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2016 DIGILAW 1096 (GUJ)

Dinesh Arvindbhai Padaria v. Union of India

2016-06-14

ALPESH Y.KOGJE, S.R.BRAHMBHATT

body2016
JUDGMENT : Alpesh Y. Kogje, J. 1. The petitioner before this Court claims to be an informer, on whose information a raid was carried out and incident of excise duty evasion came to light. Now by invoking Articles 226 and 227 of the Constitution of India, the petitioner is claiming reward to which he is entitled to for the information given by him to the Department. 2. The facts in brief necessary for disposal of this petition are as under:- 2.1 The petitioner gave a secret information to the officer of Director General of Anti Evasion (DGCEI) regarding illegal act of excise evasion by one VFL, which was manufacturing excisable goods, viz. Polyester staple fiber (PSF) and was removing the said product clandestinely without paying any duty. On the basis of such information, the officers of DGCEI carried out raid at the factory premises of M/s. VFL and their raid reveal that indeed it was a case of excise duty evasion on big scale. 2.2 On completion of the investigation, show cause notice was issued by the excise authorities, whereby demand of Rs. 9,92,31,857/- was raised and upon adjudication, was confirmed by the adjudicating authority. The confirmation of duty was challenged by VFL before the CESTAT. However, such appeal came to be dismissed and hence, demand of duty adjudicated has attained finality. 2.3 The petitioner-informer has received an amount of Rs. 1,00,000/- as advance reward for the information. 2.4 The case of the petitioner for receiving the final reward on the basis of the adjudication by the adjudicating authority was considered by the Rewards Committee. The decision of the Rewards Committee was communicated under communication dated 19.12.2011. From this communication, it appears that the Rewards Committee has held as under:- "The committee perused the O-41 register of the unit maintained by the range for the period 1998-99, 1999-2000 and 2000-01. The Committee noted that after debiting Rs. 92,00,000/- from RG 23A Pt.II on 19.01.99, the unit had operated only in month of June-99, August-99, and October-99 and had paid duty amounting to Rs. 1,21,870/- through PLA and Rs. 8,47,942/- through Cenvat account during this period. The Committee further noted that after debiting Rs. 23,60,118/- from their RG 23C Pt.II on 27.03.2000, the unit operated only in the month of April-2000 and May-2000 and paid duty amounting to Rs. 51,676/- only through PLA and Rs. 1,21,870/- through PLA and Rs. 8,47,942/- through Cenvat account during this period. The Committee further noted that after debiting Rs. 23,60,118/- from their RG 23C Pt.II on 27.03.2000, the unit operated only in the month of April-2000 and May-2000 and paid duty amounting to Rs. 51,676/- only through PLA and Rs. 6,74,619/- through their Cenvat account during this period. The unit is closed since then. Hence the unit has paid only through the PLA Rs. 1,73,546/- and Rs. 15,22,561/- through their Cenvat account after the case was detected on 19.0.1999. The Committee went through the judgment of Larger Bench of CESTAT, Mumbai in case of M/s. Gauri Plasticulture (P) Ltd. v. CCE Indore, (2002) ELT 199 (Tri. LB) in which CESTAT has decided that assessee is not allowed to claim the cash refund of unutilized credit as credit lying in balance get lapsed on closure of the unit. In this case if the party would not have debited Rs. 1,15,60,116/- from the Cenvat account during investigation, an amount of Rs. 1,15,60,116/- minus Rs. 1,73,546/- would have lapsed as unutilized credit after the closure of the unit thus after detection of the case Department has gained only Rs. 1,73,346/- through PLA before closure of the unit. The committee finally observed since no additional recovery except Rs. 1,73,346/- paid by the party through PLA has been made in this case anti Rs. 1,00,000/- has already been granted and paid to the informer as advance rewarded and recovery proceedings from remaining dues amount to Rs. 15,86,60,312/- are pending with the DRT, Mumbai the case is not ripe from grant of final reward at this stage, final reward proposal can be considered only after completion of recovery proceedings in the DRT, Mumbai when additional recovery to the Government take place." 