IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 13TH JANUARY 2009 / 23RD POUSHA 1930 WP(C).No. 26466 of 2003(A) ------------------------------------- PETITIONER(S): ----------------------- KARTHIKAYAN T.K., VISHNU MANA, C.M.C. 29 CHERTHALA P.O., CHERTHALA, ALAPPUZHA. BY ADV. SRI.N.N.SUGUNAPALAN (SR.) SRI.P.K.YUSUFF ISSUDDIN SRI.N.R.CHANDRASEKHARAN RESPONDENT(S): -------------------------- 1. THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, OFFICE OF THE CALICUT COMMISSIONERATE MANACHIRA, CALICUT. 2. GOVERNMENT OF INDIA, REPRESENTED BY SECRETARY, CENTRAL EXCISE OF CUSTOMS DEPARTMENT, NEW DELHI ADV. SRI.P.S.SREEDHARAN PILLAI, SCGSC FOR R1 SRI.JOHN VARGHESE, SCGSC SRI.P.PARAMESWARAN NAIR,ASST.SOLICITOR FOR R1,2 SRI.JOHN VARGHESE,SC,CEN.BOARD OF EXCIS FOR R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/01/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 26466 of 2003(A) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 - TRUE COPY OF THE INFORMATION IN WRITING DATED 20.5.1993 OF THE PETITIONER BEFORE THE 1ST RESPONDENT SUBMITTED IN THE THEN OFFICE, AT COCHIN. EXT.P2 - TRUE COPY OF THE CERTIFICATE DATED 6.2.1996 ISSUED BY 1ST RESPONDENT AT COCHIN TO THE PETITIONER REGARDING THE DISBURSEMENT OF RS.5 LAKHS ONLY AS ADVANCE REWARD. EXT.P3 - TRUE COPY OF THE REPRESENTATION DATED 17.6.2003 BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXT.P4 - TRUE COPY OF THE REPRESENTATION DATED 24.7.2003 OF THE PETITIONER BEFORE THE 1ST RESPONDENT. EXT.P5 - TRUE COPY OF THE LETTER C.NO.IV/06/50/2002/PREV/6603 DATED 31.07.2003 FROM THE 1ST RESPONDENT TO THE PETITIONER. EXT.P6 - TRUE COPY OF THE JUDGMENT DATED 03.06.2005 IN W.A. N. 1138 OF 2005 OF THE HIGH COUR T OF KERALA. EXT.P7 - TRUE COPY OF THE LETTER WITH ENDORSEMENT UNDER REF. MS/210/93/61/TF-1 DATED 18.06.1993 REGARDING APPROVAL FOR PAYMENT OF CENTRAL EXCISE DUTY PAID BY M/S. ITI LTD. PALAKKAD ON21.06.1993. RESPONDENTS' EXHIBITS: EXT.R1(a) - TRUE COPY OF THE GUIDELINES ISSUED BY THE GOVERNMENT OF INDIA MINISTRY OF FINANCE, DT. 16.4.2004. EXT.R1(b) - TRUE COPY OF THE ORDER-IN-ORIGINAL NO. 38/93 DT. 30.11.1993. EXT.R1(c) - TRUE COPY OF THE SANCTION ORDER NO. 7/95-96 DT. 24.01.1996. // TRUE COPY // PA TO JUDGE rhs S.SIRI JAGAN, J - - - - - - - - - - - - - - - - - - - - - - - W.P(C)No. 26466 of 2003 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 13th day of January, 2009 J U D G M E N T The petitioner was an employee of M/s. ITI Ltd. Palakkad. In the course of his employment with company, he came across certain evasion of excise duty made by company. By Ext.P1, he passed on that information to the Superintendent of Central Excise, Customs, Intelligence and Investigation Unit, Cochin. On the basis of that information, the Central Excise Department made enquiries and launched a case against the company for evasion of excise duty. Immediately on issue of a show cause notice by the central excise authority to the company pursuant thereto, the company admitted the evasion with an explanation for the same and paid the excise duty. Thereafter, the adjudicating authority namely; the Collector of Central Excise, confirmed the demand for duty on the company and also imposed penalty of Rs. 1 lakhs. To encourage the public to pass on information regarding evasion of duties, the Government of India announced a scheme for reward, which is produced as Ext.R1(a) along with counter affidavit of the respondent. As per the same, informants from public as well as the officers of the department are entitled to W.P(C)No. 26466 of 2003 - 2 - reward up to 20% of the amounts of duty involved plus amount of fine and penalty levied, imposed and recovered. Guidelines are prescribed for fixing the reward amount. Since the information supplied by the petitioner unearthed evasion of duty by the company, pending adjudication proceedings an advance reward of Rs.5 lakhs was paid to the petitioner. In this regard it may also be noted that total amounts of duty recovered from the company was Rs.85 lakhs. Rs. 1 lakhs penalty was also recovered. However, by Ext.P5, the petitioner was informed by the department that the Reward Committee had after going through the records of case, observed that the previous Reward Committee had taken a decision that the reward amount of Rs. 5 lakhs already sanctioned to the petitioner could be treated as the final reward. The petitioner is challenging Ext.P5. 2. According to the petitioner, in so far as, after declaring that 20% of the duty evaded can be paid as reward, the amount of Rs. 5 lakhs paid to the petitioner is palpably inadequate, in so far as 85 lakhs have been recovered from the company as duty and another Rs. 1 lakh as penalty pursuant to the information passed on by the petitioner. Since Ext.P5 referred to a decision of the Reward Committee, I directed the respondent to make available the files containing the W.P(C)No. 26466 of 2003 - 3 - decision of the Reward Committee. The file has been produced before me today. The claim of the petitioner is stoutly opposed by the respondents. According to them, the Reward Committee who went into the question of payment of reward for the particular information has decided that the advance reward already paid to the petitioner should be treated as the final reward. It is argued by the respondents that in view of Ext.R1(a) guidelines issued by the Government, for the determination of the amount of reward is in the discretion of the award committee and the Collector. According to them, the Reward Committee and the Collector has exercised that discretion correctly and decided that the amount to be paid as reward in this case is only Rs. 8.5 lakhs out of which 5 lakhs had been paid to the petitioner and Rs. 2.33 lakhs had been paid to the officers who conducted the investigation. It is argued by the counsel for the respondents that the petitioner is not entitled to any further amount as reward. 