Court questions Chief Commissioner's actions on undated cheques, stresses due process, orders investigation

The Court found that the actions of the Chief Commissioner of Central Excise (Anti Evasion) were questionable, particularly regarding the collection of undated cheques without proper legal basis. It emphasized the importance of following due process and issued directives for the Commissioner to address and investigate these practices. The Court ordered the cheques to be sealed, required the Commissioner to detail steps to halt the illegal practice, and allowed the Petitioner to have legal representation in future proceedings. The case was adjourned for further hearing to ensure compliance with the Court's instructions.

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Issues Involved:
1. Functioning of the Chief Commissioner of Central Excise (Anti Evasion).
2. Availing of exemption by the Petitioner under Notification No. 12/2012-CE.
3. Collection of undated cheques by the Anti Evasion Wing.
4. Legality of the actions taken by the Anti Evasion Wing during the visit/search.
5. Compliance with legal provisions and procedural fairness.

Issue-wise Detailed Analysis:

1. Functioning of the Chief Commissioner of Central Excise (Anti Evasion):
The writ petition highlighted disturbing facts about the functioning of the Chief Commissioner of Central Excise (Anti Evasion). The Court examined original files and noted that intelligence suggested the Petitioner, Digipro Import & Export Pvt. Ltd., was engaged in manufacturing mobile phone batteries, chargers, and LED bulbs. The unit was registered with the Central Excise Department and imported components at nil duty rates. It was alleged that the unit paid lower duties than required, leading to a differential duty liability.

2. Availing of exemption by the Petitioner under Notification No. 12/2012-CE:
The issue concerned the Petitioner's availing of exemption under Notification No. 12/2012-CE. The scrutiny of ER-3 Returns indicated that the Petitioner cleared mobile phone batteries and LED bulbs at lower duty rates than applicable. The Superintendent's note dated 6th March 2017 sought permission to visit the Petitioner's premises to safeguard revenue, which was granted by the Additional Commissioner on 10th March 2017.

3. Collection of undated cheques by the Anti Evasion Wing:
During the visit on 10th March 2017, the Director of Digipro allegedly admitted that the exemption was not applicable and offered to deposit the differential duty. Five undated cheques totaling Rs. 1.25 crores were collected. The Petitioner disputed this, claiming the cheques were collected under coercion. The Court noted discrepancies between the Superintendent's note and the panchnama regarding the cheques' dates.

4. Legality of the actions taken by the Anti Evasion Wing during the visit/search:
The Court questioned the legality of collecting undated cheques without proper quantification of duty and without issuing a show cause notice (SCN). The Court emphasized that officers must function within the law's confines and cannot collect duty on the spot without following due process. The affidavit filed by the ADC attempted to justify the collection of cheques, stating it was at the Petitioner's request due to insufficient funds.

5. Compliance with legal provisions and procedural fairness:
The Court highlighted the lack of legal provisions or notifications allowing the collection of undated cheques. It referred to a similar judgment in Capri Bathaid Private Limited v. Commissioner of Trade & Taxes, where such practices were deemed illegal. The Court directed the Commissioner of Central Excise, Delhi-II, to file an affidavit explaining steps to stop this practice and to investigate the officers involved. The Court also directed the Central Vigilance Commissioner (CVC) to issue guidelines to prevent such practices.

Conclusion:
The Court ordered the five cheques to be kept in a sealed cover with the Registrar General and directed the Commissioner of Central Excise, Delhi-II, to file an affidavit detailing steps to stop the illegal practice and to investigate the involved officers. The Court also allowed the Petitioner to have counsel present during any future proceedings and kept the writ petition pending to ensure compliance with its directions. The case was listed for further hearing on 30th May 2017.

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