1964 (3) TMI 8 - HC - Central Excise

Court rules in favor of petitioner merchant, deems department's actions unjustified under Rule 52-A (2)

The court found that the petitioner, a general merchant, was not liable under Rule 52-A (2) of the Central Excise Rules. The department's demand for a ... Seized goods Issues:1. Whether the petitioner, a general merchant, is liable under Rule 52-A (2) of the Central Excise Rules for contravening excise regulations.2. Whether the department's demand for a security bond and deposit of Rs. 300 from the petitioner was lawful and justified.3. Whether the department's actions against the petitioner were appropriate considering the responsibility of the mill as the producer of the goods.4. Whether the department's demand for depositing the sum of money before any order of confiscation has been made was valid.Analysis:1. The petitioner, a general merchant not involved in manufacturing or production, was subjected to excise proceedings for an alleged violation of Rule 52-A (2) of the Central Excise Rules. The petitioner contested his liability, arguing that he should not be held accountable. The departmental officers seized goods from the petitioner and demanded a security bond and a deposit of Rs. 300 for release. The petitioner complied, but later challenged the necessity of the bond. The department claimed the bond was valid and enforceable, asserting a right to recover the amount. The petitioner's liability and the goods' confiscation were yet to be determined, acknowledged by the court.2. The department's demand for a security bond and deposit from the petitioner was scrutinized. The petitioner contended that the bond was unnecessary after complying with the initial deposit requirement. The court found it surprising that goods were released without the bond initially, questioning the subsequent demand for deposit before any confiscation order. The court highlighted the petitioner's undertaking, which covered the requirements of the bond, allowing possession of goods until an adverse order was passed. The court ruled that the department could only demand payment of fines in lieu of confiscation, not the return of goods or a deposit based on their value.3. The petitioner argued that the department's actions were unjust as they did not pursue the mill, responsible for excise duty payment as the producer of goods. The petitioner emphasized that no notice of demand was served to the mill, suggesting the department's focus on the wrong party. The court acknowledged the petitioner's concerns regarding the department's choice of action against him instead of the mill, raising questions about the legality and fairness of the department's approach.4. The court concluded that the goods were released based on a proper undertaking by the petitioner, rendering the department's subsequent demand unjustified pending a final order. A writ of prohibition was issued to restrain the department from making such demands, emphasizing that the department could enforce the undertaking or security bond as necessary in the future. The court's decision aimed to uphold fairness and proper legal procedures in excise matters, ensuring that actions taken by authorities were justifiable and lawful.