Prima facie excise evasion justified seizure retention, continued adjudication, and arrest despite shareholder status claims.

Seized cash linked to alleged clandestine excise evasion was not ordered to be returned, as prima facie material connected the amount with unaccounted sale proceeds and possible recovery proceedings. The challenge to adjudication and confiscation failed because search material, electronic records, employee statements and bank accounts indicated the petitioner was actively involved in the business and could not be treated as a mere shareholder. The arrest challenge also failed: the Court noted statutory arrest powers, non-cooperation, a prima facie case of fraud and duty evasion, and production before the Magistrate within time, holding the offence to be cognizable and non-bailable.

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Issues: (i) Whether the seized cash of Rs. 45 lakh was liable to be returned for want of notice within six months under the imported confiscation scheme; (ii) Whether the adjudication and confiscation proceedings could be quashed against the petitioner on the ground that he was only a shareholder; (iii) Whether the arrest of the petitioner was illegal and the offence was bailable.

Issue (i): Whether the seized cash of Rs. 45 lakh was liable to be returned for want of notice within six months under the imported confiscation scheme?

Analysis: Section 12 of the Central Excise Act enabled application of specified Customs Act provisions to excise matters with necessary modifications. The scheme of Sections 110, 121 and 124 of the Customs Act, 1962 was considered applicable to sale proceeds and property traceable to excisable goods removed in contravention of the excise law. Though the six-month rule under Section 110(2) was relied upon, the Court found that the petitioner was prima facie involved in the clandestine business, had no plausible explanation for possession of the cash, and the amount was linked to the alleged evasion and could also be relevant for attachment and recovery proceedings.

Conclusion: The seized amount was not directed to be returned and the claim for release of the cash failed.

Issue (ii): Whether the adjudication and confiscation proceedings could be quashed against the petitioner on the ground that he was only a shareholder?

Analysis: The material collected in search and investigation, including electronic records, statements of employees, and bank accounts opened in employees' names, showed prima facie participation of the petitioner in the running of the business and collection of sale proceeds from unaccounted clearances. The Court held that the petitioner could not be treated as a mere passive shareholder and that the proceedings for confiscation, duty demand and penalty could lawfully continue.

Conclusion: The request to quash the adjudication proceedings was rejected.

Issue (iii): Whether the arrest of the petitioner was illegal and the offence was bailable?

Analysis: The Court noted the statutory powers of arrest and summons under the Central Excise Act, the non-cooperation of the petitioner, and the prima facie case of fraud, forgery and large-scale excise duty evasion. It also held that the petitioner was produced before the Magistrate within the prescribed time and that the offence disclosed by the material was cognizable and non-bailable.

Conclusion: The challenge to the arrest failed and no relief was granted on that ground.

Final Conclusion: The writ petition was held to be devoid of merit because the investigation material disclosed prima facie excise evasion, justified continuation of adjudication and related recovery proceedings, and negatived the challenge to arrest and seizure.

Ratio Decidendi: Where seizure and recovery are supported by prima facie material showing clandestine excise evasion, the writ court will not direct return of the seized amount or quash adjudication and arrest merely because the petitioner claims to be a shareholder or invokes the six-month notice rule under the imported confiscation provisions.

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