TaxTMI 
TaxTMI 
2013 (3) TMI 233
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.... now stands as 'Kattha (Catechu) excluding Gambier'. 4. Traditionally, Kattha is manufactured from Khair wood. It is exempted from excise duty. The petitioners case is that: It can be manufactured from Gambier, which is imported from outside; They purchase Gambier from the market and manufacture Kattha from it. They are not liable pay excise duty. 5. The Central Excise Department at Kanpur (the Department) disputed the claim of the petitioners. They started investigating it. 6. A search was conducted on 4th September, 2003 in six units in Kanpur. Out of these six, we are concerned with the three that are petitioners in WP (Tax) 1289 of 2003 (the first WP), WP (Tax) 1290 of 2003 (the second WP), and WP (Tax) 1334 of 2003 (the third WP). 7. The goods as well as the records of the searched units were seized and three samples of the goods were made. One sample was given to the petitioner, one was sent to Central Revenue Control Laboratory, Pusa Road, New Delhi (the CRCL), and one was kept by the Department. 8. The notices were issued to them on 10-10-2003 requiring them to register their product as classifiable under chapter sub-heading 1301.10 (Lac; gum, resin and other vegetabl....
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....get themselves registered. Subsequently, notices have also been issued by the Department on 31-8-2004 to the petitioners in first and third WPs and on 29-7-2004 to the petitioner in the second WP to deposit excise duty and penalty. The question whether the product is liable to excise duty or not will be decided in these proceeding and not here in the writ jurisdiction. 16. As we are not expressing our opinion on the merit of the case, we do not wish to say anything except that the Department cannot adopt discriminatory approach: the manufactured goods from Gambier cannot be treated as Kattha (and exempt it from excise duty) at some places and at others as an excisable item. The Department has to adopt one standard; either it is treated as Kattha and a non-excisable item by the excise department or is not treated as Kattha consequently an excisable item: there cannot be discrimination areawise. We leave the matter here. 17. The petitioner may appear before the authority of the Department, that has issued notices to them in the week commencing 21st November, 2010 along with their objections and evidence in support of the same. Thereafter, the objection of the petitioners may be dec....
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....l the unit involved in the manufacturing of Gambier extract and also put up a letter to DGCEI mentioning the details of intelligence.' 24. The reasons are there in the note of the Superintendent. They are relevant and were in existence prior to the order for the search. It is on their basis, the search was ordered by the empowered officer on 25-3-2003. Thereafter, some officials were authorised and search was conducted on 4-9-2003. However, the question is, should they be personally recorded by the empowered office? 3rd point : Not necessary to personally record reasons 25. The counsel for the petitioner cited Commissioner of Commercial Taxes, Board of Revenue v. Ram Kishan Shrikishan Jhaver, AIR 1968 SC 59 (paragraph 17 to 19) (the Ramkishan case) and submitted that : (i) In view of Section 18 of the Excise Act, the search is made in accordance with the provisions of Code of Criminal Procedure, 1973 (the CrPC). (ii) The conditions for conducting the search are mentioned in Section 165 of CrPC. (iii) In Ramkishan case, section 165 CrPC has been interpreted and it has been held that, * The empowered officer must have reasonable grounds for believing that anything necessary fo....
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....toms Act, 1962 (the Customs Act) with such modifications and alterations as it may consider necessary. 31. By the Notification No. 68/63-C.E., dated 4-5-1963 as amended from time to time, sub-section (1) of Section 105 [Section 105(1)] of the Customs Act with suitable modifications has been applied in the Excise Act. 32. Sub-section (2) of Section 105 [Section 105(2)] of the Customs Act applies CrPC so far as search under the Customs Act is concerned. It is similar to Section 18 of the Excise Act. 33. Sections 105(1) and 105(2) apply Section 165 CrPC to a search under the Customs Act. They came to be interpreted in R.S. Seth Gopikishan Agarwal v. R.N. Sen, Assistant Collector of Customs and Central Excise, AIR 1967 SC 1298 (the Gopikishan case). In the Gopikishan case also, a similar argument was raised but was negated. 34. In the Gopikishan case, the Supreme Court held that the searches under Sections 105 of the Customs Act and 165(1) CrPC are intended to meet different situations : Section 165 CrPC applies only to the case where search is urgently required and search warrant cannot be obtained in the ordinary course. The conditions mentioned in Section 165(1) CrPC do not appl....
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....y for the empowered officer to record them personally. * In the present case, the reasons were there. They were approved by the empowered officer. Thereafter, the order for search and seizure was made. * This is sufficient compliance for conducting search under the Excise Act. 39. The counsel for the petitioner submits that : * The empowered officer has neither used the word 'approved' nor 'agreed' while making his noting; and * This shows that there was no approval under the Act. 40. In Gopikishan case, a similar question was raised that the authorisation given by the empowered officer did not say that he had reasons to believe. The court (in paragraph 6) held that : 'Though the words "reason to believe" are not in terms embodied in the authorisation, the phraseology used in effect and substance meant the same thing.' 41. Here also, the words 'approved' or 'agreed' are not specifically used but there are ways of expression: language is used in different ways by different people but what is to be seen is the substance of it. 42. The empowered officer made his noting immediately after the note of the Superintendent. He has indicated that the se....
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....d on M/s. N.K. Laminates and Brij Kattha Industries is valid; whereas the search of Kanchan Udyog is illegal. 51. In view of our finding on this point, the Department has to return the seized goods and documents of Kanchan Udyog. However, it will be open to the Department to (for citations see below) : * Take photocopies of the documents; * Use the documents in the proceeding to be decided by the Department. Conclusions : 52. Our conclusions are as follows : (a) The reasons to conduct the search are there; (b) The reasons to conduct the search need not be personally recorded by the empowered officer, but he should apply his mind and approve the same; (c) The search conducted on M/s. N.K. Laminates and Brij Kattha Industries is valid; whereas the search conducted on Kanchan Udyog is illegal; (d) The Department may return the goods and documents seized from Kanchan Udyog though it is entitled to keep photostat copies of the documents and use the same in the assessment proceeding; (e) The party may appear before the relevant officers in the Excise Department at Kanpur in the week commencing 22nd November, 2010 and file their objection and evidence. Thereafter, the ques....