BHAVIN IMPEX PVT. LTD Vs. STATE OF GUJARAT

JUDGEMENT

(1.) THE key question that arises for consideration in this writ petition is as to whether the authorities under the Central Excise Act, 1944 (hereinafter referred to as 'the Act') have the power to arrest a person under Section 13 of the Act without a warrant and without filing an FIR or lodging a complaint before a Court of competent jurisdiction.

(2.) THE petitioner - M/s. Bhavin Impex Private Limited, a 100% EOU (Export Oriented Unit) is engaged in the manufacture of brass sanitary fittings, brass bolts, nuts, screws etc. classifiable under various chapters of the Central Excise Tariff Act, 1985, out of imported raw materials viz. mix brass scrap/mix brass scrap with iron attachment and other impurities etc. procured free of import duty under the relevant notifications under the Customs Act read with the provisions of the Foreign Trade Policy and as per the procedures laid down under the Scheme for Export Oriented Units. Pursuant to the intelligence received by the Central Excise Department that the petitioner was indulging in diversion of brass scrap imported duty - free under the 100% Export Oriented Unit (EOU) Scheme in the local market without payment of appropriate duty, a team of officers visited the unit at Jamnagar and carried out search on 14th February, 2008. During the search operation, the officers recovered certain record and private chits indicating diversion of duty -free imported goods in the local market without invoice and without payment of duty. The officers, in presence of independent panchas, seized the record by drawing a regular panchnama dated 14th February, 2008. Upon scrutiny of the record, it was revealed that the petitioner had shown the recovery of attachment of impurities in imported scrap at a higher ratio. According to the Central Excise authorities, the petitioner was showing higher generation ratio of impurities so as to manipulate the actual content of brass scrap in the records to camouflage it as impurities. In fact, the imported duty -free brass scrap was diverted and sold in the local market without proper invoice and without payment of duty. However, in order to regularise the quantity of scrap purchased and sold, generation of impurities and their subsequent DTA sale were shown at a very low rate so as to divert the imported brass scrap in the guise of impurities. It appeared that the petitioner had shown fictitious sale of impurities at lower rate so as to disguise the quantity of brass scrap actually generated. Therefore, brass scrap of higher value had been removed clandestinely without invoice and without payment of duty with an intention to earn undue benefit out of the EOU Scheme. During the course of search on 14th February, 2008, the statement of one Kishore Karshandas Bhagat, Accounts Assistant of the petitioner was recorded under the provisions of Section 14 of the Act wherein he admitted that the private chits found during the course of the search are the details of the brass scrap sold clandestinely by the petitioner in the local market without invoice and without payment of duty. Various other admissions were also made by the said Mr. Bhagat. On 14th February, 2008, the statement of Mr. Sanjay Natwarlal Sayani, who was a Director of the petitioner Company at the relevant time, was also recorded under Section 14 of the Act. Mr. Sanjay Sayani had also admitted recovery of private chits from the possession of Mr. Bhagat and had also admitted that the said private chits were miscellaneous internal chits of M/s. Bhavin Impex Private Limited, Jamnagar. It appears that on account of fatigue, Mr. Sanjay Sayani had requested for another date for further queries and was accordingly summoned to appear before the Investigating Officer on 21st February, 2008. However, he did not appear on that date citing reason of illness. Thereafter, a fresh summons was issued on 28th February, 2008 pursuant to which Mr. Sanjay Sayani appeared before the Investigating Officer Shri K.K. Sheth, Superintendent (Preventive) on 28th February, 2008. On that day, a statement of Mr. Sanjay Sayani was recorded in his own hand wherein various admissions were made. Thereafter, on the same date, Mr. Sanjay Sayani lodged an FIR against four officers including Joint Commissioner of Customs and Central Excise before the Police Commissioner, Rajkot and various other authorities. On 01st March, 2008, Mr. Sanjay Sayani filed a criminal complaint before the Chief Judicial Magistrate, Rajkot against all officials of Customs and Central Excise being Criminal Case No. 32 of 2008. On 04th March, 2008, a Civil Suit came to be filed by the petitioner for defamation and personal physical harassment against the officials of the Customs and Central Excise Department.

(3.) A summons was issued to Mukeshbhai Sayani on 06th March, 2008 to remain present before the Investigating Officer on 07th March, 2008 in reply to which Mr. Mukesh Sayani sent a letter dated 07th March, 2008 stating that he was present in the factory premises for the whole day on 06th March, 2008 and had answered the queries raised by the officers at the relevant time and has nothing more to say and as such, does not want to appear before the Investigating Officer.