SEARCH, SEIZURE, ARREST AND PROSECUTION - CBEC Manual (OLD) - Central Excise

CHAPTER 17 SEARCH, SEIZURE, ARREST AND PROSECUTION PART-I SEARCH AND SEIZURE 1. Introduction 1.1 Provisions of search and seizure are used by the Central Excise Officers to enforce the provisions of the Central Excise Law. These provisions are used as an exception when the direct physical intervention becomes necessary. At the same time, the search and seizure is to be done in accordance with the laid down law. In this regard reference is to be made to the applicable provisions of r statutes like The Code of Criminal Procedure, 1973, Customs Act, 1962 etc. 2. Provisions relating to search 2.1 The provisions relating to search are given in Section 18 of the C Excise Act, 1944, which provides that all searches should be made in accordance with the provisions of the Code of Criminal Procedure. 2.2 Rules 22 and 23 of the Central Excise Rules, 2002 (hereinafter referred to as the said Rules), empower the authorized officer to enter and search any premises, conveyance or other place. Further, rule 24 ibid specifically empowers such officer to effect a seizure or detention. Moreover, Section 12 of the Central Excise Act, 1944, empowers the Central Government to apply the provisions of the Customs Act to the Central Excise also. In exercise of such powers the Central Government has issued Notification No.68/63, dated 4.5.1963 modifying and extending the various sections of Customs Act, 1962 to Central Excise matters. The provisions of Sections 105 (1), 110, 115 [ clauses (a) (e) of sub section (1)], 118(a), 119, 120, 121, 124, 142 (1)(b), 142(i)(c)(ii) and 150 have been made applicable to Excise duties with modifications as stipulated in said notification 68/63 as amended. 2.3 In terms of the said rules, an officer not below the rank of an Inspector of Central Excise, duly authorized by Commissioner by special or general order, can search at any time, any premises or conveyance where he has son to believe that excisable goods are manufactured, stored or carried in w of the provisions of the Act or rules. For a registered premises or for stopping and searching any conveyance in transit no search warrant is required. However, in other cases, normally search warrants are issued by the Deputy/Assistant Commissioner authorizing the search. The Central Excise Officer is also authorized to stop and search any conveyance as well. The search to be carried out in the presence of two independent witnesses. 2.4 Section 22 deals with vexatious searches, seizure etc. by Central Excise Officers. In such cases, the Central Excise officer will be liable to punishment under the law. Similar provision is made applicable to any person wilfully and maliciously giving false information leading to vexatious search. 3. Seizure 3.1 Rule 24 of the said Rules provides for power to detain goods or seize the excisable goods. If a Central Excise Officer, has reason to believe that any goods, which are liable to excise duty but no duty has been paid thereon or the said goods were removed with the intention of evading the duty payable thereon, the Central Excise Officer may detain or seize such goods. 3.2 The power to release seized goods emanates from the power to seize. The goods seized may be released provisionally under bond in the Format specified under the erstwhile Central Excise Rules, 1944 [bond] along with 25% security or surety by the officer who is normally competent to adjudicate the case. The adjudicating officer will also consider the importance of such goods for evidence, and will release the goods provisionally if the bond is furnished. Wherever necessary, sample may also be drawn. The adjudicating officer, however, will ask the owner or in-charge of the goods to whom the goods were released provisionally to produce the goods any time before the issue of adjudication order, if he is of the view that the goods are liable for confiscation. In case the person to whom goods were released provisionally fails to produce the goods at appointed time, the bond may be enforced for recovering the amount due. (Auth: CBEC Circular No. 686/2/2003-CX. dated 2.1.2003). PART II ARREST AND PROSECUTION 1. Arrest 1.1 Provisions for arrest are contained in Sections 13, 18, 19 and 20 of Central Excise Act, 1944. These provisions provide for power to arrest, searches and arrests how to be made, disposal of persons arrested and procedure to be followed by officer-in-charge of police station. 1.2 Any Central Excise Officer not below the rank of Inspector with prior approval of the Commissioner can arrest any person under Section 13 whom he has reason to believe that he is liable to punishment under the Central Excise Act or the rules made there under. (Section 141 of Finance Act, 2003). 1.3 The arrested person shall be produced before the Jurisdictional Magistrate or the Chief Judicial Magistrate, as the case may be, within twenty- four hours of the arrest. 1.4 Power to grant bail is normally to be exercised by a Jurisdictional Magistrate. 