2017 (3) TMI 410 - HC - Central Excise

Sealing of machinery - seizure of raw materials and other materials - prayer for release of raw materials and de-sealing of machinery - Held that - a period of more than six months has passed since the goods in question have been seized and the two machines in question have been sealed. Therefore, in the light of the provisions of sub-section (2) of section 110 of the Customs Act, since no notice under sub-section (1) thereof has been given in respect of the sealed machines, and no order extending the period of six months has been passed, continuation of the sealing of the machines in question, is clearly without any authority of law - the sealing of machinery not justified. Insofar as the release of raw materials is concerned, by virtue of the provisions of section 110A of the Customs Act, the respondent authorities are duly empowered to release the goods pending adjudication on taking a bond from the owner in proper form with such security and conditions as the adjudicating authority may require - The deponent has submitted that he is willing to execute such bond as may be required for release of the raw materials - there should be no impediment in releasing the raw materials subject to the petitioner executing the requisite bond. Petition allowed - decided in favor of petitioner.

Summary

Issues:
Petition seeking direction to de-seal machineries and release seized materials; Seizure operation by Central Excise department; Complaint registered for offences under Central Excise Act; Show cause notice issued for confiscation and duty levying; Delay in de-sealing machineries; Authority to seal and de-seal goods; Release of raw materials pending adjudication.

Analysis:
The petitioner, a partnership firm engaged in manufacturing filtered cigarettes, filed a petition under Article 226 seeking directions to de-seal two machineries sealed during a seizure operation by the Central Excise department. The seizure included various raw materials and packaging materials, with a total value assessed at ?37,23,103. A complaint was registered for offences under the Central Excise Act, leading to the arrest of the petitioner's partner. A show cause notice was issued for confiscation and duty levying, with subsequent representations made for release of seized materials and de-sealing of machineries.

The petitioner's advocate argued that the continued sealing of machineries without a show cause notice or extension order beyond six months was illegal. The respondent authorities had imposed conditions for de-sealing, which were contested as unjustified due to the lack of legal authority for sealing goods. The court noted that since no notice or extension order was issued within six months, the sealing of machineries lacked legal authority, and the respondents were directed to de-seal the machines without conditions.

Regarding the release of raw materials, the court highlighted the authority under section 110A of the Customs Act for the respondent authorities to release goods pending adjudication upon execution of a necessary bond. The petitioner expressed willingness to execute the bond, leading to the court's decision to direct the respondents to release the seized raw materials upon the petitioner executing the requisite bond.

In conclusion, the petition succeeded, and the court directed the respondents to de-seal the machineries and release the seized raw materials upon the petitioner executing necessary bonds, with no costs imposed.