can seized goods be released after payment of duty and penalty?

PJ/Case Law/2016-2017/3445

Case-SANDEEP GUPTA versus COMMISSIONER OF CENTRAL EXCISE
Citation-2017(345) E.L.T.79 (ALL.)
Issue-can seized goods be released after payment of duty and penalty?
Brief Facts- The facts of the present case are that the petitioner is the proprietor of the firms M/s. Sandeep Manufacturing Strips (a manufacturing unit) and M/s. Sandeep Metal Supply (a trading company). The manufacturing unit was situated at Loni, Ghaziabad whereas the trading unit was situated at Chawri Bazar, Delhi. The two units of which the petitioner was the proprietor were engaged in manufacturing and trading respectively of copper items falling under Chapter Heading 74 of Central Excise Tariff Act, 1985. A search was conducted in the premises of M/s. Sandeep Manufacturing Strips, Loni, Ghaziabad and the goods were seized/detained vide Panchanama order dated 27-10-2010. The business premises of M/s. Sandeep Metal Supply was also searched and the goods were seized/detained vide Panchanama of even date.The contention of the petitioner was that there was no illegality in the business activities of the petitioner and, therefore, the search and detention affected on 27-7-2010 was illegal. The detention order was liable to be lifted.
It appeared that a show cause notice was issued by the Directorate General Central Excise Intelligence, New Delhi on 25-1-2011 calling upon the petitioner to show cause as to why the items of copper seized from the premises of M/s. Sandeep Metal Supply weighing 5317.11 Kgs. and valued at Rs. 1,91,43,040/- be not confiscated under Rule 25 of the Central Excise Rules, 2002 and further 4522 Kgs. of Copper ingots, 4413 Kgs. of copper strips seized from the factory premises of M/s. Sandeep Metal Strips, Loni, Ghaziabad be also not confiscated under the aforesaid Rules. A sum of Rs. 22,42,584/- towards Central Excise duty and Rs. 44,852/- as Education Cess and Rs. 22,426/- as Higher Education Cess be not demanded and recovered under Section 11A(1) of the Central Excise Act, 1944. Interest, penalty and seizure of vehicle as also penalty for abetting for commission of the offence be not imposed. Vide letter dated 17-2-2011, the Additional Commissioner, Central Excise Commissionerate, Ghaziabad had informed that the seized goods can be released provisionally after completing the prescribed formalities i.e. after execution of the B-11 Bond equal to the value of goods seized backed by security equal to 25% of the Bond amount.
Appellant’s Contention-Sri Sinha, learned Counsel submitted that the petitioner was prepared to deposit the amount of excise duty and penalty which may be imposed on the seized goods and, thereafter, the seized goods be released. A further plea was raised that the respondents were not supplying the legible copies of the relied upon documents in the show cause notice and, therefore, the petitioner was not in a position to submit the explanation/reply. He submitted that on account of the seizure of the goods, the petitioner’s business was being adversely affected.
Respondent’s Contention-Sri Kesarwani, learnedSenior Standing Counsel appearing for the Respondents No. 1 & 2 , submitted that regarding the grievance of not providing the legible copies of the relied upon documents, the same did not hold good, as on 19-12-2011, the legible copies of all the relied upon documents were given to the petitioner. Photostat copy of the acknowledgement given by Sandeep Gupta, the proprietor was also produced. This fact has not been disputed by the learned Counsel for the petitioner. Thus, the grievance of not supplying of legible copies of relied upon documents did no longer exist.

Reasoning Of Judgement- it was held thatSo far as the question of release of the seized goods were concerned, bench may mention here that in the show cause notice dated 25-1-2011, the Directorate General of Central Excise Intelligence, Delhi had specifically asked the petitioner to show cause as to why the goods seized from the premises of M/s. Sandeep Metal Supply and M/s. Sandeep Manufacturing Strips be not confiscated. Adjudication proceedings were yet to be finalised. If ultimately, the authority comes to the conclusion that the seized goods were liable to be confiscated, then in the discretion of the adjudicating authority, an option can be given to the offending party to redeem it on payment of certain amount. What would be that amount at present was only a guess which bench were not inclined to make.
The submission of Sri Sinha that the seized goods may be released on deposit of the amount of Excise duty which was likely to be levied, if accepted at this stage even when the adjudication proceedings were yet to be completed would set at naught the statutory provisions which provided for confiscation of seized goods and its release on payment of redemption amount. Bench may mention here that the duty and penalty which may be imposed was in addition to the confiscation of goods, if ordered and was not in lieu thereof. That being the position, bench cannot direct the release of seized goods on payment of Excise duty and penalty, which may be imposed.
Bench herein observed that the adjudication proceedings have been pending since 25-1-2011. For one reason or the other, it has been held up. As the legible copies of relied upon documents have already been supplied to the petitioner on 19-12-2011, bench directed the petitioner to submit his reply/explanation within a period of one month from today and the Respondent No. 1 or the authorised officer, who had issued the notice dated 25-1-2011 shall pass the final order in accordance with law within one month thereafter.
Decision- writ dismissed.
Comment-The kernel of the case was that when a search is conducted and the goods are seized/ detained then goods cannot be released merely on payment of duty and penalty. As here the adjudication proceedings were not concluded and Quantum of redemption fine was not known ordering release of goods would make statutory confiscation provision redundant. Since payment of duty and penalty is not in lieu of redemption fine, release of seized goods was held to be not permissible.
Prepared By-arundhati bajpai

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PJ/Case Law/2016-2017/3445

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