9911796707
TMI Blog2002 (6) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed under Tamil Nadu General Sales Tax and Central Sales Tax. He was assessed to Sales Tax up to 1988-89. After 23-1-1990, he was not doing any business. He was an income-tax assessee also having agricultural income. The petitioner was not manufacturing any products. Therefore, he has not obtained any licence under the Central Excise Act. The petitioner was the sole distributor for M/s. Twin City Organics and M/s. Dye Distributors India Limited, Bombay who are the manufacturers of camphor. The petitioner's assessment for sales tax was completed based on the books of account and receipts and Gate Passes issued by the manufacturers outside the State of Tamil Nadu. According to the market situation, prices are fixed and sold to small dealers who manufacture and sell camphor tablets in small-scale, to the manufacturers of Ayurvedic medicines and for temple uses. When it is sold to the manufacturers of Ayurvedic medicines, the percentage of profit is higher. While so, on 23-1-1990, the first respondent's officers searched the residence of the petitioner and recovered Indian currency totalling to a sum of Rs. 83,47,070/-; statements were obtained by coercion. In fact, the petitioner tol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court for return of currency. Since Criminal Procedure Code is not applicable, the petitioner filed W.P. No. 4836 of 1990 praying for mandamus to return Rs. 40,44,858/- and balance of Rs. 42,97,212/- to be paid to the Income-tax Department. He also filed another W.P. 5045 of 1990 for a declaration that Notification No. 68/63 issued under Section 12 of Central Excise Act applicable to the Central Excise Act as ultra vires. The second respondent issued a show cause notice. Challenging that, the petitioner filed W.P. 12110 of 1990. The matter was heard at length before the Division Bench of this Court. Ultimately, the Division Bench dismissed the writ petition as pre-mature holding that the adjudication proceedings will decide the issue. Since the issue has not been decided and there was no finding on the legal issues raised by the petitioner, the petitioner filed the present writ petition. The search and seizure itself was illegal. The mahazar shows that the Central Excise Officers seized the currency on the reasonable belief that it constituted material evidence to the enquiry conducted by the officers and also on the reasonable belief that the petitioner violated the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nely removed excisable goods weighing 1,325 kgs. Valued at Rs. 1,08,751/- was also seized from the petitioner's premises at Coimbatore and Madras; Excisable goods weighing 2,000 kgs., of camphor valued at Rs. 1,68,647.75 consigned to the petitioners have also been seized at transporter's godown in addition to several incriminating documents. On the basis of the above documents, show cause notice was given. The petitioner was receiving excisable goods under GPIs and also without cover of proper documents. Evidence to this extent was also unearthed. The search is not illegal. The currency has been seized by the officer on the reasonable belief that it represented sale proceeds of excisable goods removed in contravention of the provisions of Central Excises and Salt Act and the rules made thereunder. The petitioner did not provide any reasonable explanation for possession of Indian currency of Rs. 83 lakhs; instead he admitted that the money was obtained by selling camphor and Isoborneol supplied by M/s. Twin City Organics (P) Limited and M/s. Dye Distributors India Limited at higher rate. But, he was not able to produce any account for that. He was the sole distributor for the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh relates to sale proceeds of excisable goods. Further, the entry and search itself was on the basis of information, to look out for contraband excisable goods. Even before the income-tax authorities, the petitioner had not given any supporting documents. The circumstances that existed at the time of dismissal of the previous of writ petition still continues. There is no change of circumstance as stated by the petitioner. The officers exercised the powers conferred by the Act and the rules. The officers had sufficient reason to believe that the unaccounted currency was directly connected with sale of goods supplied by M/s. Twin City Organics (P) Limited and M/s. Dye Distributors India Limited. The Notification No. 68/63 issued under Section 12 of Central Excises and Salt Act makes it applicable to the provisions of Sections 105, 110, 121 etc., of the Customs Act for the purpose of levy of collection and the duty of exercise and also to other provisions pertaining to offences committed under the Central Excise Law. This enables the officers to search places where they have reason to believe that there are goods liable for confiscation. If the goods manufactured are removed in contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that, - "If reasonable belief is formed by the Superintendent of Central Excise who is subordinate to the Collector, the seizure is invalid. Reasonable belief as envisaged by Section 110 of the Customs Act must be formed by the proper officer who must be the Head of the Department, i.e., the Collector. Reasonable belief formed by the Superintendent will not justify seizure. Section 110 of the Customs Act, 1962 as made applicable to the Central Excises Act and Rule 2(xi) of the Central Excise Rules, 1944 and Notification No. 69/59. The pre-requisite condition for the application of Section 110 of the Customs Act, 1962 as applicable to the Central Excises Act, is the reasonable belief of the proper officer to the seizure of the goods in respect of which contravention has been made. In the instant case, the warrant for search was issued by the Preventive Assistant Collector of Central Excise and search was made by the Superintendent of Central Excise and others. According to Rule 2(xi), the proper officer is the officer in whose jurisdiction, the land or premises of the producer of any excisable goods is situate. In view of this, it is the Head of the Department, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or had such a reason to believe that documents or things relevant for proceedings under the Central Excise Act were in possession of the petitioner and therefore issued the warrant of search of premises of the petitioner. Therefore, the warrant of search issued by the Assistant Collector is valid in law. 9.The contention of the Counsel for the petitioner is that only the "proper officer" under the Central Excise Act, viz., the Collector of Central Excise is competent to effect any seizure, but in this case, since the seizure has been effected by the Superintendent, the seizure is invalid. As per Section 18 of the Central Excise Act, all searches and arrests under this Act shall be carried out in accordance with the provisions of Criminal Procedure Code, relating to search and seizure under the Code. During search, suspected things and documents can be "taken possession of" by the officer who conduct the search. That is not "seizure" within the meaning of Section 110 of Customs Act. Seizure under Section 110 of the Customs Act can be made only after following the procedure under sub-section (2) of Section 110 of the Act; for that show cause notice has already been issued. The cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e materials to form reasonable belief, under Section 110 read with Section 123 of the Customs Act, 1962. Therefore, it cannot be contended that the Assistant Collector did not have "reasons to believe" when the search warrant was issued. Therefore, the search as well as all acts in pursuance of such search are valid. The warrant issued by "Assistant Collector of Central Excise" under Section 105(1) of the Customs Act is valid. As per the Notification No. 68/63, non-duty paid excisable goods can be seized wherever it is found. When it is found that duty was not paid on the excisable goods, such goods can be taken possession of from any person including a dealer. The argument that the sale proceeds of such goods cannot be taken from a dealer is not acceptable. 12.The Counsel for the petitioner next submitted that the petitioner was only a dealer; he was not a manufacturer; Central Excise Act applies only to the manufacturers, and therefore, the Notification No. 68/63 which extends the provisions of the Customs Act to Central Excise Act is not applicable to the petitioner as the petitioner was not a manufacturer. Excise duty is levied on the goods; it is not a duty on the manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutors India Limited, the manufacturers of camphor and isoborneol which are excisable goods. 14.The counsel for the respondents submitted that against the search and seizure, the petitioner has got a right of appeal as provided under the statute. The Counsel for the petitioner replied that the appellate authority under the Central Excise Act is only the Collector of Customs and therefore, appeal cannot be filed against the seizure. It is true that the Assistant Collector of Central Excise is the officer lower in rank than the Collector of Central Excise. But, since in this case, the warrant of seizure was signed only by the Assistant Collector, against that order, appeal can be filed before the Collector. 15.The counsel for the respondent further submitted that even assuming for the sake of argument that the search conducted was not legal or not in accordance with law, yet the evidence collected by such seizure can be used against the petitioner. Therefore, the evidence collected cannot be held to be inadmissible in any proceedings. The Counsel for the petitioner replied that only Indian currency was seized and hence it has no other evidentiary value, except, that if it all, ..... 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