CWP No. 12188 of 2009 [1] IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH CWP No. 12188 of 2009 Date of Decision: 05.11.2009 M/s J.C.B.India Limited. ..Petitioner versus Union of India and others. ..Respondents CORAM: HON'BLE MR. JUSTICE T.S.THAKUR,CHIEF JUSTICE HON'BLE MR. JUSTICE MAHESH GROVER 1.Whether Reporters of local papers may be allowed to see the judgment ? 2. Whether to be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? Present : Mr. Ashok Aggarwal, Sr. Advocate with Mr. Jagmohan Bansal, Advocate for the petitioner. Mr. HPS Ghuman, Advocate, for the respondents. ***** T.S.Thakur, C.J. (Oral) This petition under Article 226 of the Constitution of India calls in question the validity of seizure memo (Panchnama) dated 8.7.2009 whereby officers from the Directorate General of Central Excise Intelligence seized from two units one at plot No. 55, Sector 6, Faridabad and the other at 23/7, Mathura Road, Ballabhgarh, both owned by the petitioner company, what according to the respondents are automobile parts valuing Rs. 53,73,49,280/-. The petitioner also CWP No. 12188 of 2009 [2] prays for a mandamus directing respondent No.3 to return the bank guarantee which the petitioner has furnished for securing a provisional release of the seized goods in terms of an order dated 10.7.2009 (Annexure P-7). The challenge arises in the following circumstances:- The petitioner is a public limited company engaged in the manufacture of Excavators and Loaders etc. in its unit at Faridabad in the State of Haryana. Apart from the manufacturing unit set up by it at Plot No. 55, Sector 6, Faridabad,, the petitioner company also has its unit at 23/7, Mathura Road, Ballabhgarh where it packs, repacks, marks and affixes its Logo 'JCB' on the parts that are supplied to the petitioner company by other manufacturers. On the basis of an intelligence report received by the Directorate General of Central Excise Intelligence that the petitioner company was engaged in the manufacture of automobile parts in the unit mentioned above and that the same was not registered as required under the Central Excise Act, 1944 ( for short 'the Act') and also that on account of non-registration of the unit, the manufactured automobile parts were being sold in the market without payment of excise duty, a search was conducted by the officers of the Directorate General of Central Excise Intelligence on 8.7.2009 at both the premises, one situate at Faridabad and the another at Ballabgarh. In the course of search and seizure, the respondents claim to have seized what according to them are automobile parts valuing Rs. 53,73,49,280/- mentioned earlier. The Panchnama (seizure memo) prepared pursuant to the search & seizure operation, inter-alia, suggests that the petitioner company was engaged in packing, repacking, branding and affixing of stickers CWP No. 12188 of 2009 [3] containing MRP and its Logo 'JCB', which according to the respondents tantamounts to 'manufacturing' such parts within the meaning of Section 2 (f) (iii) of the Act. The Panchnama refers to the statement made by Shri G.P.Singh, Associated Vice President of the petitioner company, in which the nature of the activity undertaken by the company in the units aforementioned has been described as packing, repacking, branding and affixing of stickers and Logo etc. The respondents are pursuant to the seizure aforementioned conducting an investigation and are in the process of collecting the requisite data and other information necessary for initiation of further action, if any, against the petitioner company. While the investigation was afoot, the petitioner company appears to have made an application to the Directorate General of Central Excise Intelligence seeking provisional release of the seized goods which application was allowed by the Commissioner of Central Excise Delhi in terms of his order dated 10.07.2009 subject to the petitioner furnishing a bond for the full value of seized goods and a bank guarantee for a sum of Rs. 2,88,67,464/- representing 5% of the said value. The bank guarantee was directed to be kept valid until finalization of the case. It is not in dispute that the petitioner company has pursuant to the said order not only furnished a bond for the entire amount representing the value of the seized goods but also furnished a bank guarantee for the amount demanded by the Commissioner. It is also not in dispute that the order passed by the Commissioner of Central Excise provisionally releasing the goods in favour of the petitioner company on the satisfaction of the terms and conditions stipulated in the order referred CWP No. 12188 of 2009 [4] to above is not under challenge before us in these proceedings. The petitioner has all the same assailed the seizure of the goods and sought a writ of certiorari quashing the seizure memo and a mandamus directing return of the bank guarantee furnished by it, as already noticed above. The challenge to the seizure of goods and the prayer for a mandamus directing return of the bank guarantee proceeds primarily on the basis that the goods in question do not answer the description of automobile parts referred to in Entry No. 100 in Schedule-III of the Act. According to the petitioner, the parts seized by the respondents from the premises of the petitioner