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2010 (2) GCD 1323 (Guj)
Hon’ble Ms. Justice H.N. Devani
Bhavin Impex Pvt. Ltd.
Versus
State of Gujarat & Anr.
Special Criminal Application No. 1192 of 2009—Decided on 27-28-29/10/2009
Central Excise Act, 1944 — Sections 9, 13, 18 and 19 — Criminal Procedure Code, 1973 — Sections 41 to 60 and Section 173 — Constitution of India, 1950 — Articles 20(3), 22(1) — Power to arrest under the Act — In absence of a warrant and without FIR or lodging a complaint before a Court — Scope — Court held that Section 13 of the Act empowers the Central Excise Officers to arrest a person whom he has reason to believe to be liable to punishment under the Act without issuance of warrant and without registration of an FIR or a complaint before the Magistrate.
Held :
From the language employed in Section 13 of the Central Excise Act, it is apparent that the said provisions confer power on the Central Excise Officer to arrest any person subject to the following: (i) he should have reason to believe that such person is liable to punishment under the Act or the rules made thereunder; (ii) such powers can be exercised by a Central Excise Officer not below the rank of Inspector of Central Excise, and (iii) such arrest has to be made with the prior approval of the Commissioner of Central Excise. Thus the power to arrest is a substantive power conferred on the Central Excise Officer which he can exercise subject to fulfillment of the aforesaid three conditions. There is no other pre-condition for arrest of a person under Section 13 of the Act. Thus, the Section itself does not say that arrest has to be made only in the manner provided under the Code for arrest in case of non-cognizable cases. When the Legislature in its wisdom has provided three conditions for exercise of powers under Section 13 of the Act, if it so intended it would have added a further condition that such arrest has to be made in the manner provided for arrest in case of non-cognizable cases. However, when the Legislature has not thought it fit to introduce such a condition, this Court finds no reason to read such condition in the said provision. From the discussion in the preceding paragraphs, it is apparent that when a Central Excise Officer arrests a person under the provisions of Section 13 of the Act, he does so for the purpose of enforcing the provisions of the Central Excise Act and not for the purpose of detecting the commission of an offence under the Act. The powers of arrest have in fact been vested in the Central Excise Officers only for the purposes of carrying out the purposes of the Act and not for the purpose of prosecuting any accused person of an offence under the Act as that is the duty of the police officer and not the Central Excise Officer. [Para 28]
Examining the issue from another angle, as noted hereinabove the arrest under Section 13 of the Act is for investigation/enquiry to fulfill the objects of the Act and not for detection of a crime. If the interpretation canvassed by the learned counsel for the petitioner is accepted, it would render the provisions of Section 13 redundant inasmuch as if a person is to be arrested only after registration of a first information report or lodgment of a complaint, the question of arrest by the Central Excise authorities would not arise. Neither would the question of the Magistrate issuing a warrant arise prior to lodging a complaint. Besides, once an FIR is registered or a complaint is lodged, the person against whom an accusation is made would be “an accused” or “a person accused of an offence”, whereas Section 13 contemplates arrest of a person and not “an accused” or of “a person accused of an offence”. It is settled legal position that while interpreting a statutory provision, a construction which would in effect obliterate it from the statute-book, should be eschewed. [Para 30]
The above discussion leads to the inevitable conclusion that under Section 13 of the Central Excise Act empowers the Central Excise Officers to arrest a person whom he has reason to believe to be liable to punishment under the Act without issuance of warrant and without registration of an FIR or a complaint before the Magistrate. [Para 31]
Ms. H.N. Devani, J.—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
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