2.5 It is this decision which the petitioner has questioned in this petition praying inter-alia as under:- "ii. Your Lordship may be pleased to issue writ of certiorari and/or writ in the nature of certiorari or any other writ, order and direction by quashing and setting aside the impugned decision of the Rewards Committee dated 19.12.2011 at Annexure-D to this petition; iii. Your Lordship may be pleased to issue writ of certiorari and/or writ in the nature of certiorari or any other writ, order and direction by quashing and setting aside the impugned decision of the Rewards Committee dated 19.12.2011 at Annexure-D to this petition; iii. Your Lordship may be pleased to issue a writ of Mandamus, or writ in the nature of Mandamus or any other appropriate writ, order or direction, directing the respondents to: a. Withdraw and/or cancel the impugned decision dated 28-11-2011 by Rewards committee b. To forthwith grant the balance interim reward on the net recovery being Rs. 2212023.00 (2312023.00 less 100000.00 Advance reward amount paid) @ 20% of the debited portion of total demand being 11560118.00 along with interest for the such delayed payment of reward c. To attain finality to the issue of reward be further pleased direct and/or request DRT, Mumbai to expedite the disposal of the pending proceeding No. 484 of 2002 against M/s. VFL" 3. In support of his contention, learned Advocate Shri Chhabaria for the petitioner submitted that the decision of the Rewards Committee is not in consonance with the scheme. He submitted that once the adjudication is concluded, the petitioner was entitled to receive the reward under the scheme. He submitted that though the scheme envisages payment of reward on the basis of recovery made, in view of the communication, he would submit that the adjudicating authority in an order, which has attained finality, has concluded that the amount of excise duty is received. He referred to the portion of the final order in the Order in Original passed by the Commissioner of Central Excise and Customs, Surat-II dated 07.05.2004, where the conclusion is as under:- "I determine and demand the Central Excuse duty amounting to Rs. 9,92,31,857/- (i.e. 6,81,84,464.00 + 3,10,47,393.00) leviable on the PSF cleared illicitly and Polyester Waste cleared without payment of duty for job-work, under Section 11A of the Central Excise Act, 1944. M/s. VFL has already paid Central Excise duty amounting to Rs. 1,15,60,118/-. I confirm and appropriate the same and order M/s. VFL to pay the remaining Central Excise duty amounting to Rs. 8,76,71,739/- forthwith." 4. On that basis, he submitted that as the adjudicating authority has concluded that amount of Rs. 1,15,60,118/- is already paid by M/s. VFL, hence the petitioner is entitled to receive 20% of that amount which comes to Rs. 23,12,023.00. 8,76,71,739/- forthwith." 4. On that basis, he submitted that as the adjudicating authority has concluded that amount of Rs. 1,15,60,118/- is already paid by M/s. VFL, hence the petitioner is entitled to receive 20% of that amount which comes to Rs. 23,12,023.00. Learned Advocate referred to the judgment of the Apex Court in the case of Union of India v. R. Padmanabhan in Appeal (Civil) No. 2769 of 1999 dated 13.08.2003. In this judgment, learned Advocate drew particular attention to the following observations made by the Apex Court:- "..... Reward is purely an ex-gratia payment, subject to the Guidelines on the discretion of the competent authority, though it cannot arbitrarily be denied or refused at whim or fancy and it should specifically conform to and must be shown to fall or claimed within the four corners of the Scheme and not by any deviation or modulation of the Scheme, as the Courts think it should be and if it cannot come strictly within the four corners of it, such claim may have to be dealt with only under the residuary powers enabling the grant of reward....." 5. While making submissions, he candidly agreed to the proposition that the scheme envisages payment of the reward only on the basis of the amount recovered in any manner on the basis of the information. 6. As against this, learned Senior Advocate Shri R.J. Oza appearing for respondent Nos. 3 and 5 supported the decision of the Rewards Committee and submitted that the decision of the Rewards Committee is in conformity with the scheme of grant of reward to and informer and Government servant "the Reward Scheme" for short). Shri Oza took us through the relevant provisions of the Reward Scheme, which are as under:- "4.1 Informers and Govt. servants will be eligible for reward upto 20% of the net sale-proceeds of the contraband goods seized and/or amount of duty evaded plus amount of fine and penalty levied/imposed and recovered. However, in respect of gold, silver, opium and other narcotic drugs etc. seized under the provisions of the Customs Act, 1962/Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, the overall ceiling of reward will be as per specific rates indicated in the Annexure. However, in respect of gold, silver, opium and other narcotic drugs etc. seized under the provisions of the Customs Act, 1962/Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, the overall ceiling of reward will be as per specific rates indicated in the Annexure. These ceilings would be subject to periodical revision in the light of the price fluctuations of these items, for which periodical intimations may be sent to the DGRI/DGNCB, who, in turn, will send suitable recommendations to the Ministry, for appropriate revision, as and when warranted. 