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TMI Blog1979 (3) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... atch factory by name M/s. Vasu Match Company and the sole proprietor is Mrs. Kusum who is the wife of the plaintiff's brother and Mr. K. Suresh is the son of the plaintiff and a power of attorney holder of Mrs. Kusum. On 14-8-1971 the officers of the appellants, Central Excise Department, visited one M/s. Shanti Match Company belonging to one Mr. Palani. All these match companies are duly licenced under the Central Excise Act. Till 1970 Palani was the Manager of Free India Match Company of the respondent-plaintiff. During their visit to Shanti Match Company for the purpose of inspection the Central Excise officials recovered a note book cut into two pieces bearing the seals of Free India Match Company. The accounts in the said cut note book contained one signatures of the respondent-plaintiff and his brother. On a scrutiny of the register the Central Excise Officials suspected that the plaintiff and his brother Lakshminarayana had manufactured and removed without payment of excise duty huge quantities of matches without properly accounting for them in the registers. As they suspected something fishy about the accounts, the cut note book was seized by them under a Panchanama, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that Mr. Palani was the manager of his company from July, 1963 till August, 1970 and thereafter left the service and started another match company. Later on 28-8-1971, the Central Excise officials again visited the Free India Match Company and verified the stores of matches in their store-room and finishing rooms and found 11843 gross of matches (50's) in 601 bundles of 5 gross each, in store room and 274 bags of 30 gross each and in loose in the finishing rooms. According to the defendants the records revealed that the respondent Free India Match Company did not account for all the goods manufactured in their factory and that they had illicitly manufactured 17273 gross of matches (50's) more and not accounted for in the relevant prescribed registers and evaded payment of Central Excise duty due thereon. They have therefore seized 11843 gross of matches (50's) which they valued about Rs. 28,000/- ex-duty manufactured by the respondent-company and on the ground that the licensee i.e., the respondent appeared to have contravened the Central Excise rules with an intention to evade payment of Central Excise duty seized the same under a Panchanama dated 28-8-1971, Ex. B-2. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement was recorded on 8-9-1971 from the plaintiff's brother Lakshminarayana, manager of the Free India Match Company and a further statement of the plaintiff on 8-9-1971 and that all these have been acknowledged by him. A copy of the statement dated 28-8-1971 given by the plaintiff was also enclosed to the notice. In the said notice it was stated on behalf of the appellants that the goods manufactured by the respondent-company were seized by the officers on 28-8-1971 in the presence of independent witnesses and in the presence of the respondent-plaintiff himself, who is the proprietor and his brother Lakshminarayana who is the manager of the Free India Match Company for infringement of the provisions of Central Excise and Salt Act and Rules, 1944, that the departmental proceedings are in progress and that he will be intimated further. 3. On 28-1-1972 the respondent-plaintiff gave a lawyer's notice Ex. A-7 stating that the seizure of goods on various dates was illegal, that the cut note book recovered from the Shanti Match Company belonging to Mr. Palani does not relate to his company, that the same was manufactured by Mr. Palani who was their ex-manager and was on enimical t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintiff and other independent witnesses, that the Central Excise officers discharged their duties in good faith. They further contended that though the stocks that were found on one of the dates of the seizure tallied with the R.G. 1 register, the seizure was effected as the accounts were found fictitious with regard to the prior period. They valued the goods seized at Rs. 28,000/- exclusive of the duty paid. They further denied that the motive imputed by the respondent-plaintiff that since he failed to cater to the needs of the Central Excise officers the goods were seized. They further contended that a show cause notice dated 17-1-1972 was issued to the respondent, plaintiff for the purpose of adjudication and the same was served on him on 21-2-1972 within six months from the date of the seizure of the goods and that the goods are kept in the custody of the Central Excise officers pursuant to the orders of the Fourth City Magistrate, Hyderabad dated 25-5-1972. They further contended that the suit is not maintainable as no Civil Court can entertain the suit in view of Sections 35 and 36 of the Central Excise and Salt Act, 1944 which specifically provided for remedies to grievances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code and whether the suit is premature as the departmental adjudication was not yet over? 6. On all these issues, the trial court after consideration of the evidence on record accepted the case of the plaintiff-respondent and held that the seizure of the account cut note book by the Central Excise officers from Mr. Palani, the ex-manager of the respondent-plaintiff on 14-8-1971 is not true and that the said account book does not relate to the plaintiff's company, that the same is not genuine and that the same was a fictitious document brought into existence with the help and collusion of Mr. Palani. On the issue whether the statement dated 28-8-1971 recorded from the plaintiff was obtained by threat of arrest and coercion, the lower court found in favour of the plaintiff. On the main issue whether the seizure of the entire stock and accounts of the plaintiff's company on 28-8-1971 the lower court found that it is illegal and not warranted by the rules under the Excise Act governing seizure. On the issue whether the seizure was made as the plaintiff failed to cater to the needs of the Excise officers, the trial court found that the evidence adduced on behalf of the