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1970 (8) TMI 33 - HC - Central Excise

Issues Involved:
1. Legality of seizure of goods by Excise Authorities.
2. Legality of search and seizure of documents.
3. Application of Sea Customs Act, 1878 and Customs Act, 1962 to the Excise Act.
4. Compliance with Section 165 of the Criminal Procedure Code.
5. Extension of time for issuing show cause notice under Section 110(2) of Customs Act, 1962.
6. Right to return of goods and documents seized.

Detailed Analysis:

1. Legality of Seizure of Goods by Excise Authorities:
The Excise Authorities alleged that the Petitioners were evading excise duty by running unauthorized powerlooms and creating bogus concerns. They seized goods from the Petitioners between 11th March 1963 and 20th March 1963. The Petitioners contended that there was no legal provision allowing the seizure of their goods. The Excise Authorities justified the seizure under Rule 201 of the Excise Rules and Section 178 of the Sea Customs Act, 1878, which allowed seizure of goods liable to confiscation. The Court held that Section 178 was applicable at the time of seizure, and the seizure was not illegal. The power to seize under Section 178 was independent of any search, and the seizure was justified as the goods were liable to confiscation under Rule 9(2) of the Excise Rules.

2. Legality of Search and Seizure of Documents:
The Excise Authorities conducted searches and seized documents from the Petitioners' premises on 18th March 1963. The Petitioners argued that the searches violated Section 18 of the Excise Act and Section 165 of the Criminal Procedure Code. The Court noted that the search order did not comply with all requirements of Section 165, such as recording reasons for the search. However, it found substantial compliance and held that the search was not illegal. Even if the search was illegal, the documents seized would not be returned as they were relevant to ongoing proceedings.

3. Application of Sea Customs Act, 1878 and Customs Act, 1962 to the Excise Act:
The Petitioners argued that the Central Government had no power to apply provisions of the Sea Customs Act, 1878 or Customs Act, 1962 to the Excise Act. The Court held that searches and seizures were part of the procedure relating to offences under the Excise Act, and Section 12 authorized the application of such provisions. The Court found that the provisions of the Sea Customs Act, 1878 continued to apply until 4th May 1963, when they were replaced by provisions of the Customs Act, 1962.

4. Compliance with Section 165 of the Criminal Procedure Code:
The Petitioners contended that the search order did not comply with Section 165 Cr. P. C. requirements, such as recording reasons for the search and obtaining a Magistrate's warrant. The Court found that the search order mentioned the grounds for belief and the necessity of the search, though not in detail. It held that there was substantial compliance with Section 165, and the search was not illegal. The Court also noted that the search was conducted under Rule 201 of the Excise Rules, which allowed searches without a Magistrate's warrant.

5. Extension of Time for Issuing Show Cause Notice under Section 110(2) of Customs Act, 1962:
The Petitioners argued that the extension of time for issuing a show cause notice was invalid as they were not given an opportunity to show cause against it. The Court held that the extension order was valid even if made after six months from the date of seizure. It rejected the argument that the Petitioners had a right to be heard before the extension, as it would defeat the purpose of the investigation. The Court followed the Mysore High Court's judgment, holding that the order of extension was not void for lack of opportunity to show cause.

6. Right to Return of Goods and Documents Seized:
The Petitioners sought the return of goods and documents seized, arguing that the seizures were illegal. The Court held that the goods were not liable to be returned as the seizure was justified under Section 178 of the Sea Customs Act, 1878 and Rule 201 of the Excise Rules. It also held that the documents seized were relevant to ongoing proceedings and would not be returned even if the search was illegal. The Court dismissed the petition, noting that complicated legal questions were involved, and no costs were awarded.

Conclusion:
The High Court dismissed the petition, holding that the seizure of goods and documents by the Excise Authorities was justified under the applicable legal provisions. The Court found substantial compliance with Section 165 Cr. P. C. and held that the extension of time for issuing a show cause notice was valid. The Petitioners were not entitled to the return of the seized goods and documents.

 

 

 

 

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