Case: Subhaschandra Balchandra Badjate Vs. The Director General

petitioner in such a case these provisions need to be kept in mind. Circumstance of fraud mentioned in section 11-A (4) of the Central Excise Act is prima facie made out in the present matter. There is prima facie case for evasion of estate duty and also non payment of income tax on the income made by utilizing aforesaid modus operandi. Thus not only the duty payable is to be ascertained under the present Act but the Income Tax authorities need to take action in present case. The provisions of sections 11, 11A, 11AA, 11E etc. are independent of the provisions giving power of confiscation. Provision of Section 226(4) and (5) of the Income Tax Act need to be kept in mind by officers of the Central Excise and it is their duty to see that in such cases information is given to the Income Tax Department also. When such matter comes before Court it is also duty of the Court to see that the Income Tax Department is heard in such a case and intimation of the incident is given to the Income Tax Department also. In view of these circumstances, this Court holds that the amount cannot be returned to the petitioner. Returning of the amount will amount to virtually disposing of the property which can also be attached under the aforesaid provisions. This Court has no hesitation to hold that the amount cannot be returned to the present petitioner and so he is not entitled to such a relief. Learned counsel for the Department has placed reliance on a case reported as AIR 1974 SC 348 (Pooran Mal v. Director of Inspection).29. The relief of quashing the adjudication proceeding started against the present petitioner also cannot be given to the petitioner in view of the material already discussed. The material is sufficient to make out a prima facie case that he was involved in running of the business and he was collecting money, sale proceeds in respect of the excisable goods. He was actively involved in evasion of the excise duty. Thus the proceeding of confiscation and imposition of penalty can go on against him. The learned counsel for the Department has placed reliance on the following cases reported as (1) 1997 (96) E.L.T. 21 (S.C.) (Union of India v. Polar Marmo Agglomerates Ltd); and, (2) AIR 2004 SC 3328 (Commissioner of Customs v. M/s Charminar Nonwovens Ltd.).30. The submission for the present petitioner that his arrest was illegal and the offence is bailable is also not acceptable. The material collected shows that false record was created for evasion of excise duty. Thus, it is a case of forgery and fraud also. There has been evasion of excise duty in respect of goods worth more than Rs.140 crore. Provisions of sections 9, 9-A and 9-AA of the Central Excise Act show that this offence is cognizable and non bailable. The duty evaded apparently exceeded Rs.50 lakh (for old provision Rs. 30 lakh) and there is such specific allegation of the Department. When a case is filed in Criminal Court, the Court has also power to forfeit such amount and that can be seen in the provisions of the Code of Criminal Procedure and also section 110 of the Central Excise Act. The learned counsel for the Department has placed reliance on a case of Rajasthan High Court reported as (2006) 202 CTR Raj 231 (Harvest Gold Food (India) Pvt. v. Union of India).31. The provision of Section 13 of the Central Excise Act shows that there is a power to Excise Officer not below the rank of Inspector to arrest the person like present petitioner involved in such offence if he has authorization as provided in section 13 of the Act. The provision of section 14 of the Act shows that there is power to the empowered officer to issue summons to a person like present petitioner and call him to the office. Section 14(2) of the Act shows that persons so summoned is bound to comply with the summons and the conditions of the summons. Provision of Section 18 gives procedure for such an arrest. Provision of Section 19 of this Act runs as under:-"19. Disposal of persons arrested.-- Every person arrested under this Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer-in-charge of the nearest police station."32. In the present case summons was served on the petitioner and he was called to Pune to appear before the empowered officer. He failed to comply with this summons. Authorization of arrest was then given. It is submitted for the Department that Excise Officer empowered to arrest person like the petitioner was at Pune and so the petitioner was taken to Pune. Admittedly the petitioner was produced before the Magistrate from Pune by such empowered officer and within the prescribed period. It is non bailable offence and the Magistrate refused bail to the two sons of the present petitioner. Even the Sessions Court refused bail and the High Court granted bail subject to aforesaid conditions to the sons of the petitioner. Only due to the circumstance like petitioners old age, the Magistrate granted him bail. Therefore the submissions that the petitioner ought to have been taken to the nearest police station and he should have been produced before the Magistrate at Jalna cannot be given much weight and these circumstances cannot be used against the Department. The competent officer at Pune has the power under section 21 of the Act which is similar to the power of the officer in charge of a police station. Such officer produced the petitioner before the Magistrate of Pune and within the prescribed period. There is provision in the Act like section 22 taking care of search, seizure etc. Thus no relief as claimed by the petitioner can be given in the present case.