived for reconsideration by the respondent no. 2. The rule was made absolute without any order as to costs.

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