plaintiff tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d acted as an adjudicating authority under the provisions of the Act and therefore the judgment of the trial court is contrary to law and beyond its jurisdiction. The second point urged by the learned Counsel was that the search and seizure were conducted by the appellants-defendants under the provisions of the Central Excise and Salt Act and the rules made thereunder. It is self-contained enactment and in respect of every action taken under the Act special remedies are provided to appropriate authorities by way of an appeal and a revision. Hence the Civil Court has no jurisdiction to entertain the suit and decide the question whether the seizure and search are in accordance with law. The last submission made by the learned Counsel was that the finding given by the trial court that the defendants acted in bad faith is contrary to its own reasoning. Having held that the story of the plaintiff that the defendants have acted in bad faith in conducting the search and seizure of the materials inasmuch as their request for a bribe of Rs. 4,000/- has been rejected by the plaintiff is unbelievable, the trial judge erroneously held that the defendants acted in bad faith and granted Rs. 2.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made in their presence, and a list of all things seized in the course of such search and of the places in which they are respectively found shall be prepared by such officer or other person and signed by such witnesses. Under sub-clause (3) of Section 103, the occupant of the place searched, or some person in his behalf, shall in every instance, be permitted to attend during the search, and a copy of the list prepared under this section, signed by the said witnesses, shall be delivered to such occupant or person. The other sub-clauses are not necessary. No other provision of the Criminal Procedure Code is brought to the notice relating to searches. 12. Before we go to the question of seizure w e will consider whether the search was effected by the defendants in accordance with the provisions of the Central Excises and Salt Act read with Section 103 of the Code of Criminal Procedure. As stated already Rule 201 of the Central Excise Rules empowers the Central Government to empower any officer to make the search of any premises where he has reason to believe that excisable goods are manufactured or stored or carried on in contravention of the provisions of the Act or the rules. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who conducted the search and the seizure. From the evidence of D.W.1 it also appears that on 14-8-1971 itself immediately after the cut book was seized from the Shanti Match Company they searched the plaintiff-respondent company and recovered some registers and records after passing a receipt to the plaintiff-respondent. The said receipt is marked as Ex. B-5 dated 14-8-1971. After the recovery of the cut book in which the entries relating to the plaintiff's company were found the appellants officers felt that it was necessary to search the premises of the plaintiff's house and company as they had reason to believe that the plaintiff-respondent had evaded payment of tax for the goods manufactured during the relevant dates. We, therefore, find that Rule 201 which empowers an officer to make a search of the premises where excisable goods are manufactured or stored and are processed in contravention of the provisions of the Act or the rules is not violated. 13. We will next consider whether Section 103 of the Code of Criminal Procedure had been violated in making the search. Ex. B-4 is the Panchanama prepared on 19-8-1971 when the appellants inspected the residential premises of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them in the cross-examination except stating that himself and Subba Rao, D.W 2 Inspector of Central Excise, Headquarters preventive Unit, Hyderabad demanded a bribe of Rs. 4.000/- from the plaintiff and his brother P.W.1 and that on their refusal, they seized the account books of the plaintiff without giving any receipt or under any Panchanama. These suggestions were denied by D.W.1 and the suggestion that this witness had demanded a sum of Rs. 4,000/- as bribe from the plaintiff was neither stated in the notices exchanged between the parties prior to the filing of the suit nor in the plaint filed on behalf of the plaintiff. We have therefore no reason to disbelieve the evidence of D.W.1 that the search and seizure were conducted in accordance with the provisions to the Act. We also hold that the appellant officials had reason to believe that the excisable goods are manufactured or stored contrary to the provisions of the Act. 14. We may note a few decisions in this regard. In Radha Kishan v. State of U.P. - A.I.R. 1963, Supreme Court 822 a question came up whether a search conducted in contravention of Section 103 would vitiate the seizure of the articles. Mudholkar, J., who spo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the plaintiff was not maintaining the accounts properly and the officials prima facie felt that there was evasion on duty. That was followed by the visit of the premises of the plaintiff by the Central Excise officials, which resulted in the seizure of the goods and records under a Panchanama Ex. B-4 dated 19-8-71. In the statement made by the plaintiff on 26.8.1971 which was marked as Ex. B-1 it is admitted by the plaintiff that the registers which were taken after searching his house on 19-8-1971 and the book filling register which was divided into two parts with the stamp of Free India Match Company, Hyderabad which had been seized by the officers of the defendants in the Shanti Match Company on 14-8-1971 related to Free India Match Company. He further admitted that the names of the workers which were written in the cut register belongs to Free India Match Company. He also admitted that Mr. Palani, who as the manager of the Shanti Match Company was the manager of the plaintiff's Free India Match Company from 1963 till August, 1970 and that the registers here maintained by him. He further admitted that the registers seized by the officers of the appellants-defendants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. From these facts we have no doubt that the appellants officers had reason to believe that the plaintiff had contravened the provisions of the Central Excise Act and the rules made thereunder. 