2010 (3) TMI 630 - HC - Central Excise

Court dismisses challenge to Excise Duty notice on Ayurvedic manufacturers, emphasizes safeguarding electronic evidence

RAHAT INDUSTRIES Versus COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD

RAHAT INDUSTRIES Versus COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD - 2010 (254) E.L.T. 385 (All.) Issues:Challenge to notice dated 5-5-1999 for Central Excise Duty recovery, appointment of Commissioner to seal and examine floppies and hard disc, retrieval of data from floppies, petition pending for over ten years, jurisdiction of the authority issuing notice.Analysis:The petitioners, registered manufacturers of Ayurvedic medicines, faced a search and seizure operation resulting in the seizure of documents and electronic articles, including floppies and a hard disc. A notice dated 5-5-1999 was issued to recover Central Excise Duty and impose penalties. The petition challenged this notice and requested the appointment of a Commissioner to seal and examine the seized items. Initially, two Advocate Commissioners were appointed to seal the floppies and hard disc, with further proceedings stayed. Later, the petitioners requested printouts of data from specific floppies, leading to the appointment of an Advocate Commissioner for this purpose.The Advocate Commissioner's attempts to retrieve data from the floppies were unsuccessful, indicating potential data loss due to the passage of time. The petitioners argued that without this data, they couldn't properly reply to the notice. However, the Court declined to issue a direction for data retrieval, considering the limited lifespan of floppies. The respondents argued that the data demanded by the petitioners had already been supplied to them, as certified by a representative in a statement. The Court noted that a hard copy of the data was available with the respondents and could be supplied to the petitioners if necessary.The Court emphasized that the petition had been pending for over ten years and primarily challenged the show cause notice. It clarified that a writ petition against a notice is typically not entertained unless the notice is jurisdictionally flawed. Since the notice in question was not shown to lack jurisdiction, the Court declined to interfere using writ jurisdiction. However, it directed the petitioners to submit their reply to the notice within a month and allowed them to raise contentions regarding data supply or retrieval. The Additional Commissioner was tasked with considering these submissions and passing a final order promptly.In conclusion, the Court dismissed the writ petition but advised authorities to obtain hard copies of seized software data before sealing them to prevent future retrieval issues. This precaution was deemed essential for both authorities and Courts when dealing with software material to avoid data loss and inconvenience in the future.