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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 ..... by the Anti-Evasion Department of Central Excise requires a deeper investigation. The Court has every reason to believe that this has come to light only because the Petitioner has approached this Court. This practice is perhaps being adopted in a number of instances which are yet to come to the notice of the Court. There will be serious ramifications if this practice is allowed to continue unchecked. In the first place, it must be realised that the officers of the Anti Evasion Wing of the Central Excise Department have to function within the four corners of the law. They are bound by not only the CE Act and the Rules made thereunder but all the notifications/circulars/instructions issued from time to time including those issued by the CBEC. There is no scope at all to collect duty and that too without even quantifying the extent of duty evasion. The Court would like the matter to be carried out to its logical conclusion - the writ petition is kept pending to ensure compliance of the directions mentioned. X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Commissioner ('ADC') on 10th March, 2017. 4. There is a note dated 14th March, 2017 in the file titled 'Visit to M/s. Digipro Import and Export Pvt. Ltd.' Inter alia it records that during the course of the visit a statement was made by the Director of Digipro, Mr. Rohit Jain, which has also been placed on file. What is of immediate relevance is that it is recorded in the note that there was a purported admission by Mr. Jain "that above notification exemption was not applicable in their case." The note states that "Shri Rohit Jain was ready to deposit the differential duty of 10.5% as they had short-paid the duty on all the clearances of mobile phone battery. Accepting his offence, he voluntarily tendered five undated cheques towards their duty liability amounting to ₹ 1,25,00,000/- as detailed below: Sl.No. Cheque No. Amount (in Rs.) 1. 691099 20,00,000/- 2. 691100 25,00,000/- 3. 691101 25,00,000/- 4. 691102 25,00,000/- 5. 691103 30,00,000/- Total 1,25,00,000/- 5. There is then a paragraph devoted to search at NIPL and the statement of Mr. Mudit Jain, Director of NIPL. The Court has been shown a separate file containing the statements as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to Exemption Notification No. 1/2011-CE dated 1st March, 2011. They also handed over to the Commissioner a copy of the Circular/Instruction of the Central Board of Excise and Customs (CBEC) bearing No. F.No.528/2/2008-Cus (TU) dated 6th February, 2009 which purportedly stated that the battery pack being part of cellular/mobile phone are eligible for exemption." When the note dated 14th March, 2017 was put up before the ADC, he issued three instructions: (i) Please realise the cheques early. (ii) Please quantify duty liability (iii) Please put up file as soon as cheque is realised. 9. A summons was issued to the Petitioner on 29th March, 2017. On 30th March, 2017 the Petitioner's counsel requested the Department not to encash the cheques claiming to have rightly availed of the benefit of exemption notification in question. The Petitioner thereafter filed the present petition on 30th March, 2017 alleging illegalities committed by the Department. The Petitioner prayed inter alia for a declaration that the Petitioner is entitled to the benefit of exemption and for a mandamus to the Respondent No.3 i.e. the Commissioner of Central Excise, Delhi-II not to encash the five cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit dated 1st May, 2017 has been filed by the ADC seeking to explain the collection by the officers of the Department of the undated cheques as under: "7. That, it is further respectfully submitted, at the time of tendering the cheques, the petitioner requested for some time for making good the payment and stated that since he is not having sufficient balance/funds with him at that point of time, therefore, he requested that the cheques may not be presented immediately and assured that within a very short period of time he would clear his statutory duty liability. The petitioner, therefore, requested that no date may be put on the cheques and as and when the petitioner would have sufficient balance, he would inform the deponent and accordingly the deponent may encash these cheques. On getting the assurance from the petitioner, the officer who visited the premises of the petitioner, agreed not to put any date on the cheques." 13. Today the Court has been shown the five undated cheques for sum of ₹ 1.25 crores which were collected from the Petitioner during the visit to the premises of the Petitioner on 10th March, 2017. The Court specifically asked Mr. Harpreet Singh, l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealers whose premises are searched. This is wholly impermissible in law and will lead to unhealthy practice of arm-twisting a dealer into parting with alleged tax dues without there even being an order of assessment. The tax demand crystallises only upon an assessment. In any event, even if a dealer volunteers to deposit the disputed tax amount, he should be asked to deposit the said amount in the counter designated for that purpose. There is no question of the members of the search team collecting such payment. The CVAT should issue clear instructions in this regard. It should also be made clear that if any of the officers of the DT&T are found violating the instruction, they would be subject to disciplinary proceedings." 16. In that case again while directing the return of such cheques to the dealer from whom they were collected, the Court observed that "the VAT Authorities have in these cases proceeded on a basic misconception of the scope of their powers and authority." In para 52, the Court observed as under: "52. The Court would like to impress upon the CVAT that given the frequency with which the Court has been constrained in the recent past to interfere with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner and empowered in this regard and the cheques handed over by the petitioner have still not been encashed as the petitioner had time and again requested for some time to arrange for the duty amount. Further the said cheques were handed over voluntarily in the wake of circumstances which have been explained supra. Thus, there was no action on part of the department which can be said to be lacking of any authorization by the Competent Authority." 18. The Court rejects the attempts of the ADC to distinguish the above judgment on the ground that the search and seizure operation in the above case under the DVAT Act was without authorisation whereas in the present case it was duly authorised. The ADC is obviously missing the point. The ADC has been unable to point out any provision of law or any notification or any circular that permitted the officers who visited the Petitioner's business premises to collect undated cheques which purportedly constitute the differential duty. He is further unable to explain how these undated cheques were kept with the Department and why indulgence was shown by the Department to the Petitioner when the Petitioner requested for some time to arrange for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand and under threat and coercion is compelled to issue cheques or pay cash which is supposed to constitute the differential duty. This is undoubtedly prejudicial to the Assessee and is harmful to public interest. It is not rule of law but anarchy unleashed by holders of public office. Neither is it an acceptable scenario in a system governed by the rule of law. It metamorphises into a system of rule by law and, worse still, by abuse of law. It has to be stopped. 21. The Court would like the matter to be carried out to its logical conclusion. The cheques brought to the Court are directed to be kept in a sealed cover with the Registrar General of this Court. The Court would like the Commissioner of Central Excise, Delhi-II to personally file an affidavit in this Court in light of the present order to explain to the Court what steps he proposes to take to immediately stop this illegal practice adopted by his officers of collecting undated cheques. This affidavit should be filed on or before 29th May, 2017. The Commissioner is also requested to remain personally present in Court on the next date to assist the Court with the queries that the Court may have. 22. The Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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