1999 (1) TMI 39 - HC - Central Excise

Court dismisses petition challenging visit to factory, upholds show cause notice. Petitioners can present case before adjudicating authority.

The court dismissed the petition as it found no merit in the petitioners' contentions. It concluded that the respondents' visit to the factory was for ... Search and seizure Issues Involved:1. Whether the respondents conducted a search.2. Whether the show cause notice is vitiated due to lack of reason to believe excisable goods were being manufactured, stored, and sorted.3. Whether the notification regarding the adoption of the provisions of the Customs Act is invalid.4. Whether the case is fit for interference under Article 226 of the Constitution.Issue-wise Detailed Analysis:1. Did the respondents conduct a searchRs.The petitioners alleged that a raiding party conducted a search on April 22, 1998, without showing any search warrant, and seized documents. The respondents countered that no search was conducted; instead, the factory premises were visited for scrutiny and verification of records under Rule 197 of the Central Excise Rules, 1944. The court found inherent evidence indicating no raid or seizure. The statement of the Managing Director, Mr. Mohinder Gupta, and the Resumption Memo supported the respondents' claim. The court concluded that the visit was for scrutiny, not a raid, and the documents were resumed, not seized.2. Is the show cause notice vitiated as the respondents had no reason to believe that excisable goods were being manufactured, stored, and sorted in the petitioners' factoryRs.The petitioners contended that the respondents conducted the raid without recording reasons to believe that excisable goods were being stored or manufactured. The court found this contention misconceived. The rule authorizes searches if there is reason to believe excisable goods are being processed or stored in contravention of the Act. The court noted that the respondents had definite information and documents indicating evasion of excise duty, justifying the scrutiny and verification. The court held that the show cause notice was not vitiated.3. Is the notification regarding the adoption of the provisions of the Customs Act invalidRs.Section 12 of the Central Excise Act allows the Central Government to declare that provisions of the Customs Act, 1962, apply to excise duties. The court found that the notification issued under Section 12 was within the jurisdiction conferred by the Act. The provisions of the Customs Act could be applied with modifications and alterations. The notification had stood the test of time for over three decades, providing intrinsic evidence of its validity. The court concluded that the notification was legal and valid.4. Is the present case fit for interference under Article 226 of the ConstitutionRs.The petitioners argued that the case was based on documents stolen by Mr. Rajiv Puri and pending before the court. They sought to stay further action by the excise authorities. The court found no evidence supporting the claim that the documents were stolen. The petitioners had waited for over four months before alleging theft by Mr. Rajiv Puri. The court noted that only a show cause notice was issued, giving the petitioners an opportunity to prove their case. The court concluded that it was not appropriate to interfere under Article 226 of the Constitution.Conclusion:The court dismissed the petition, finding no merit in the contentions raised by the petitioners. The search was deemed a permissible scrutiny under Rule 197, the show cause notice was justified, the notification under Section 12 was valid, and there was no basis for interference under Article 226. The petitioners were given an opportunity to present their case before the adjudicating authority.