2009 (1) TMI 237 - HC - Central Excise

Reward Informer Finalization of demand - As per the same, informants from public as well as the officers of the department are entitled to reward up to 20% of the amounts of duty involved plus amount of fine and penalty levied, imposed and recovered. Guidelines are prescribed for fixing the reward amount. Since the in formation supplied by the petitioner unearthed evasion of duty by the company, pending adjudication proceedings an advance reward of Rs. 5 lakhs was paid to the petitioner Held that - The appeal proceedings relate only to penalty and as far as reward amount is concerned it has already been realised and the reward for both the informer and the officers is much less than the admissible amount matter remanded to reward committee with a direction to re-consider the issue of payment of further reward to the petitioner in accordance with guidelines.

Summary

Issues:
Challenge to reward amount determination by Reward Committee based on guidelines.

Analysis:
The petitioner, an employee of a company, reported evasion of excise duty by the company to the Central Excise Department. A reward scheme by the Government entitled informants to a percentage of the duty recovered. The petitioner received an advance reward of Rs. 5 lakhs, but the Reward Committee decided it as the final reward, which the petitioner challenged. The respondents argued that the discretion for reward determination lies with the Committee and Collector, and the amount paid was correct. The court examined the guidelines for rewards and found that the Committee did not adequately justify restricting the reward to Rs. 8.5 lakhs, less than 10% of the total recovered amount. The court noted that without the petitioner's information, the evasion would not have come to light, and a more thoughtful decision was required from the Committee. The court directed the Committee to reconsider the reward issue in line with the guidelines within two months.

In conclusion, the court found that the Reward Committee did not properly apply the guidelines in determining the reward amount for the petitioner. The court directed the Committee to review the matter and make a decision considering all aspects stipulated in the guidelines. The court disposed of the writ petition with the direction for re-consideration of the reward amount within a specified timeframe to ensure a fair and just determination based on the guidelines.