5.1 Reward is purely an ex-gratia payment which, subject to guidelines, may be granted on the absolute discretion of the authority competent to grant rewards and cannot be claimed by anyone as a matter of right. In determining the reward which may be granted, the authority competent to grant reward will keep in mind the specificity and accuracy of the information, the risk and trouble undertaken, the extent and nature of the help rendered by the informer, whether information gives clues to persons involved in smuggling, or their associates etc., the risk involved for the Govt. Servants in working out the case, the difficulty in securing the information, the extent to which the vigilance of the staff led to the seizure, special initiative, efforts and ingenuity displayed, etc. and whether, besides the seizure of contraband goods, the owners/organizers/financiers/ racketeers as well as the carriers have been apprehended or not. 6.3 In all other cases, including Customs appraising cases, cases of town-seizures and Central Excise duty evasion cases, normally, no advance/interim reward will be granted. However, in cases where the parties/persons involved have voluntarily paid the amount of duty evaded during the course of investigation, admitting their liability, 25% of the voluntary deposits may be considered for payment as advance/interim reward to the informers, after the issue of the show-cause notice (SCN), provided the authority competent to sanction reward is satisfied that there is reasonable chance of confiscability/infringement/evasion, as the case may be, being established in adjudication and sustained in appeal/revisionary proceedings. However, in such cases, the Govt. servants will become eligible for payment of advance/interim reward only after adjudication of Show-Cause Notice resulting in confirmation of duty. 7.1 Final rewards, both the officers as well as informers, should be sanctioned and disbursed only after conclusion of adjudication/appeal/revision proceedings. However, in such cases, the Govt. servants will become eligible for payment of advance/interim reward only after adjudication of Show-Cause Notice resulting in confirmation of duty. 7.1 Final rewards, both the officers as well as informers, should be sanctioned and disbursed only after conclusion of adjudication/appeal/revision proceedings. The final reward will be determined on the basis of the net sale proceeds of goods seized/confiscated (if any) and/or the amount of additional duty/fraudulently claimed Drawback recovered plus penalty/fine recovered and the total reward admissible, i.e. advance and final reward put together, will not exceed 20% of the net sale proceeds (if any) plus amount of additional duty, fine/penalty recovered or the amount of drawback fraudulently claimed recovered, as the case may be. This will also be subject to instructions in para 4.3 above as regards rewards to Govt. Servants is concerned. The advance/interim reward sanctioned and disbursed, if any, shall be adjusted from the final reward to be paid to the officers/informers. 9. REVIEW OF FINAL REWARDS SANCTIONED BY THE COMPETENT AUTHORITY Final reward sanctioned by the duly constituted reward sanctioning authority/committee shall not be reviewed or reopened. However, in most exceptional cases, where DGRI, DGCEI, or the Chief Commissioner, as the case may be, is satisfied that the review of the final reward sanctioned by the competent authority is absolutely necessary to redress any grave injustice meted out to the Informer/Govt. servant and make a recommendation to the Board to this effect, the Govt. may review the final reward sanctioned on the specific recommendations of the Board." 