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2019 (12) TMI 888 - HC - Central ExciseLoss of value of seized goods - insecticides - expiry of seized goods - direction to Respondents to pay value of goods, which have expired and could not be sold due to seizure - HELD THAT - Respondent-DGCEI seized insecticides which are having shelf life on account of expiry date. The goods were seized on 17.11.2015 and provisional release order was passed on 13.4.2016 i.e. after the expiry of 5 months. The release conditions were onerous which this court vide order dated 13.6.2016 modified. The value of goods and the fact that goods have become unfit for sale is not in dispute. Respondent is not solely at fault and responsible for loss of goods as alleged by Petitioner, whereas we find that Petitioner is also partially responsible - Petitioner should and must have sold goods by availing the release as soon as provisional release order was passed. Thus, we find that Petitioner and Respondent must equally bear loss of value of goods. Petitioner is entitled to 50% of value of goods, as aforesaid determined, which are lying in the factory premises of the Petitioner. The Respondent shall refund in cash 50% of value of goods within one month from the date of receipt of copy of this order failing which the petitioner shall be entitled to payment of interest at the rate of 9% on the aforesaid amount due from the date of present order till the date of payment, which the Department would be free to recover from the sanctioning/competent Authority. Petition allowed.
Issues:
Petitioner seeking disposal of seized goods and payment for expired goods due to seizure. Analysis: 1. The Petitioner, a private limited company, filed a petition under Article 226 of the Constitution of India to seek the disposal of seized goods and payment for expired goods due to seizure. The Petitioner, engaged in manufacturing insecticides, had stock worth MRP ?3.60 Crore seized by the Directorate General of Central Excise Intelligence (DGCEI) in 2015. Despite repeated requests for release, the goods expired as the season for sale passed during the seizure period. The Petitioner shifted the goods to its factory to avoid rent, where they remain unsold. The Petitioner sought compensation for the loss of goods, citing a previous judgment supporting their claim. 2. The Respondent contended that there was no delay in releasing the goods, as an order for provisional release was issued in April 2016. The Respondent argued that the Petitioner did not take necessary steps to sell the goods even after modification of release conditions by the court. A show cause notice for confiscation was also pending before the Adjudicating Authority. The Respondent denied responsibility for the loss of goods and emphasized the pending legal proceedings. 3. The Court examined the facts and found that the seized insecticides had a shelf life with an expiry date. The goods were seized in November 2015, and a provisional release order was issued in April 2016, after a delay of five months. The Court acknowledged that the goods had become unfit for sale and referred to previous judgments stating that a Petitioner, subject to liability for confiscation, is entitled to payment for the value of goods. The Court found that both the Petitioner and Respondent shared responsibility for the loss of goods. 4. The Court determined that the Petitioner should have sold the goods upon receiving the provisional release order. It held that both parties must equally bear the loss of the goods. The Court noted that a Show Cause Notice for confiscation was issued, and the determination of liabilities must precede the payment for the value of goods. The value of the goods in question was calculated at 70% of ?3.2 Crore after granting a 30% abatement. 5. Consequently, the Court held that the Petitioner was entitled to 50% of the determined value of goods lying in their factory premises. The Respondent was directed to refund this amount within one month, failing which interest at 9% would be applicable. The Court also ordered the Respondent to remove or dispose of the goods within a month; failure to do so would allow the Petitioner to handle the disposal as they see fit. 6. The judgment concluded by granting relief to the Petitioner in the specified terms, balancing the responsibilities of both parties in the loss of goods and providing a mechanism for compensation and disposal of the seized goods.
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