1994 (1) TMI 138 - AT - Central Excise

Issues Involved:
1. Legality of the police seizure and admissibility of evidence.
2. Validity of the show cause notice.
3. Appellant's involvement in the manufacture and sale of labeled bidis.
4. Time-barred nature of the show cause notice.
5. Impact of the appellant's acquittal in criminal proceedings on the Central Excise case.

Issue-wise Detailed Analysis:

1. Legality of the police seizure and admissibility of evidence:
The police raided the appellant's house and seized bidis and labels without a Central Excise license. The appellant contended that the police were not authorized to effect seizures or record statements under the Central Excise Act or Rules. The Tribunal noted that while the police were not authorized to seize goods or record statements under the Central Excise Act, the Central Excise Department took over the case and proceeded with their own investigation. The Tribunal acknowledged that the statements recorded by the police were not admissible under the Central Excise Act, but the Department's subsequent actions were valid.

2. Validity of the show cause notice:
The appellant argued that the show cause notice was not properly issued as it was signed by the Superintendent for the Additional Collector. The Tribunal held that if the Additional Collector had taken the decision and the Superintendent issued the order "for Additional Collector," it did not constitute an irregularity that would vitiate the proceedings.

3. Appellant's involvement in the manufacture and sale of labeled bidis:
The appellant admitted to selling loose bidis but denied manufacturing labeled bidis. The Tribunal noted that the appellant's admission and the recovery memo indicated that the appellant was engaged in the business of selling bidis. The Tribunal observed that the evidence suggested the appellant was labeling bidis and selling them, even though the appellant denied such activities. The Tribunal concluded that the appellant was involved in the manufacture and sale of labeled bidis for the past six months.

4. Time-barred nature of the show cause notice:
The appellant contended that the show cause notice was time-barred for the period beyond six months prior to its issuance. The Tribunal agreed that the show cause notice was valid for the normal period of six months but was time-barred for the extended period. The Tribunal emphasized that the Department could only demand duty and impose penalties for the quantity of bidis manufactured and cleared during the normal period.

5. Impact of the appellant's acquittal in criminal proceedings on the Central Excise case:
The appellant was acquitted by the Hon'ble A.C.J.M., Lucknow, in the criminal case. The Tribunal noted that the criminal proceedings were independent of the Central Excise proceedings. The acquittal in the criminal case did not affect the Department's action under the Central Excise Act and Rules. The Tribunal emphasized that the acquittal was based on the lack of evidence for the criminal charges and did not pertain to the Central Excise violations.

Conclusion:
The Tribunal modified the impugned order and remanded the matter for de novo adjudication. The Tribunal directed that the liability be re-determined in accordance with the law and the findings that the appellant was involved in the labeling and sale of bidis for the past six months, and the show cause notice was valid for the normal period of six months. The Department was entitled to demand duty and impose penalties only for the quantity of bidis manufactured and cleared during this period.

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