UNION OF INDIA Vs. K RAMULA

JUDGEMENT

(1.) The two defendants, Union of India, Ministry of Finance and the Collector, Central Excise, Hyderabad, in O. S. No. 286 of 1972 on the file of the Court of the Fourth Addl. Judge, City Civil Court, Hyderabad are the appellants in this appeal.

(2.) The respondent-plaintiff filed a suit for release of his goods seized on 28-8-1971 or in the alternative for the recovery of their value of Rs. 36,000.00 and for damages of Rs. 5,000.00 for the loss of his business and reputation on account of the illegal and wrongful seizure of the goods. The material facts relevant for the purpose of this appeal are as follows : - The respondent-plaintiff is the sole proprietor of a Match Factory by name M/s. Free India Match Company situate in Hyderabad. The Brother of the plaintiff one K. Lakshminarayana was the manager of this company. There is another Match Factory by name Vasu Match Company and the sole proprietor is Mrs. Kusum who is the wife of the plaintiffs brother and Mr. K. Suresh is the son of the plaintiff and a power of attorney holder of Mrs. Kusum. On 14-8-1971 the officers of the appellants Central Excise Department visited one Shanti Match Company belonging to one Mr. Palani. All these Match Companies are duly licensed under the Central Excise Act. Till 1970 Palani was the Manager of Free India Match Company of the respondent plaintiff. During there visit in Shanti Match Company for the purpose of inspection the Central Excise Officials recovered a note book cut into two pieces hearing the seals of Free India Match Company. The accounts in the said cut note book contained one signature of the respondent- plaintiff and his brother. On a scrutiny of the register the Central Excise Officials suspected that the plaintiff and his brother Lakshminarayana had manufactured and removed without payment of excise duty huge quantities of matches without property accounting for them in the registers. As they suspected something fishy about the accounts, the cut note book was seized by them under a panchanama, which was marked as Ex. B- 3 on the same day i.e. 14-8-1971. On the same day they visited the respondent-plaintiffs match company and seized certain registers. Thereafter the plaintiffs house was searched under a search warrant on 19-8-1971 and they found five gross bundles of matches bearing the trade mark `Apolo of Vasu Match Company, Hyderabad. During the course of their search they also found some account books of Free India Match Company. In addition to these two, they recovered some other documents also. These articles along with the books of free India Match Company were seized by the Central Excise Officials under a Panchanama Ex. B-4 dated 19- 8-1971. The place where the goods were found was not a licenced premises. The case of the respondent-plaintiff was that they were duty paid goods and sold to one Meenakshi General Stores and since the entire consideration was not received by him they were kept in his house and that the goods do not belong to him as they were already sold to Meenakshi General Stores and hence the seizure was illegal. On 26-8- 1971 the Central Excise Officials visited the Free India Match Company belonging to the plaintiff and showed the cut note book which was seized from Shanti Match Company on 14-8-1971, containing the accounts of the plaintiffs company for the period from 1-4-1965 to 31-3-1966 and asked the plaintiff whether the said register relates to Free India Match Company. The respondent-plaintiff denied that he said book had anything to do with their Free India Match Company and stated that it was brought into existence by Mr. Palani, who was their ex-manager and who was on economical terms with the plaintiff- respondent and was doing rival business of manufacturing of Matches. They also recorded a statement Ex. B-6 on the same day. On 26-8-1971 the plaintiff made a statement Ex. B-1 before the Central Excise Officials i.e., in the presence of the Central Excise Superintendent, Hyderabad. In the said statement he stated that certain records were taken from his Company on 14-8- 1971 and from his house on 19-8-1971 and a book which has been divided into two parts with the stamp of the Free India Match Company which has been seized by them on 14-8-1971, and that all the said books related to Free India Match Company and the names of the workers which was written in the cut register belong to Free India Match Company. He further stated that Mr. Palani was the manager of his company from July, 1963 till August, 1970 ad thereafter left the service and started another Match Company. Later on 18-8-1971, the Central Excise Officials again visited the Free India Match Company and verified the stoes of matches in their store-room and Finishing rooms and found 11843 gross of matches (50s) in 601 bundles of 5 gross each, in store room and 274 bags of 30 gross each and in loose in the finishing rooms. According to the defendants the records revealed that the responded Free India Match Company did not account for all the goods manufactured in their factory and that they had illicitly manufactured 17273 gross of matches (50s) more and not accounted for in the relevant prescribed registers and evaded payment of Central Excise duty due thereon. They have therefore seized 11843 gross of matches (50s) which they valued about Rs. 28,000.00 ex-duty manufactured by the respondent-company and on the ground that the licensee i.e., the respondent appeared to have contravened the Central Excise Rules with an intention to evade payment of Central Excise duty seized the same under a panchanama dated 28-8-1971, Ex. B-2. In the said Panchanama it was also stated that the respondent and his brother Lakshminarayana who is the manager was present at the time of drawing mahazar. The Panchanama was completed by 10.00 p.m. in the night. On 1-9-1971 the plaintiff-respondent addressed the Collector, Central Excise, Hyderabad stating that the Central Excise officials visited his premises and seized stocks of matches and also account books, that they did not make a panchanama or a search list as required by the provisions of Criminal Procedure Code, that they did not give a receipt for the goods seized nor did they make such list in his presence. He further informed the Collector, Central Excise that they recorded a statement from him, on 28-8-1971 dictating the contents thereof as it suited them and took his signature. No independent witnesses were called for either at the item of search and seizure from the factory premises nor at the time he was interrogated or when his statements were recorded. He further stated that the statement dated 28-8-1971 was written to the dictation of the Central Excise officials in the manner desired by them and not out of his free will. Thereafter the plaintiff issued a notice Ex. A-3 on 4-10-1911 to the Collector of Central Excise stating that in his representation dated 1-9-1971 he appointed out the irregularities committed by the Central Excise officials in the matter of search and seizure and the involuntary nature of the statements recorded from him to their dictation on 28-8-1971 under threat and duress, that on reply was sent to his representation dated 1-9-1971 and since the excisable goods seized from the premises tallied with the records of the R. G. 1 the officers have no right for seizing and removing them from his premises and inasmuch as the seizure was illegal thy are bound to return the goods, that if the same are not returned within a week of receipt of the said notice, the plaintiff will be constrained to take all steps necessary to recover the property illegally seized and removed and for costs. To the letters dated 1-9-1971 nd 4-10-1971 Exs. A.1 and A.3 respectively a reply was sent by the appellants that a Panchanama was conducted on 19-6-1071 in respect of the house search, that statements was recorded from the plaintiff o 19-9- 1971, 26-8-1971 and 28-8-1971 and a statement was recorded on 8- 9-1971 from the plaintiffs brother Lakshminarayana, Manager of the Free India Match Company and a further statement of the plaintiff on 8-9-1971 and that all these have been acknowledged by him. A copy of the statement dated 28-8-1971 given by the plaintiff was also enclosed to the notice. In the said notice it was stated on behalf of the appellants that the goods manufactured by the respondent-company were seized by the officers on 28-8-1971 in the presence of independent witnesses and in the presence of the respondent-plaintiff himself, who is the proprietor and his brother Lakshminarayana who is the Manager of the Free India Match Company for infringement of the provisions of Central Excise and Salt Act and Rules, 1944, that the department proceedings are in progress and that he will be intimated further.