13. UNDERTAKING BY THE INFORMER At the time when an informer furnishes any information or documents, an undertaking should be taken from the informer that he/she is aware that the extent of the reward depends on the precision of the information furnished by him/her; that the provisions of Section 82 of the Indian Penal Code have been read by and/or explained to him/her; that he/she is aware that if the information furnished by him/her is found to be false, he/she would be liable to prosecution; that he/she accepts that the Govt. is under no obligation to enter into any correspondence regarding the details of seizures made, etc., if any, and that the payment of reward is ex-gratia in the absolute discretion of the authority competent to grant reward. It may also be made specifically clear to the informer that the Govt. is under no obligation to enter into any correspondence regarding the details of seizures made, etc., if any, and that the payment of reward is ex-gratia in the absolute discretion of the authority competent to grant reward. It may also be made specifically clear to the informer that the Govt. is under no obligation to grant/sanction the maximum admissible reward upto 20% of the net sale proceeds of the seized/confiscated goods, (if any) and/or the amount of additional duty/penalty/redemption fine recovered and that the amount of reward to be sanctioned to the informer, will purely depend on the specificity & accuracy of the information & other dependent factors, as indicated in para 5.1 of these guidelines." 7. On the basis of the Reward Scheme, Shri Oza submitted that the instance of giving final reward would only come into existence on the basis of actual recovery made by the Department pursuant to the information given by the informer. He submitted that in the instant case, what is actually recovered by the Department is an amount of Rs. 1,73,000/- (rounded off) and as against this, the petitioner has already received an amount of Rs. 1,00,000/- towards the interim reward. He submitted that in view of the fact that the amount is actually not recovered and the recovery to be made by the Department is still subject to the pending proceedings with DRT, Mumbai, where number of claimants appear to staked their claims against M/s. VFL and therefore, unless those litigations come to an end, thereafter only recovery of the actual amount from M/s. VFL will be possible and depending upon extent of recovery made in the instant case, final reward can be passed. 8. Shri Oza, on the point of issuance of writ of mandamus, relied upon the judgment of the Hon'ble Apex Court in the case of Union of India v. C. Krishna Reddy, reported in 2004 (163) ELT 4 (SC). He drew our attention to paras-12 and 13, which read as under:- "12. 8. Shri Oza, on the point of issuance of writ of mandamus, relied upon the judgment of the Hon'ble Apex Court in the case of Union of India v. C. Krishna Reddy, reported in 2004 (163) ELT 4 (SC). He drew our attention to paras-12 and 13, which read as under:- "12. The scheme or the policy of the Government of India dated 30.3.1985 shows that the authority competent to grant the reward, while taking a decision regarding the entitlement of the person concerned has to keep many factors in his mind like specificity and accuracy of the information, the risk and trouble undertaken, the extent and nature of the help rendered by the informer, whether information gives clues of the persons involved in smuggling or their associates, the difficulty in securing the information, the risk involved for the government servants in working out the case and whether apart from seizure of contraband goods, the owners/organisers/financiers/racketeers have been apprehended. The scheme further mentions that reward is an ex-gratia payment and subject to the guidelines and may be granted on the absolute discretion of the authority competent and further that no one can claim the reward as a matter of right. The High Court in writ jurisdiction cannot examine or weigh the various factors which have to be taken into consideration while deciding a claim regarding grant of reward. These are matters exclusively within the domain of the authorities of the Department as they alone can weigh and examine the usefulness or otherwise of the information given by the informer. In the writ petition filed by the respondent, no details had been given on the relevant issues. If the grant of reward cannot be claimed as a matter of right it is not understandable as to how a Writ of Mandamus can be issued commanding the Government to give a particular amount by way of reward. Though this specific plea was taken in paras 18 and 21 of the counter affidavit, yet neither the learned Single Judge nor the Division Bench adverted to this aspect of the matter. 13. It is well settled by a catena of decisions of this Court that a Writ of Mandamus can be granted only in a case where there is a statutory duty imposed upon the officer concerned and there is a failure on the part of that officer to discharge the statutory obligation. 