By TIOL News Service

AHMEDABAD, FEB 28, 2017: THE petitioner, a partnership firm, is engaged in the business of manufacturing of filtered cigarettes. It is the case of the petitioner that it has been issued excise registration certificate in Form RC-2 for manufacture of cigarettes. A seizure operation was conducted on the unit of the petitioner firm on 29.06.2016, whereby the officers of the Central Excise department seized various raw materials and packaging material from the premises of the petitioner firm. The materials included tobacco, silver foil, plastic sheet outside cigarette cover, carbon box, outer box, etc., total value whereof was assessed at Rs.37,23,103/-. Two machines which were lying in the premises of the petitioner also came to be sealed by the excise officers.

It is the contention of the Petitioners that the scheme of seizure and confiscation, etc., even in relation to the Central Excise Act, 1944 is contained in sections 100 to 110A of the Customs Act, 1962, however, there are no specific provisions vis-a-vis sealing of goods. It was pointed out that under sub-section (2) of section 110 of the Customs Act, where any goods are seized under sub-section (1) thereof, and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of goods, the goods shall be returned to the person from whose possession they were seized. It was submitted that in the present case, despite the fact that no show cause notice has been issued qua the sealed machineries, the same have not been de-sealed though a period of more than six months has elapsed. Moreover, no order has been passed as contemplated under the proviso to sub-section (2) of section 110 of the Customs Act, extending the period of seizure for any further period. Therefore, continuation of the seizure is not legal.

After hearing both sides, the High Court held:

+ From the facts as emerging from the record, admitted position is clear that a period of more than six months has passed since the goods in question have been seized and the two machines in question have been sealed. In view of the provisions of sub-section (2) of section 110 of the Customs Act, since no notice under sub-section (1) thereof has been given in respect of the sealed machines, and no order extending the period of six months has been passed, continuation of the sealing of the machines in question, is clearly without any authority of law. Therefore, the respondents are not justified in not de-sealing the two machines in question despite the fact that the DGCEI has given no objection certificate in that regard. Insofar as imposition of conditions for de-sealing the machines is concerned, when the respondents have no authority to continue with the sealing, the question of imposition of any condition for de-sealing the same would not arise.

+ As the release of raw materials is concerned, by virtue of the provisions of section 110A of the Customs Act, the respondent authorities are duly empowered to release the goods pending adjudication on taking a bond from the owner in proper form with such security and conditions as the adjudicating authority may require. The deponent has submitted that he is willing to execute such bond as may be required for release of the raw materials. Under the circumstances, there should be no impediment in releasing the raw materials subject to the petitioner executing the requisite bond.

(See 2017-TIOL-393-HC-AHM-CX)