(3.) On 28-1-1972 the respondent-plaintiff gave a Lawyers notice Ex. A- 7 stating that the seizure of goods on various dates was illegal, that the cut note book recovered from the Shanti Match Company belonging to Mr. Palani does not relate to his Company, that the same was manufactured by Mr. Palani who was their ex- manager who was on economical terms with the plaintiff and set up a rival match factory under the name Shanti Match Company, that the alleged book cut into two pieces brought and showed to the plaintiff on 26-8-1971 does not belong to his Company and that it is a fictitious book brought into existence by Mr. Palani with the help of others, who are enumically disposed towards him. In the notice it was further stated that the statement recorded by the Central Excise officials on 28-8-1971 was under a threat of arrest, coercion and undue influence an d to their dictation. It was further stated in the notice that in view of the endorsement "checked and found correct" in the R. G. 1 register that the stocks illegally seized are in conformity with the entries in the R. G. 1 register he has not infringed the Central Excise Act or the Rules. The whole procedure relating to the seizure was illegal, no Panchanamas were conducted, no independent witnesses were present. The stocks seized were worth about Rs. 36,000.00 and were liable to be returned to the plaintiff, falling which he will be constrained to file a suit for the recovery of the same. Thereafter, it also appears that a criminal complaint has been filed against the plaintiff in CC No. 2977 of 1973. Ex. A-12 is the certified copy of the order dated 7- 11-1973 wherein the petition filed by the Central Excise officials to withdraw the complaint was allowed and the accused were acquitted of the charges. As the goods were not returned to the respondent- plaintiff, the plaintiff filed O. S. No. 286 of 1972 out of which this appeal arises for the return of the goods or in the alternative for recovery of a sum of Rs. 36,000.00 and for damages of Rs. 5,000.00 for the loss of plaintiffs business and reputation on account of the illegal and wrongful seizure of the goods.