1.5 Supreme Court in case of D.K. Basu v. State of West Bengal has stipulated instructions which should be invariable be followed while making arrest. 2. Prosecution 2.1 Besides the departmental adjudication, prosecution may also be launched under Section 9 of the Central Excise Act, 1944 for the offences under Section 9(1) of the Act. As per provisions of Section 9AA, prosecution may be launched against any person, Director, Manager, Secretary or other officers of a company or partner/proprietor of the firm, who is responsible for the conduct of the business of the company/firm and is found guilty of the offences under the Central Excise Act/Rules. 2.2 A minimum limit of Rs. 25 lakhs of duty involvement has been decided for launching prosecution so as to ensure better utilization of manpower, time and resources of the Department. However, prosecution can be considered in case of habitual offenders irrespective of the monetary limit prescribed, if the circumstances warrant so. (Circular No. 208/31/97-CX. dated 12.12.1997). 2.3 Section 9 of the Central Excise Act, 1944, provides for prosecution of offenders in a court of law and prescribes a minimum imprisonment of six r However, in cases where the duty involved is more than one lakh or the offender has been convicted previously under this section, the court can award a imprisonment for a term not exceeding seven years. 2.4 Prosecution proceedings in a Court of Law are generally initiated departmental adjudication of an offence has been completed. However, prosecution may be launched even where adjudication is not complete. 2.5 Generally, the adjudicating authority should indicate whether a case is fit for prosecution, though this is not a necessary pre-condition. 2.6 Confiscation and penalty in departmental adjudication and prosecution in criminal proceedings are independent of each other and do not amount to double jeopardy. 2.6 Prosecutions are launched in cases of serious nature and where sufficient evidence to prove fraudulent intention is available. Hence, before 1aünching prosecution, it is necessary that the department has evidence to prove the person, company or the individual is guilty of knowledge of the offence 1 fraudulent intention or in any manner possessed mens rea . Prosecution should be launched against top management of the company only when there is sufficient and clear evidence to show their direct involvement in the offence. 2.7 Under executive instruction the Chief Commissioner of Central or in specified cases, the Director General of Central Excise Intelligence has power to sanction prosecution. 2.8 Once prosecution is sanctioned, the complaint should be filed in court immediately after sanction of prosecution. If the complaint cannot be filed sane reason, the matter should be reported to the authority who sanctioned the prosecution. 2.9 Procedure for withdrawal of prosecution: 2.9.1 In respect of cases, where sanction for filing criminal complaint already been given by the Chief Commissioner/Director General but complaint has not yet been filed, Ministry of Law has opined that the authority withdraw prosecution should rest with an authority superior to the authority which approves launching of prosecution. Hence, in such cases, where warranted, the Chief Commissioner/Director General may recommend to the Board the withdrawal of the sanction of prosecution. 2.9.2.1 In cases where a complaint for launching prosecution has already been filed in the Court, it will be upto the Court to decide whether or not to pursue prosecution in terms of Sections 257 and 321 of Cr. PC. If a Court has given the order for withdrawal, the Deputy/Assistant Commissioner may withdraw the prosecution after getting a formal approval from the Chief Commissioner/ Director General, DGCEI who had sanctioned the prosecution. 2.9.2.2 In specific cases, the Central Government may recommend withdrawal of prosecution. In this context, the opinion of the Ministry of Law is that Public Prosecutor can move the Court only after obtaining approval of the Central Government to withdraw prosecution. If the Central Government, before issuing such permission to withdraw prosecution considers the competent legal advice of the Prosecutor in charge or the legal advice of the Ministry of Law, the Ministry/Department is competent to permit withdrawal of prosecution. If the Ministry/Department proposes to permit withdrawal of prosecution without the legal advice or against the legal advice, they have to refer the matter to the Cabinet for obtaining the approval and permission of the Cabinet for withdrawal of prosecution. The revision of monetary limit, if any, for launching prosecution shall not be a valid ground for the recommendation. 2.10 For further details, instructions on Prosecution issued by Board from time to time may be referred to. PART III COMPOUNDING OF OFFENCES 1. Compounding of Offences 1.1 Sub-section (2) has been inserted in section 9A of Central Excise Act, 1944 so as to provide for compounding of offences under Chapter-II of the Act by Chief Commissioner of Central Excise on payment of compounding amount prescribed by the rules.