2009 (12) TMI 1054 - HC - Central Excise

Court quashes proceedings for lack of 'reason to believe' in raids, upholds petitioners' right to challenge actions.

The court allowed all three writ petitions, quashing the Panchanama and consequential proceedings against the petitioners due to the absence of a recorded ... - Issues involved:The judgment involves the legality of a raid conducted by officers of the Central Excise Department on the factory premises of three companies engaged in manufacturing TMT bars and rods, and alloy steel. The main issue is whether the officers had the required 'reason to believe' as mandated by the law before conducting the raid.Details of the Judgment:Issue 1: Reason to BelieveThe petitioners challenged the raid conducted by the officers, alleging that the officers did not record the necessary 'reason to believe' as required by the Customs Act. The respondents contended that the raid was justified as the officer had reason to believe that certain goods liable for confiscation were with the petitioners.Relevant Legal Precedents:The petitioners cited a judgment of the Apex Court in the case of State of Rajasthan vs. Rehman, emphasizing the importance of having a reason to believe before conducting a search or seizure. Another judgment, Durga Prasad vs. H.R. Gomes, highlighted the necessity of fulfilling the preliminary conditions, including having a reason to believe, before exercising the power of search.Analysis:The court examined the search warrant produced by the respondents and found that it lacked any mention of the reason to believe that goods liable for confiscation were present on the premises. The court acknowledged that it cannot question the officer's belief but emphasized that the lack of recorded reasons rendered the raid illegal.Decision:The court allowed all three writ petitions, quashing the Panchanama and consequential proceedings against the petitioners due to the absence of a recorded reason to believe by the officer. The court distinguished a previous Division Bench decision and held that the petitioners had the right to challenge the initiation of proceedings on jurisdictional grounds, as established by legal precedents.In conclusion, the judgment highlights the significance of complying with legal requirements, such as recording the 'reason to believe,' before conducting raids or searches, and upholds the right of petitioners to challenge actions taken without jurisdiction.