1978 (7) TMI 114 - HC - Central Excise

Plant and Machinery - Seizure of goods - Removal in contravention of any rule - Confiscation - Classification List - Change in the stand of Excise authority -Effect - Search and Seizure - Scope of

Summary

Issues Involved:
1. Legality of the seizure of goods and detention of plant and machinery.
2. Validity of the show cause notice for the imposition of duty, penalty, and confiscation of goods.

Detailed Analysis:

1. Legality of the Seizure of Goods and Detention of Plant and Machinery:

Petitioner's Contention:
The petitioner argued that the seizure of goods and detention of plant and machinery were illegal and contrary to the provisions of the Central Excise Act and Rules. The petitioner maintained that no excise duty or auxiliary duty was payable on the goods manufactured, as they were produced from duty-paid raw materials.

Respondents' Contention:
The respondents contended that the classification list submitted by the petitioner was incorrect, and duty was indeed payable on the goods. They asserted that as the petitioner was removing goods based on a false description in the classification list, the authorities were entitled to levy duty, impose penalties, and confiscate goods. They also claimed that the authorities were empowered under the Act to seize goods and detain plant and machinery.

Court's Analysis:
- The court first considered the legality of the action of seizing goods and detaining plant and machinery. It was noted that the proper determination of whether duty was leviable on the goods should be made in proceedings related to the imposition of duty, which was already initiated by a show cause notice.
- The court found no provision in the Act or Rules authorizing the detention of plant and machinery prior to adjudication. Rule 173-Q allows for the confiscation of plant and machinery only after adjudication under Section 33 of the Act. Therefore, the detention of plant and machinery was not authorized by any provision of law.
- Regarding the seizure of goods, the court examined Section 110 of the Customs Act, which allows for the seizure of goods liable to confiscation. However, the court found that Rule 173-Q(a) and (d) of the Central Excise Rules, which were relied upon by the respondents, did not apply. The goods were seized before removal, and there was no evidence of intent to evade payment of duty.
- The court also considered Rule 200, which allows for the seizure of goods found in possession of any person in control of a vessel, cart, or other means of conveyance. This rule did not apply to goods lying in a factory.

Conclusion:
The court concluded that the detention of plant and machinery and the seizure of goods were not justified under any provisions of the Act or Rules. Therefore, W.P. No. 327/77 was allowed, and the respondents were directed to revoke the seizure and detention.

2. Validity of the Show Cause Notice for Imposition of Duty, Penalty, and Confiscation of Goods:

Petitioner's Contention:
The petitioner argued that no excise duty or auxiliary duty was leviable on the goods, and hence, no case was made out for levying duty, penalty, or confiscation of goods, plant, and machinery. The petitioner sought to quash the show cause notice.

Court's Analysis:
- The court noted that the issue of whether duty was leviable on the goods was a matter that should be decided in the proceedings initiated by the show cause notice.
- The court considered the writ petition to be premature, as the petitioner had approached the court at the stage of a show cause notice. The petitioner had the opportunity to appear before the authorities and present their case.
- The court emphasized that proceedings regarding the levy of duty and penalty are quasi-judicial, and it was confident that the authorities would approach the matter in a quasi-judicial manner, not influenced by the stand taken in the counter affidavit.

Conclusion:
The court dismissed W.P. No. 2542/77, stating that it was not necessary to interfere at the stage of a show cause notice. The petitioner was advised to raise their contentions before the authorities concerned.

Summary:
The court allowed W.P. No. 327/77, declaring the detention of plant and machinery and the seizure of goods as unauthorized and unjustified under the provisions of the Central Excise Act and Rules. However, W.P. No. 2542/77 was dismissed as premature, and the petitioner was advised to present their case before the authorities in the quasi-judicial proceedings initiated by the show cause notice.