PADMINI TECHNOLOGIES LIMITED Vs. NISHITH KUMAR

JUDGEMENT

(1.) This writ petition under Article 226 of the Constitution of India read with Section 482 of Cr.P.C has been preferred by the petitioners for quashing the sanction and authorization for prosecution given by respondent No.2 and the consequent proceedings and order of taking cognizance by the Court of Additional Chief Metropolitan Magistrate dated 27th April, 2006 in a complaint under Sections 135(1) (a) and 135(b) of the Customs Act filed by the Customs Authorities.

(2.) A perusal of the sanction order and the complaint shows that after receipt of intelligence about the petitioners indulging in clandestine removal of the goods from Noida Export Processing Zone with the help of security staff, surveillance was kept and on 9th January, 1997, a tempo bearing registration No.MH-01-F-405 and a truck bearing number DL-1-LC-1097 were checked on the main gate of NEPZ and documents were examined. A search of vehicles in presence of an independent witness showed that 1,62,400 Compact Discs worth Rs.1,44,00,000/- were being removed from NEPZ custom notified area in a clandestine manner. Later on reassessment of the value of the goods, after market survey, was done and it was assessed that their value was Rs.8,70,24,000/-. The statement under Section 108 of the Customs Act of Suraj Kumar was recorded who disclosed that he was acting on behalf and under the directions of the owner of the company Mr. Nalwaya. The documents carried by him were not relevant for the purpose of goods being taken out. Mr. Nalwaya was also called at the spot and his statement under Section 108 of the Customs Act was recorded. He admitted that he did not have any valid documents for taking out the seized CDs and unauthorized removal was resorted to due to financial crunch his company was facing. The searches were conducted at residential premises and office of the petitioners. The Commissioner Central Excise Noida was also requested to search the premises in Noida. On search CDs worth Rs.2,44,800/-, some documents and a large unquantified stock of inlay cards/packing material for the CDs were recovered. Considering the entire material collected by the investigating agency and the documents, respondent No.2 considered it a fit case for grant of sanction for prosecution of the petitioners in exercise of powers conferred by virtue of Section 137 (1) of Customs Act for offences punishable under Section 135 (1) (a) of the Customs Act. A complaint was filed giving details of the entire exercise of seizing of materials and clandestine removal.

(3.) After considering the material before it, learned Metropolitan Magistrate took cognizance of the offence under Section 135(1)(a) and 135(1)(b) of the Customs Act and issued summons against the petitioners. The petitioners have challenged the taking of cognizance as well as grant of sanction on the ground that Commissioner Customs had no power or jurisdiction to grant sanction since the removal of the goods was done by a 100% export oriented unit (EOU) from NEPZ. It is submitted that in respect of goods produced by an EOU Unit, only Central Excise Act was applicable and the Custom Act was not applicable since clearance/removal of goods was not an import as defined under Section 2(23) of the Customs Act. The goods manufactured in free trade zone were excisable as per 100A of Central Excise Rules, 1944 and Section 100A(2) provides that if there was a conflict between provisions of Excise Act and any other law, the provisions of Excise Act shall prevail. Therefore, sanction could not have been granted by the respondent No.2. It is also submitted that the complaint was filed after 9 years and was therefore mala fide. The question of applicability of the Customs Act on the Unit of the petitioner was also pending before this Court in view of the Order of this Court directing the Tribunal to make a reference. It is further submitted that 25465 CDs seized from the office of the petitioner were later on released since the petitioner had duly accounted for those CDs and the detention order was lifted.