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]28. Though the aforesaid position of law is in favour of the petitioner, the other circumstances of the present case cannot be ignored. The relevant material is already discussed and it shows that present petitioner was involved in running of the business and he was collecting sale proceeds. Thus, the proceeding can go on against him. There is no plausible explanation with the petitioner and there is nothing with him to show that he got such income from which he could have accumulated cash amount of Rs.45 lakh. He is a Tax Consultant. He has given undertaking to the High Court not to dispose of the property and this undertaking was given to see that his sons get bail. Liability of payment of duty, penalty and also interest is to be fixed. There are more provisions in the Central Excise Act like provisions of sections 110 andWhile considering the claim of the petitioner in such a case these provisions need to be kept in mind. Circumstance of fraud mentioned in section(4) of the Central Excise Act is prima facie made out in the present matter. There is prima facie case for evasion of estate duty and also non payment of income tax on the income made by utilizing aforesaid modus operandi. Thus not only the duty payable is to be ascertained under the present Act but the Income Tax authorities need to take action in present case. The provisions of sections 11, 11A, 11AA, 11E etc. are independent of the provisions giving power of confiscation. Provision of Section 226(4) and (5) of the Income Tax Act need to be kept in mind by officers of the Central Excise and it is their duty to see that in such cases information is given to the Income Tax Department also. When such matter comes before Court it is also duty of the Court to see that the Income Tax Department is heard in such a case and intimation of the incident is given to the Income Tax Department also. In view of these circumstances, this Court holds that the amount cannot be returned to the petitioner. Returning of the amount will amount to virtually disposing of the property which can also be attached under the aforesaid provisions. This Court has no hesitation to hold that the amount cannot be returned to the present petitioner and so he is not entitled to such a relief. Learned counsel for the Department has placed reliance on a case reported as AIR 1974 SC 348   (Pooran Mal v. Director of Inspection).The submission for the present petitioner that his arrest was illegal and the offence is bailable is also not acceptable. The material collected shows that false record was created for evasion of excise duty. Thus, it is a case of forgery and fraud also. There has been evasion of excise duty in respect of goods worth more than Rs.140 crore. Provisions of sections 9,AA of the Central Excise Act show that this offence is cognizable and non bailable. The duty evaded apparently exceeded Rs.50 lakh (for old provision Rs. 30 lakh) and there is such specific allegation of the Department. When a case is filed in Criminal Court, the Court has also power to forfeit such amount and that can be seen in the provisions of the Code of Criminal Procedure and also section 110 of the Central Excise Act. The learned counsel for the Department has placed reliance on a case of Rajasthan High Court reported as (2006) 202 CTR Raj 231 (Harvest Gold Food (India) Pvt. v. Union of India).In the present case summons was served on the petitioner and he was called to Pune to appear before the empowered officer. He failed to comply with this summons. Authorization of arrest was then given. It is submitted for the Department that Excise Officer empowered to arrest person like the petitioner was at Pune and so the petitioner was taken to Pune. Admittedly the petitioner was produced before the Magistrate from Pune by such empowered officer and within the prescribed period. It is non bailable offence and the Magistrate refused bail to the two sons of the present petitioner. Even the Sessions Court refused bail and the High Court granted bail subject to aforesaid conditions to the sons of the petitioner. Only due to the circumstance like petitioners old age, the Magistrate granted him bail. Therefore the submissions that the petitioner ought to have been taken to the nearest police station and he should have been produced before the Magistrate at Jalna cannot be given much weight and these circumstances cannot be used against the Department. The competent officer at Pune has the power under section 21 of the Act which is similar to the power of the officer in charge of a police station. Such officer produced the petitioner before the Magistrate of Pune and within the prescribed period. There is provision in the Act like section 22 taking care of search, seizure etc. Thus no relief as claimed by the petitioner can be given in the present case.