company are parts and components of earth removing machinery namely excavators and loaders which are not automobile parts within the meaning of entry referred to above. Reliance in support of that contention is placed by the petitioner company upon Circulars dated 11.07.1990 and 16.12.2008. These circulars according to the Mr. Aggarwal, learned Senior Counsel appearing for the petitioner company make it abundantly clear that excavators and loaders used as earth removing machinery are not automobiles within the meaning of entry No. 100 appearing in IIIrd Schedule to the Act. Consequently, packing, repacking or marking of such parts would not amount to 'manufacture' within the meaning of Section 2(f) of the Act. It was contended by Mr. Aggarwal that packing, repacking or marking of goods would constitute manufacture only if the same are goods mentioned in the IIIrd schedule to the Act. Inasmuch as spare parts used for earth removing machinery like loaders and excavators do not answer the definition of spare parts meant for CWP No. 12188 of 2009 [5] automobile, packing or repacking of such spare parts in the units set up by the petitioner company did not amount to manufacturing of such parts and therefore did not require registration of the units under the Central Excise Act, 1944. It was on that premise argued by Mr. Aggarwal that removal of goods, packed or repacked in the units without payment of excise duty also could not be found fault with as no excise duty was payable thereon. Alternatively, it was contended by Mr. Aggarwal that the amount of duty payable would in any case be limited only to the value addition made by the petitioner company in its unit and that in the process of assessment of the amount of duty, the amount of excise duty already paid by the suppliers besides reabate of 30% in terms of the formula applicable in such cases was the only amount that could be eventually claimed. In the reply affidavit filed on behalf of the respondents, several contentions in defence have been raised in support of the action taken by the respondents. Relying upon Section 12 of the Central Excise Act, 1944 and Sections 105 and 110 of the Customs Act, 1962, it is urged that the seizure proceedings were perfectly justified having regard to the nature of information available with the Directorate General of Central Excise Intelligence. It is asserted that a Writ Court could not reappraise the formation of any such opinion and determine whether or not the seizure was justified. Reliance in support of that submission is placed upon the decision of Supreme Court in Union of India Vs. Shyam Sunder, 1994(74) E.L.T. 197 and the decision of the High Court of Calcutta in Tirupati Trading Corporation Vs. Collector of Customs, 1998(104) E.L.T. 618. The correctness of the CWP No. 12188 of 2009 [6] interpretation placed by the petitioner upon the term 'Automobile' appearing in entry No. 100 of IIIrd schedule has also been disputed by the respondents. According to them, the petitioner-company is not only engaged in the manufacture of excavators and loaders but also in all types of multi utility vehicles. Reliance is placed by the respondents upon a clarification issued by the Board that the term 'parts, components and assemblies' of automobiles includes items like batteries, brake assembly, tyres, tubes, flaps, IC engines, ball bearing etc. It is alleged that in the course of investigations conducted hithertofore, has revealed that the petitioner in its registered premises was manufacturing not only excavators but also other special/multi purpose and tyre mounted vehicles which required to be registered with the Road Transport Authorities. These vehicles cannot be treated as earth removing machinery like excavators. In conclusion, the respondents have prayed for dismissal of the writ petition. It was argued by Mr. Ghuman, learned counsel for the respondents that investigation of the case has been hampered by the petitioner on account of persistent default in furnishing the requisite information and data demanded by the officers conducting investigation. Mr. Ghuman has drawn our attention in this regard to an affidavit of Sanjay Kumar, Intelligence Officer, Directorate General of Central Excise Intelligence, Regional Unit, Pune and the documents enclosed by him with it, to argue that despite repeated summons the petitioner company has been withholding the information and dilly- dallying furnishing of data demanded by it. Reference in this regard was specifically made to annexures R-1 to R-13 enclosed to the affidavit to CWP No. 12188 of 2009 [7] buttress the submission that the petitioner was not cooperating in the completion of the investigation instituted in the case and was not, therefore, justified in making any grievance against delay in conclusion of the entire process. We have given our careful consideration to the submissions made at the bar and perused the record. The fact that the Directorate General of Central Excise Intelligence had information with it or that the information was sufficient for the officers concerned to conduct a search and seizure operation was not disputed before us by learned counsel for the petitioner. We therefore need not to go into the question whether or not the initiation of proceedings suffered from any infirmity on