GIAN CASTINGS LTD Vs. UOI

JUDGEMENT

(1.) The first petitioner is a Public Limited Company. It has an industrial unit for the manufacture of Non-Alloy Steel Ingots at Mandi Gobindgarh. Petitioner Nos. 2 and 3 are the Managing Director and Director of the Company. On April 22, 1998, the Central Excise staff visited the factory premises. It resumed certain documents. Even the statements of the Managing Director and the Director were recorded. On September 2, 1998, the Commissioner issued a show cause notice to the petitioners to show cause "within 30 days... as to why - the Central Excise duty Rs. 2,02,10,690/-... should not be demanded from them under Rule 9(2) of the Central Excise Rules, 1944 .... on the ground that they manufactured the M.S. Ingots weighing 15540.725 M.T. which were not reflected in the Central Excise Statutory records and were removed from their factory premises without payment of duty..." The petitioners were also called upon to explain as to why interest and penalty be not imposed. They were further given an opportunity to show cause as to why the plant and machinery be not confiscated and penal action as contemplated under Rule 209 be not taken. Aggrieved by the notice, the petitioners have approached this court through the present petition under Article 226 of the Constitution. They pray that the show cause notice be quashed and that the respondents be restrained from continuing with the proceedings of the case "till such time final decision is arrived at by the Court of Sub Divisional Magistrate, Amloh in FIR No. 113 dated 31-8-1998." The petitioners also pray that the notification issued by the Central Government "whereby provisions of Sections 105(1), 110, 142 and 150 of the Customs Act have been adopted in Central Excise Act" be declared ultra vires . The sequence of Events may be briefly noticed.

(2.) The petitioners claim that vide letter dated April 20, 1998, a complaint was lodged with the SHO Police Station, Mandi Gobindgarh that "certain documents/papers/invoices signed and unsigned are missing from the factory/office..." On April 22, 1998, at about 8 AM, a raiding party headed by an Assistant Commissioner (Preventive) and the other staff carried out a search operation "under threat and coercion." No "incriminating documents or any stock or material unaccounted for in the factory or office of the petitioner-company" were found. After the search, the raiding party "prepared a Resumption Memo of the documents which were taken by them alongwith...." A copy of the Resumption Memo has been produced as Annexure P. 2. It is alleged that "the record from Sr. No. 3 to Sr. No. 45 were in the form of statutory books of accounts for the year 1993-94 till 1997-98. One file containing gate passes and another containing certain loose papers as are mentioned at Sr. No. 1 and 2 of the Resumption Memo were never recovered from the factory of the petitioners' company at the time of search operation in the presence of the Managing Director Shri Mohinder Gupta. How these documents came in possession of the raiding party is a mystery." It is further alleged that the raiding party "recorded the statement of the Managing Director." It was not voluntary but "dictated". It was got signed "under threat of arrest etc." A copy of the statement has been produced as Annexure P. 3 with the writ petition. Since it was not voluntary, Mr. Mohinder Gupta (Petitioner No. 2) "retracted the above noted statement vide his letter dated April 23, 1998 written to the Chairman; Central Board of Excise and Customs and also to Respondent No. 2 with copy to respondent No. 4." Copies of these communications have been produced as Annexure P. 4 collectively. It is further alleged that the efforts of the raiding party were frustrated as no incriminating material was found. To "save their face, the raiding party asked the Managing Director Shri Mohinder Gupta and the only other Director of the petitioners' company namely Shri Harish Kumar to accompany them to their office at Chandigarh at about 3.30 PM." On reaching Chandigarh, they were threatened with arrest and "at about 9 PM, the respondents forced Shri Harish Kumar to get his statement recorded." Even this statement was not voluntary but as dictated by the respondents. A copy of this statement has been produced as Annexure P. 5. It was even admitted as correct by Mr. Mohinder Gupta, petitioner No. 2. A copy of the summon dated April 22, 1998 issued to Mr. Harish Kumar for appearing at Chandigarh, has been produced as Annexure P. 6. He had sent a communication on April 23, 1998 retracting from the statement.

(3.) On the same day viz. April 22, 1998, the "residential premises of Shri Rajiv Puri Ex-Manager in the factory of the petitioners company" were also searched. A number of documents were seized. It is alleged that these documents "have nothing to do with the petitioner company as the same were misappropriated/stolen by Shri Rajiv Puri from the factory during the period he was working in the factory and were kept at his residence for the reasons best known to him." A copy of the Panchnama prepared after the search has been produced as Annexure P. 8.