By TIOL News Service

NEW DELHI, DEC 15, 2015: The appellants are engaged in the manufacture of automobile parts and spares liable to central excise duty. The case against the appellant is that they have not discharged central excise duty on the goods manufactured and cleared by them. During the course of investigation, certain goods were seized under Rule 24 of the Central Excise Rules, 2002. An amount of Rs. 1,49,54,280/- in the form of currency was also seized by the officers under Section 110 of Customs Act, 1962. Later, on the request of the appellant, the finished goods, un-finished goods and the raw materials were released provisionally on submitting B-11 bond. When the matter reached the High Court after rejection of the application by the Settlement Commission, the High Court disposed of the Petition by directing the assessee to file an application for provisional release of the seized amount and directing the central excise authorities to pass an appropriate order. Thereafter, the impugned order was passed by the Commissioner rejecting the assessee's request for release of the currency seized on the ground that seized on the ground that the provisions of Section 110 A of Customs Act, 1962 are not made applicable to Central Excise. The assessee is in appeal against the order passed by the Commissioner.

After hearing both sides, the Tribunal held:

+ Seizure of currency is made under Section 110 of the Customs Act, 1962 on the reasonable belief that they are sale proceeds of clandestinely manufactured and cleared excisable goods which are liable for confiscation. Section 110 of the Customs Act states that if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods. Section 2 (22) of the Customs Act defines "goods" which includes currency. Since seizure of currency is made adopting the definition of "goods" as contained in Section 2(22) of the Customs Act, 1962 and considering it as "goods", the ld. Commissioner's observation that the definition of "goods" as per Section 2 (22) of the Customs Act, 1962, which includes currency, has not been made applicable to the Central Excise vide notification no.68/63-CE is factually incorrect. If this view is to be accepted, the seizure of currency in the present case itself will become untenable as there is no other provision under Central Excise Act, 1944 for seizing currency. The definition in the Act confines to 'excisable goods'. Hence, it is clear that the seizure of currency is made by the officer adopting the definition in the Customs Act and the said provision treats the currency as "goods" which can be seized. And on 16.08.2011, the Dy. Commissioner (AE) ordered the provisional release of seized goods other than currency on submitting B-11 Bond for Rs.98,91,350/- and bank guarantee of Rs.24,72,838/-. No legal authority has been quoted in the communication. The Department does not have a case that the provisional release of the seized goods as ordered on 16.08.2011 is not authorized by the law. Therefore, applying a different treatment for the currency which is seized as goods (sale proceeds of non-duty paid goods) is not legally sustainable. The power, which is applicable for the release of the provisional release of the seized goods is equally applicable to the provisional release of seized currency as sale proceeds of offending goods. Appellate Commissioner's observation that there is no specific provision under Central Excise Act, 1944, for provisional release of the seized currency, is contrary to the guidelines mentioned in the Central Excise Manual and Department's own action for releasing the seized goods.