that account. It is also not in dispute that the petitioner company is engaged in the manufacture of earth removing machinery for which purpose it purchases parts and components from other manufacturers and suppliers. Mr. Aggarwal, learned Senior counsel for the petitioner submitted, and in our opinion rightly so, that the two units viz. one in which the petitioner company manufactures the earth moving machinery and the other in which the company simply packs, repacks and marks the parts supplied by other manufacturers, may be treated as different units unconnected with each other. What is,however, not disputed is that in the units where the search was conducted, the petitioner company had a very huge stock of spare parts purchased from other manufacturers which parts were being packed, repacked and marked for sale by the petitioner company under its brand 'JCB', and that such packing, repacking and marking would constitute 'manufacture' within the meaning of Section 2(f)(iii) of the Act, in case CWP No. 12188 of 2009 [8] the goods answer the description under any one of the entries mentioned in IIIrd schedule. All that was argued at some length before us by learned counsel for the parties was whether or not the parts that were seized in the course of search and seizure operation were parts of automobile referred to in entry No.100 of IIIrd schedule. According to the petitioner company, they were not, while according to the respondents, they were automobile parts, packing, repacking or marking whereof would tantamount to manufacturing thereby obliging the petitioner company to have the unit registered and to pay excise duty on the same before removing the goods for sale. Whether or not the parts seized from the petitioner's unit are automobile parts is a matter regarding which the Investigating Agency has yet to draw a final conclusion. The Investigating Officer has asked for information and is in the process of formulating a final opinion on the subject before any further action on the basis of any such conclusion is initiated against the petitioner. The question, therefore is whether we ought to intervene at this stage to scuttle any such investigation and quash the ongoing process by declaring that parts seized from the petitioner's unit are not actually automobile parts. Our answer is in the negative. We do not think that we would be justified in prejudging the issue or clutching at the jurisdiction of the Investigating Agency or the statutory authorities who may eventually be called upon to determine whether the parts seized from the premises of the petitioner company, are automobile parts or the same are parts used in machineries other than automobiles. It is true that in cases where complete lack of jurisdiction on the part of the authority initiating action is established, a Writ Court CWP No. 12188 of 2009 [9] may intervene even at any interlocutory stage and quash the ongoing process. Decisions rendered by their lordships of the Supreme Court have held that complete lack of jurisdiction on the part of the authority who has initiated action may itself be a ground for a Writ Court to intervene to prevent what may otherwise amount to an abuse of the process of law. That, however, does not appear to be so in the instant case. We say so because the competence of the authority who conducted the search and seizure operation was not disputed before us. That the authority had enough material on the basis of which it could have acted in the manner it did, has also not been assailed. That the petitioner was engaged in the activities of packing or repacking and marking of parts, which according to the respondents, are automobile parts, is also admitted by none-less than the Associated Vice President of the petitioner's company. Such being the position, it is difficult for us to hold that the seizure and ongoing investigation into the entire matter is beyond the competence of the authority conducting the same. Mr. Aggarwal, lastly contended that the petitioner has been forced by the circumstances to furnish a bond and also a bank guarantee for a huge amount and that delay in completion of the investigation may unnecessarily burden the petitioner with avoidable financial liability. He urged that the respondents could in the least expedite the completion of the investigation. Although, according to the respondents, delay in completion of the investigation has been mainly on account of the petitioner's omission to furnish the requisite information demanded from it, we see no reason why the investigation should go on indefinitely. In case the information required by the Investigating CWP No. 12188 of 2009 [10] Agency is not forthcoming for any reason, the Investigating Agency may proceed to draw adverse inference if otherwise permissible in law or take any other action which the authority may be competent to do, in order to expeditiously complete the investigation. We, therefore, deem it just and proper to direct that the Investigating Agency shall expedite the ongoing investigation and conclude the same as far as possible within a period of six months from today. The writ petition is accordingly disposed of with that direction leaving the parties to bear their own costs. (T.S.THAKUR) CHIEF JUSTICE (MAHESH GROVER) JUDGE 05.11.2009 'ravinder'