2000 (1) TMI 51 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the detention memos dated 30-12-1999 and 31-12-1999.
2. Right of the petitioner to operate its industrial unit despite the detention.
3. Legality of the seizure of movable goods from the Managing Director's residence.

Detailed Analysis:

1. Legality of the Detention Memos:
The petitioner challenged the detention memos issued under Rule 230 of the Central Excise Rules, 1944, which allowed the detention of goods, plant, and machinery when excise duty was unpaid. The petitioner argued that no amount was due as the claims for abatement and redetermination of production capacity were pending. However, the respondents contended that excise duty was fixed based on installed capacity, and arrears of more than Rs. 98 lacs were due. The court noted that the petitioner had an appeal pending before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) and that the High Court was not the proper forum to determine the justiciability of the detention order. The court suggested that the petitioner could seek redress from the Commissioner of Appeals or the Commissioner of Central Excise.

2. Right of the Petitioner to Operate its Industrial Unit:
The petitioner claimed that the detention of the plant and machinery led to the stoppage of production, causing irreparable loss. The court examined Rule 230 and concluded that it only authorized the detention of goods to prevent their transfer or disposal. The rule did not prohibit the use of the detained property for production. The court held that the petitioner had the right to use the detained plant and machinery for production, provided they were not transferred or disposed of. The respondents were directed to remove any seals from the detained items, allowing the petitioner to resume production.

3. Legality of the Seizure of Movable Goods from the Managing Director's Residence:
The respondents conducted a raid on the residential premises of the Managing Director, detaining various household goods, including jewelry and cash, under Section 12 of the Central Excise Act read with Section 121 of the Customs Act. The court found it astonishing that the respondents could believe these items represented the sale proceeds of excisable goods without any material evidence. However, since the petitioner did not claim ownership of the seized goods, the court did not address the propriety of their seizure.

Conclusion:
The writ petition was partly allowed. The court directed the respondents to remove seals from the petitioner's furnaces, diesel generating set, overhead cranes, and electric transformers, allowing their use for production. The detention under Rule 230 would continue until otherwise ordered by the appropriate authority. The petition was dismissed in other respects, with no order as to costs.