17. The learned Counsel for the respondent-plaintiff strenuously contended that the cut book which was seized from Shanti Match Company belonging to Mr. Palani was not produced before the court nor Mr. Palani was examined and therefore the very basis on which the searches were conducted and seizures were made is illegal as it cannot be said that the defendant officers had reason to believe that the plaintiff contravened the provisions of the Act and the rules. That there was a seizure is admitted by the plaintiff himself and in fact the suit itself was for release of the goods which according to the plaintiff were seized illegally. The cut book was no doubt not produced in the lower court. Whether the goods are liable for confiscation or any person is liable to pay any penalty on account of the breach of the provisions of the Act and the rules is a matter to be adjudicated under Section 33 of the Central Excises and Salt Act by the competent authority. The only question with which we are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pertain to Free India Match Company. He admitted that it was he who wrote Ex. B-1 wherein his brother admitted that the cut book seized on 14-8-1971 from the Shanti Match Company belong to the Free India Match Company. But he explains that the statement was written by him to the dictation of D.W. 1, the Superintendent of Central Excise. He further states that the Central Excise officials namely D.Ws. 1 and 2 demanded a sum of Rs. 4,000/- from his brother as illegal gratification and since they refused, the cut book was prepared by Mr. Palani, their ex-employee, with the connivance of the officials. Whether it is true or not that is a different matter. P.W. 1 clearly admits that he was shown a cut book which contain some entries relating to Free India Match Company on the basis of which a search of the plaintiff's premises was conducted. He also admits that adjudication proceedings are pending before the Central Excise Collector, Hyderabad. P.W. 2 is a person, who went to P.W. 1 on 28-8-1971 to bring P.W. 1 to his Saith Narsinga Rao and at that time he saw the Excise officials. P.W. 2 stated in his evidence that the entire stock was taken away without giving any receipt. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as regards the entries found in the cut book. He is an interested witness and we are not prepared to place any reliance upon this evidence. We, therefore, reject the evidence adduced on behalf of the plaintiffs with regard to the way in which the search and seizure were conducted and on a consideration of the material on record we hold that the search and seizure conducted by the Excise officials are perfectly in accordance with the provisions of the Central Excises and Salt Act read with the relevant provisions of the Code of Criminal Procedure and the Customs Act. We set aside the findings of the lower court in this regard and we hold that the seizure was lawful. The findings of the lower court are more in the nature of adjudication proceedings which is the exclusive domain of the authorities constituted under the Central Excises and Salt Act. Whether there was any contravention of the provisions of the Act and whether there was any evasion of payment of duty and whether the goods are liable to be confiscated is the subject matter of adjudication proceedings by the competent authority under Section 33 of the Central Excises and Salt Act. From a reading of the judgment of the low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the aggrieved parties. The trial court has held that since the plaintiff has not contravened any provisions of the Act the goods are not liable for confiscation and that the seizure was illegal and the Civil Court is competent to adjudicate upon the matter. Sections 35 and 36 speak of appeals and revisions against any decision or order of the authorities which is either appealable or revisable. That is a matter for adjudication by the appropriate authority under the Act and further the seizure and search were effected under the provisions of the Central Excises and Salt Act and the rules made thereunder. It is not a case where the authorities under the Act have no power at all to search and seize the goods in which case alone their action would be outside the provisions of the Act. In such a case it is true that the Civil Court has got jurisdiction to entertain the suit. But this is a matter where the contention of the plaintiff himself is the search and the seizure are done contrary to the provisions of the Act and it is not his contention that the authorities are not empowered to conduct any searches and seizures under the provisions of the Act. We therefore hold that the seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht, the findiag in paragraph 18 of its judgment that the Central Excise officers while affecting the seizure did not act in good faith while discharging their duties as public servants is wholly unsustainable. There is absolutely no warrant for this finding because excepting the allegation of the bribe no other suggestion was made to the defendants that they were deposing either falsely or their action was motivated by irrelevant consideration. Having disbelieved the theory of the request for a bribe on the part of the Excise officials, there is no evidence on which the lower court could come to the conclusion that the Central Excise officials did not act in good faith while discharging their duties. We, therefore, set aside the finding on issue No. 7 in paragraph 18 of the judgment that the Central Excise officials did not act in good faith as being one based on no evidence. The trial court awarded an amount of Rs. 2,000/- as damages on the ground that the seizure was wrongful. As we have held that the seizure was in accordance with the provisions of the Act, the judgment of the lower court awarding a sum of Rs. 2,000/- as damages for wrongful seizure is set aside. 22. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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