2022 (3) TMI 508 - HC - VAT and Sales Tax

Seeking to release the raw materials, goods, stock and finished goods seized and detained by the official respondents - removal of alcoholic beverages and violation of provisions of the Pondicherry Excise Act, 1970 - HELD THAT - Provisions of Section 102 of Code of Criminal Procedure even if made applicable to the provisions of the Puducherry Excise Act, 1970, is not attracted to the raw materials of the petitioner, as the said provision applicable only in the context of stolen goods - Section 457 of the Code of Criminal Procedure pre-supposes a seizure of property and where such property is not produced before a criminal for during an enquiry or trial, the Magistrate may make such order as he thinks fit respecting the disposal of such property or deliver such property to the person entitled to the possession thereof, or if such person cannot be ascertained, respecting the custody and production of such property. Further, the Magistrate can order delivery of seized goods to such person during enquiry or trial, if the identity of the person so entitled is known. If seizure has been effected, the official respondents were required to give details of seizure in a report and filed before the Magistrate, in which case, the Magistrate would have issued an appropriate order for delivery of such goods - the petitioner cannot be made to run from pillar to post for no fault of theirs merely because they had engaged the services of the fourth respondent as a contract manufacturer/ job worker to manufacture Indian Made Foreign Liquor by supplying the required raw materials. A mere lock and seal of the premises is not sufficient to conclude a valid seizure if there is no Seizure Mahazar. The officer themselves can allow the release of the goods lying in the distillery of the fourth respondent. Either way, raw materials of the petitioner cannot be retained - the petitioner has made out a case for release of the raw materials - the official respondents are therefore directed to take steps for release of the raw materials of the petitioner immediately, preferably within 15 days from the date of a copy of this order. It is made clear that all the procedural requirements that are required to be observed shall be without prejudice to the rights of the petitioner. The fourth respondent is directed to coordinate with the respondents for the release of the raw materials of the petitioner. The official respondents shall prepare proper delivery note evidencing the release of the raw materials and file a report before the concerned Magistrate - the petition is allowed.

Issues Involved:
1. Legality of seizure of raw materials and goods.
2. Authority to seize goods under the Pondicherry Excise Act, 1970.
3. Procedural compliance under the Criminal Procedure Code (Cr.P.C.).
4. Entitlement of the petitioner to reclaim seized goods.
5. Role of the fourth respondent in the alleged violations.
6. Jurisdiction and remedies available to the petitioner.

Detailed Analysis:

1. Legality of Seizure of Raw Materials and Goods:
The petitioner sought a Writ of Mandamus for the release of raw materials, goods, stock, and finished goods seized by the respondents. The petitioner argued that the fourth respondent, a bottling unit, was engaged under a manufacturing agreement and had no authority to sell products without the petitioner's permission. The petitioner claimed that even if the fourth respondent indulged in duty evasion, the seized goods were for manufacturing purposes and should not be confiscated.

2. Authority to Seize Goods under the Pondicherry Excise Act, 1970:
The respondents argued that the goods were seized due to violations of the Pondicherry Excise Act, 1970. They cited the cancellation of the fourth respondent's license for using counterfeit holograms to evade excise duty. The respondents maintained that the seized goods included bottles with counterfeit holograms and other items.

3. Procedural Compliance under the Criminal Procedure Code (Cr.P.C.):
The petitioner contended that the seizure did not comply with the procedural requirements of the Cr.P.C., specifically Sections 102 and 457. The court noted that the respondents did not file a seizure memo or Mahazar detailing the seized raw materials. The court emphasized that a valid seizure requires a detailed report filed before a superior official, which was absent in this case.

4. Entitlement of the Petitioner to Reclaim Seized Goods:
The court highlighted that the raw materials were lying in the premises of the fourth respondent under lock and seal, without a proper seizure report. The court ruled that if no formal seizure was made, the respondents must release the goods to the petitioner within 30 days. If a seizure was made, the Magistrate should order the delivery of the goods to the petitioner under Section 457 of the Cr.P.C.

5. Role of the Fourth Respondent in the Alleged Violations:
The fourth respondent was accused of using counterfeit holograms and violating the Pondicherry Excise Act, 1970. The court noted that the fourth respondent's license was canceled due to these violations. However, the court emphasized that the petitioner's raw materials should not be retained merely because they engaged the fourth respondent as a contract manufacturer.

6. Jurisdiction and Remedies Available to the Petitioner:
The court directed the petitioner to work out remedies before the appropriate judicial authorities. The court concluded that the petitioner should not be made to run from pillar to post and directed the respondents to release the raw materials within 15 days, ensuring all procedural requirements are observed.

Conclusion:
The court allowed the writ petition, directing the respondents to release the petitioner's raw materials immediately and file a proper delivery note before the concerned Magistrate. The fourth respondent was instructed to coordinate with the respondents for the release of the goods. The court emphasized that the petitioner should not suffer due to the actions of the fourth respondent.

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