13. It is well settled by a catena of decisions of this Court that a Writ of Mandamus can be granted only in a case where there is a statutory duty imposed upon the officer concerned and there is a failure on the part of that officer to discharge the statutory obligation. The chief function of the writ is to compel performance of public duties prescribed by statute and to keep subordinate tribunals and officers exercising public functions within the limit of their jurisdiction. Therefore, in order that a mandamus may issue to compel the authorities to do something, it must be shown that there is a statute which imposes a legal duty and the aggrieved party has a legal right under the statute to enforce its performance. (Bihar Eastern Gangetic Fishermen Co-operative Society Ltd. v. Sipahi Singh, AIR (1977) SC 2149; Lekhraj Satram Dass Lalvani v. Deputy Custodian-cum-Managing Officer, AIR (1966) SC 334 and Dr. Umakant Saran v. State of Bihar, AIR (1973) SC 964." 9. Shri Oza also drew our attention to judgment of this Court in case of D.D. Gandhi v. Union of India, reported in 2011 (273) ELT, 491 (Guj.), which also held a similar view. In the said judgment, relying upon the judgment in case of C. Krishna Reddy (supra), it was held as under:- "7. Though learned advocates have argued the matter at length, we propose to decide this petition on certain relevant issues such as, (i). whether there is any failure on the part of the officer to discharge any statutory obligation, and (ii). Whether grant of reward is ex-gratia, (iii). whether there is any vested right on the informant to claim reward, and (iv). Whether a writ petition would lie in the facts and circumstances of the case. 8. The Apex Court in the case of D.G. Revenue Intelligence & Invest. Vs. Amrit Lal Mehta, reported in 2007 (220) ELT 9 (SC) has held as under in paragraph 7 of the judgment:- "7. However, considering the fact that it has been held by this Court in the cases of Union of India & Ors. 8. The Apex Court in the case of D.G. Revenue Intelligence & Invest. Vs. Amrit Lal Mehta, reported in 2007 (220) ELT 9 (SC) has held as under in paragraph 7 of the judgment:- "7. However, considering the fact that it has been held by this Court in the cases of Union of India & Ors. v. C. Krishna Redy reported in (2003) 10 SCALE 1050 as well as in Union of India v. R. Padmanabham reported in (2003) 7 SCC 270 and in the Reward Scheme that there is no vested right in the person to claim a reward and that the payment can, at the highest, be an ex-gratia payment, there is absolutely no justification to grant interest on such ex-gratia payment." 9. That apart, the issue involved in the present petition is squarely covered in the decision of the Apex Court in the case of Union of India v. C. Krishna Reddy reported in 2004 (163) ELT 4 (SC). In paragraphs 13 and 14 of the judgment, the Apex Court held as under:- "13. It is well settled by a catena of decisions of this Court that a Writ of Mandamus can be granted only in case where there is a statutory duty imposed upon the officer concerned and there is failure on the part of the officer to discharge the statutory obligation. The chief function of the writ is to compel performance of public duties prescribed by statute and to keep subordinate tribunals and officers exercising public functions within the limit of their jurisdiction. Therefore, in order that a mandamus may issue to compel the authorities to do something, it must be shown that there is a statute which imposed a legal duty and the aggrieved party has a legal right under the statute to enforce its performance. (Bihar Eastern Gangetic Fisherman Co-Operative Society Ltd. v. Sipahi Singh AIR 977 SC 2149, Lekhraj Satram Dass Lalvani v. Deputy Custodian-cum-Managing Officer, AIR 1966 SC 334 and Dr. Umakant Saran v. State of Bihar, AIR 1973 SC 964 ). 14. By the very nature of things, no one has a legal right to claim a reward. The scheme itself shows that it is purely an ex-gratia payment subject to guidelines and may be granted on the absolute discretion of the competent authority and cannot be claimed by anyone as a matter of right." 10. 14. By the very nature of things, no one has a legal right to claim a reward. The scheme itself shows that it is purely an ex-gratia payment subject to guidelines and may be granted on the absolute discretion of the competent authority and cannot be claimed by anyone as a matter of right." 10. In the facts of the present case, the respondents were not performing any statutory duty imposed upon them and therefore it cannot be said that there is failure on the part of the officer to discharge the statutory obligation. A writ of mandamus, therefore, cannot be issued in the matter. 11. In view of the aforesaid settled position of law, we do not intend to undertake the futile exercise of dealing with each and every judgment cited before us by learned advocate for the petitioner. 