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2008 DIGILAW 1819 (PNJ)

Green Aloys Pvt. Ltd. v. Union Of India

2008-10-31

ADARSH KUMAR GOEL, L.N.MITTAL

body2008
Judgment 1. This petition seeks a direction for release of raw material seized by the Anti-Evasion Branch of the Central Excise, Faridabad on 15-9-2008 and also to quash letter of seizure dated 24-9-2008 along with Panchnama. 2. Case of the petitioner is that it was engaged in manufacture of ferrous and non-ferrous ingots (aluminium alloy ingots), for which raw material of aluminium scrap, silicon scrap and copper scrap are required. The petitioner availed Cenvat credit for the inputs under the Cenvat Credit Rules, 2004 . The inputs received were entered into a register. On physical verification conducted by the representatives of the Department on 15-9-2008, certain records, hard disc and floppy were seized. Closing stock was also checked up. Case of the petitioner was that there were no irregularities and the raw material was duly entered in the books of account. The petitioner made a request for release of the seized goods. The petitioner was required to deposit Rs. 11 lac towards Central Excise Duty, which may be found due without any assessment. 3. Contention raised in the petition is that under the Cenvat Credit Rules, 2004 , only the finished goods are excisable and there could be no evasion of duty unless the goods are manufactured and cleared. Condition of executing Bond in form B-11 or giving of cash security for releasing the goods was not justified. Bond B-11 was applicable for release of finished goods only. 4. In the reply filed on behalf of the respondents, stand taken is that the petitioner had shown low value addition and paid very less amount of duty from the cash account. The imported scrap was of the value of Rs. 70-80 per kg. while finished goods were of the value of Rs. 120-130 per kg. They also found that against the declared stock of 453326 kg. aluminium scrap entered in the stock RG-23A Pt-I register, the balance shown was nil. In the table reproduced in para 3 of the written statement, it is mentioned that though there was entry of goods received in register RG-23A, in the register maintained in computer in Excel sheet, the entry of 7-9-2008 and 8-9-2008 was nil. It is, thus, pointed out that under Rule 15 of the Cenvat Credit Rules, 2004 , the goods were liable to confiscation and penalty. 5. We have heard learned counsel for the parties and perused the record. 6. It is, thus, pointed out that under Rule 15 of the Cenvat Credit Rules, 2004 , the goods were liable to confiscation and penalty. 5. We have heard learned counsel for the parties and perused the record. 6. We find that the seizure was effected on 15-9-2008 and neither the goods have been released nor is there any progress in conducing inquiry when allegation is only about record not being complete, which does not require any detailed investigation. It is well settled that power of effecting seizure is coupled with duty. There is no explanation whatsoever as to why for the period of more than one month no further investigation has been made. On being pointedly asked from learned counsel for the respondents, they have expressed their inability to make any statement when the investigation will be completed beyond saying that the respondents are entitled for a period of six months under the rules. 7. Even though, we do not express any opinion on merits at this stage, the question of prima facie case for confiscation is required to be examined with a view to decide whether stand of the respondents for continuing to detain the goods except if the petitioner agrees for the terms imposed i.e. furnishing of cash security for 25% of value of goods, is fair. The goods seized have been found to be entered in the stock register. In these circumstances, it cannot be held that there was a clear case for confiscation only on the ground that in the computer in excel sheet, some of the goods were not entered. There is nothing to show that in respect of the goods, there was wrongful availment of Cenvat credit or even in respect of goods which were entered in the register but not entered in the computer, there was wrongful availment of Cenvat credit. Presumption of wrongful availment of Cenvat credit is sought to be drawn from the fact that there was little value addition to the finished product over and above the value of the raw material, which was a debatable issue. Thus, it could not be held that there was strong prima facie case for confiscation of goods which would justify continued detention of goods or demand of security for the value of goods. Thus, it could not be held that there was strong prima facie case for confiscation of goods which would justify continued detention of goods or demand of security for the value of goods. Procedure for seizure has to be reasonable and fair and there has to be some basis for continuing to detain the goods. Mere allegation or mere initiation of investigation does not justify detention of goods. The terms imposed for release of goods have to have nexus with safeguarding possible demand of duty. Bond B-11 is not shown to be applicable for release of raw material. 8. We, therefore, partly allow this petition and direct release of goods on petitioner furnishing undertaking to pay the duty or other dues which may be found due without furnishing any cash security or bank guarantee for the value of the goods. 9. We find that the stand of the respondents in not finalizing the issue for a period of one and a half months and in not specifying any period for completing the investigation when facts were already on record, does not rule out mala fides on the part of the concerned officers. No doubt, the excise authorities have jurisdiction to conduct search, seizure or investigation, such power has to be exercised reasonably and for the purpose for which the power is conferred. When serious invasion on Fundamental Rights of citizens is involved, the authorities are not expected to adopt unreasonable attitude. 10. We direct Secretary, Ministry of Finance, Government of India, New Delhi to look into this aspect of the matter and file an affidavit in this Court within two months. 11. The matter be listed for 15-1-2009 for considering the affidavit filed by the Secretary, Ministry of Finance, Government of India, New Delhi. 12. A copy of the order be sent to the Secretary, Ministry of Finance, Government of India, New Delhi.