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TMI Blog2017 (5) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... le phone charger and LED bulbs. The unit was registered with the Central Excise Department since 4th January, 2016. The intelligence gathered was that the unit imported more than 20 kinds of components/raw materials under nil rate of duty for the manufacturing of mobile phone battery, mobile phone battery charger and LED bulb. More than 70% of the clearances of finished goods of the unit are stated to be of mobile phone battery. It is further stated that the unit is selling all their finished goods to one single buyer named Nancy Impex Private Limited (NIPL). It is alleged that the unit was paying duty @ 2% ad valorem on mobile phone battery and mobile phone charger, and 6% on LED bulbs. According to the Respondents, the tariff rate of duties on these products is 12.5% ad valorem. 3. The issue concerns the availing of exemption by the Petitioner under Notification No. 12/2012-CE dated 17th March, 2012. The note on the file further states that while scrutinising the Petitioner's ER-3 Returns filed for the period of April to December, 2016 it had been observed that the unit had cleared mobile phone batteries valued at Rs. 13,76,75,874 on payment of duty of central excise at 2% a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017 and concluded at 23:00 hours on the same day. Nothing untoward happened during the course of preventive check proceedings and it was conducted in a peaceful and orderly manner in our presence. No harm was caused to any person, property and religious sentiments. Before leaving the premises the officers again offered their personal search which was politely declined by Shri Rohit Jain in our presence." (emphasis supplied) 6. It requires to be noted that while the note dated 14th March, 2017 prepared by the Superintendent, a portion of which has been extracted hereinbefore, talks of 'undated cheques' having been collected, the panchnama talks of the Petitioner having voluntarily tendered five 'post-dated' cheques. 7. The Petitioner's version of what happened on 10th March, 2017 is of course different. Its version is that all of a sudden on 10th March, 2017, a team of the Anti Evasion, Central Excise, Delhi visited the office; conducted search; seized some of the documents and thereafter collected five cheques "all dated nil" bearing the aforementioned numbers and for the same amount i.e. Rs. 1.25 crores. The copies of the panchnama dated 10th March, 2017 and the copie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the five cheques are available with the Department and have not yet been encashed. It is directed that the said five cheques shall be brought to the Court by a responsible officer of the Department on the next date of hearing. 4. The Court would like to know on what instructions, orders and circulars the practice of collecting undated cheques from parties is being undertaken by the officers of the Anti Evasion Wing of the Central Excise Department, The Court directs the Additional Commissioner of Central Excise, In-charge of the Anti-Evasion Wing of the Commissionerate of Central Excise, Delhi-II to himself personally file an affidavit in this Court not later than 1st May, 2017 on this aspect. 5. The attention of Mr Harpreet Singh has been drawn to the judgment of this Court in Capri Bathaid Private Limited v. Commissioner of Trade &Taxes 2016 (155) DRJ 526 where a similar practice followed in the Department of Trade and Taxes of the Government of the NCT of Delhi was directed to be stopped forthwith. 6. The Additional Commissioner, while filing the affidavit as directed above, will after reading the aforementioned decision, place/state the stand of the Anti Evasion Wing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it makes it appear that officers of the Department who go on a visit/survey etc to detect evasion of CE duty, have the discretion to decide on the spot what the evaded duty amount is; to collect such duty by way of cheques; to decide again on the spot the terms on which such duty should be paid; to decide again on the spot whether to grant such duty evader the facility of postponement/late payment by 'agreeing' not to put any date on such cheques. It is indeed extraordinary that officers at the level of a Superintendent would have such vast powers of collecting duty on the spot without even a quantification of the duty amount preceded by a show cause notice (SCN). No attempt has been made to demonstrate that the above is a procedure known to law. It actually points to the opposite. And that is what makes it inexcusable. 15. At this stage, at the risk of some digression, it requires to be noticed that the Court has come across instances where a similar practice of 'collecting' purported differential duty/tax from dealers/assessees alleged to have evaded payment of statutory duties/taxes has come to the notice of the Court in the context of the proceedings under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y would be subject to disciplinary proceedings." 17. In its order dated 12th April, 2017 in the present case, the Court had specifically drawn the attention of the learned counsel for the Respondent to the above judgment. Further, this Court required the ADC while filing his affidavit to read the decision and place the stand of the Anti Evasion Wing on record. In the affidavit filed by the ADC, he deals with these aspects in paras 3 and 17 as under: "3. That, I have gone through the order dated 12.04.2017 passed by this Hon'ble Court and I have also gone through the Judgment passed by this Hon'ble Court passed in the case of 2016 (155) DRJ 526 and have understood the same. The present affidavit is being filed after going through the said Judgment. 17. That, the deponent further respectfully submits, the judgment passed by this Hon'ble Court in the case of Capri Bathaid Vs. Commr. Of Trade & Taxes is, with respect, not applicable to the facts of the present case. It is respectfully submitted in this regard that the case of Capri Bathaid is distinguishable on facts since in the said case, the officials of the Delhi VAT Department had carried on a search/seizure exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o scope at all to collect duty and that too without even quantifying the extent of duty evasion. 20. The most glaring feature here is that when the note dated 14th March, 2017 was put up before the ADC, his three instructions were to "1. Release the cheques early" (which is a tacit acceptance of the practice of collection of undated cheques); "2. To quantify the statutory liability" (which is a clear admission that till then the duty was not quantified) and "3. To again put up the file as soon as the cheques are realised" (which is a clear admission of the fact that it is not known when that is going to happen). It is telltale that even after the Court issued notice to the Department in the present petition, the above instructions of the ADC have not been complied with. The undated cheques remained with the Department. What loss this entailed to the Government Exchequer is a different issue altogether. Then there is the loss of interest on the said amount. At least two scenarios are possible when such unbridled power of 'collection' of duty, on the spot, is allowed to go unchecked. One is that since there is nothing written down anywhere, the unscrupulous officers who cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will also be sent a copy of the judgment of this Court in Capri Bathaid Private Limited v. Commissioner of Trade & Taxes (supra). The CVC is probably aware that there is a pattern in several Departments of the Government which are entrusted with powers of collection of duties and taxes, and vested with search and seizure powers, resorting to such illegal practice of collecting cheques some time undated and some time even cash from persons and entities who may have evaded payment of taxes and duties. The extent of harm this can cause to the government exchequer and the harassment it can cause to innocent persons is immense. It symbolises what economists term as 'rent seeking behaviour' of public servants. It also raises serious issues about accountability and transparency of the functioning of these Departments. It is imperative for the CVC to issue clear guidelines. 24. Reverting to the case in hand, Mr. Harpreet Singh says that a SCN will be issued to the Petitioner in all probability within a week from today. Mr. Priyadarshi Manish, learned counsel appearing for the Petitioner, requests that when the Petitioner is summoned to appear in person pursuant to the SCN, it shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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