2006 (6) TMI 67 - HC - Central Excise

Section 9A, 9A(2) & 14 of CEA makes the offences non-cognizable & compoundable - In spite of existence of such provision, without giving notice & without summoning, the officers resorted to section 13 & arrested the applicant - officers exceeded under provisions of Indian Penal Code also as per sec. 420/467/468/471 IPC, excise officer have no power to arrest - In present case offence is non-cognizable & compoundable so bail application is allowed - no chance of tampering of evidence

Summary

Issues Involved:

1. Bail application maintainability.
2. Liability for payment of excise duty.
3. Classification of products as Ayurvedic medicines or toiletries.
4. Validity of arrest under Section 13 of the Central Excise Act.

Detailed Analysis:

1. Bail Application Maintainability:

The court addressed the argument that the bail application was not maintainable. It was clarified that under Section 13 of the Central Excise Act, any person arrested for an offence punishable under this Act has the right to approach for bail. The court found this argument to be misconceived, affirming that the applicant, being in judicial custody, had the right to apply for bail.

2. Liability for Payment of Excise Duty:

The primary dispute was whether the applicant's company or T.V.C. Sky Shop Limited was liable for the payment of excise duty. The wrapper of the products indicated that they were "Manufactured and marketed by TVC Skyshop Ltd." and the licencing authority had granted the licence to T.V.C. Skyshop, which included the products "Roop Amruta" and "Daant Pari." An agreement between the applicant and TVC Skyshop stipulated that TVC Skyshop was responsible for any disputes arising from the payment of excise duty. The court noted that the officers of the opposite party should have conducted an enquiry under Section 14 before exercising the power of arrest under Section 13. The court abstained from recording any finding on who is responsible for the payment of excise duty, indicating that this dispute should be settled by the proper forum.

3. Classification of Products as Ayurvedic Medicines or Toiletries:

The court examined whether the products "Roop Amruta" and "Daant Pari" were Ayurvedic medicines or toiletries. The applicant argued that these products were Ayurvedic medicines and should be classified under Chapter 30 of the Central Excise Tariff Act, 1985, with duty payable under Section 4 of the Act. Conversely, the Central Excise Department contended that these were cosmetic preparations meant for beautification and should be classified under Chapter 33, with duty assessed on the basis of M.R.P. under Section 4A of the Act. The court noted that the wrappers of both products indicated they were "an ayurvedic proprietary medicine." However, it emphasized that the bail application was not the appropriate forum to conclusively determine this classification, which should be adjudicated by the competent forum after evidence is presented.

4. Validity of Arrest under Section 13 of the Central Excise Act:

The court found that the arrest of the applicant under Section 13 of the Act was arbitrary and unjustified. Section 9A of the Act makes the offences non-cognizable and compoundable. The court noted that there was no FIR lodged, and the officers should have summoned the concerned persons for enquiry under Section 14 before resorting to arrest. The court criticized the officers for exceeding their authority by also invoking provisions of the Indian Penal Code.

Conclusion:

The court concluded that the offence was non-cognizable and compoundable, with no risk of tampering with evidence or absconding by the applicant. Consequently, the court found it appropriate to grant bail to the applicant, ordering his release on furnishing a personal bond and sureties to the satisfaction of the concerned court.