3. I have heard the rival contentions in detail. 4. Ext.R1(a) contains the guidelines for giving rewards. Clause 4(1) of the same reads thus: “4.1 Informers and Govt. servants will be eligible for reward upto 20% of the net sale-proceeds of the contraband W.P(C)No. 26466 of 2003 - 4 - goods seized and/or amount of duty evaded plus amount of fine and penalty levied/imposed and recovered. However, in respect of gold, silver, opium and other narcotic drugs etc. seized under the provisions of the Customs Act, 1962/Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985, the overall ceiling of reward will be as per specific rates indicated in the Annexure. These ceilings would be subject to periodical revision in the light of the price fluctuations of these items, for which periodical intimations may be sent to the DGRI/DGNCB, who, in turn, will send suitable recommendations to the Ministry, for appropriate revision, as and when warranted.” Clause 5(1) further states thus: “5.1 Reward is purely an ex-gratia payment which, subject to guidelines, may be granted on the absolute discretion of the authority competent to grant rewards and cannot be claimed by anyone as a matter of right. In determining the reward which may be granted, the authority competent to grant reward will keep in mind the specificity and accuracy of the information, the risk and trouble undertaken, the extent and nature of the help rendered by the informer, whether information gives clues to persons involved in smuggling, or their associates etc., the risk involved for the Govt. servants in working out the case, the difficulty in securing the information, the extent to which the vigilance of the staff led to the seizure, special initiative, efforts and ingenuity displayed, etc. and whether, besides the seizure of contraband goods, the owners/organizers/financiers/racketeers as well as the carriers have been apprehended or not.” 5. Going by the above, the question to be decided is whether the Reward Committee has taken a decision in its discretion in tune with the guidelines as quoted above. I am of opinion that in so far as the maximum amount of reward payable has been fixed as 20% and the amounts recovered as duty and penalty from the company pursuant to the information given by the petitioner comes to above 86 lakhs, the Reward Committee ought to have applied their mind to decide as to W.P(C)No. 26466 of 2003 - 5 - why the reward amount should be restricted to 8.5 lakhs which is only less than 10% of the amounts recovered as duty and penalty pursuant to the information supplied by the petitioner. From the decision of the Reward Committee quoted above, I do not find proper application of mind in that regard. It is not now disputed before me that but for the information supplied by the petitioner the particular evasion of duty would never have come to light and the department would not have been able to recover the amount of Rs.85 lakhs at all. That being so, I am of opinion that a more judicious application of mind was called for on the part of the Reward Committee on the amount to be fixed as reward, based on the guidelines quoted above, which does not appear to have been done going by the decision of the Reward Committee which is available in the file produced by the respondents and reads thus: “In this case the appeal proceedings are not over. However the company has contested only penalty. The duty amount has already been realised. Out of the available reward amount of Rs.8.5 lakhs the total amount disbursed is only Rs. 2.33 lakhs. The informer has already been sanctioned a reward of Rs.5 lakhs. The appeal proceedings relate only to penalty and as far as reward amount is concerned it has already been realised and the reward for both the informer and the officers is much less than the admissible amount. The Board's instructions to disburse only 50% and wait for finalisation of appeal is only to ensure that the amount demanded is in dispute. Keeping in mind all these factors the committee has decided that the reward to the informer and the officers can be treated as final. Since the discussion has not been W.P(C)No. 26466 of 2003 - 6 - recorded, this note has been prepared. Commissioner may kindly approve this note for record.” 6. In the above circumstances, I am of opinion that the Reward Committee should re-consider the matter in the light of the guidelines. Accordingly, the 1st respondent is directed to re-consider the issue of payment of further reward amount to the petitioner in accordance with Ext.R1(a) Guidelines. Orders in that regard shall be passed, as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of this judgment. The orders to be passed on the basis of the guidelines by the Reward Committee shall on the face of it show that every aspect of the case as stipulated in the guidelines has been taken into consideration while taking a final decision in the matter of payment of additional reward to the petitioner. The writ petition is disposed of as above. S.SIRI JAGAN, JUDGE rhs