12. In view of a catena of decisions of the Apex Court and well settled position of law, grant of reward is an ex-gratia payment and there is no vested right in any person to claim a reward as a matter of right. The respondents in the instant case were not performing any statutory duty imposed upon them and, therefore, it cannot be said that there is failure on their part to discharge any statutory obligation warranting exercise of writ jurisdiction to compel performance of such duties prescribed by any statute. The policy of reward is only a 'scheme' and not a 'statute'." 10. Learned Advocate Shri Ravani appearing for respondent Nos. 2 and 4, while adopting the submissions of learned Senior Advocate Shri Oza further contended that the amount paid through utilizing cenvat credit cannot be equated with the amount recovered out of net sale proceeds and the contraband goods seized and/or amount of duty evaded plus amount of fine and penalty levied/imposed as contemplated in Clause-4.1 of the Reward Scheme. Therefore, when the adjudicating authority referred to payment of central excise duty amounting to Rs. 1,15,60,118/-, the same has to be construed as payment by utilizing cenvat credit and not actual recovery. Therefore, the claim of the petitioner to 20% of the amount referred hereinabove and adjudicated by the adjudicating authority cannot be taken into consideration for the purpose of the scheme. 11. 1,15,60,118/-, the same has to be construed as payment by utilizing cenvat credit and not actual recovery. Therefore, the claim of the petitioner to 20% of the amount referred hereinabove and adjudicated by the adjudicating authority cannot be taken into consideration for the purpose of the scheme. 11. Taking into consideration the rival submissions of the parties, the order impugned in this petition, if examined in light of the submissions for impugned award to the informant, we are of the considered view that as the Rewards Committee has not adverted to various factors which are required to be taken into consideration by the Rewards Committee for coming to the conclusion qua the informant's entitlement to receive reward and the quantum, the Rewards Committee has rather rendered its decision making it subject to outcome of the proceedings before the DRT. The non-advertence to various factors in non-recording of findings qua informant or as to why informant deserves what reward and not recording its clear findings, the order is rendered vulnerable and hence, the Rewards Committee will have to take afresh look into the matter. We hastened to add here that therefore, without recording our view on the rival submissions, we deem it fit to direct the Rewards Committee for arriving its own conclusion after affording proper opportunity to the concerned. It shall record its reasons, keeping in mind the ingredients to be considered for examining the entitlement of the informant and quantum to be awarded. We once again clarify that we are not opining on merits of the contention qua entitlement or otherwise of the informant. 12. We propose to dispose of this petition with a direction to the Rewards Committee to give a decision afresh. While doing so, the Rewards Committee will give full opportunity to both the sides to raise all the contentions. Reading of the scheme, calls upon the Rewards Committee to take a decision on the final reward and such decision is to be arrived at after completion of adjudication/appeal/revision proceedings and the final reward to be determined on the basis of net sale proceeds of goods seized/confiscated (if any) and/or amount of additional duty/fraudulently claimed drawback recovered plus penalty/fine recovered. Reading of the scheme, calls upon the Rewards Committee to take a decision on the final reward and such decision is to be arrived at after completion of adjudication/appeal/revision proceedings and the final reward to be determined on the basis of net sale proceeds of goods seized/confiscated (if any) and/or amount of additional duty/fraudulently claimed drawback recovered plus penalty/fine recovered. However, the scheme seals limit of reward to 20% of the net sale proceeds, etc., meaning thereby it is for the Rewards Committee to determine the reward amount by taking into consideration various factors as contemplated under the Reward Scheme to arrive at a figure which can be ranging from 1% to 20%. 13. In view of the aforementioned facts, the decision of the Rewards Committee needs to be re-looked in line with the observations made in this judgment. The Rewards Committee under the Reward Scheme is, therefore, directed to take a decision a fresh on the application of the petitioner and while doing so, take into consideration the observations made in this judgment. It will be open to all concerned to raise all contentions including the contention of recovery as contemplated in "The Scheme" does not cover the payment of duty by utilizing the cenvat credit. 14. The petition is disposed of with above observations. No order as to costs.