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Seizure of money throughout investigation in central excise

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Seizure of money throughout investigation in central excise

In order to hold business activities we’d like money. it’s needed to buy stuff, to purchase transportation, to purchase the many activities that area unit essential to run the business. Similarly, many another times the money is received for the products sold-out or services rendered and unarguably it’s the foremost acceptable and convenient mode of exchange. The presence of money in any place of business is natural and it shouldn’t be disapprove throughout investigation. many another times it’s found that the money on the market within the premises area unit confiscate and brought away by the department while not examining the very fact weather an equivalent is detainable or not . The money are often confiscate solely in exceptional circumstances and not during a routine manner notably once the reason for money is obtainable at the time of search and positively not if the cash is punctually accounted. This paper may be a humble commit to examine the seizure of money throughout investigation.

Before we have a tendency to proceed more we are going to examine the ability to seize as on the market within the statute. The Central Excise Act, 1944 provides power to Central Excise officer to go looking premises and seize the products if he incorporates a reason to believe that the products area unit removed with the intention to evade duty. the ability to go looking, retain or seize the products is enumerated in Rule twenty two and Rule twenty three of the Central Excise Rules, 2002 an equivalent browse as follows:

Rule 22. Access to registered premises. –

(1) a politician sceptred by the [Commissioner or Commissioner, because the case might be] during this behalf shall have access to any premises registered underneath these rules for the aim of concluding any scrutiny, verification and checks as is also necessary to safeguard the interest of revenue.

(2) each assessee, [as bourgeois UN agency problems invoices on that CENVAT credit are often taken] and initial stage and second stage dealer shall furnish to the officer sceptred underneath sub-rule (1), an inventory in duplicate, of –

(i) all the records ready and maintained for accounting of dealing in relevancy receipt, purchase, manufacture, storage, sales or delivery of product|the products} together with inputs and capital goods, because the case might be;

(ii) all the records ready and maintained for accounting of dealing in relevancy payment for input services and their receipt or procurement; and

(iii) all the monetary records and statements (including balance or its equivalent).

(3) each assessee, [an bourgeois UN agency issue associate degree invoices on that CENVAT credit are often taken] and initial stage and second stage dealer shall, on demand build on the market to the officer sceptred underneath sub-rule (1) or the audit party deputed by the [Principal Commissioner or Commissioner, because the case might be] or the businessperson and Auditor General of Republic of India, or accountant or comptroller appointive underneath section 14A or section 14AA of the Act, –

(i) the records maintained or ready by him in terms of sub-rule (2);

(ii) the price audit reports, if any, underneath section 233B of the businesses Act, one956 ( 1 of 1956); and

(iii) the Income-tax audit report, if any, underneath section 44AB of the Income-tax Act, 1961 ( forty three of 1961), for the scrutiny of the officer or audit party or the price comptroller or comptroller, because the case might be].

[Explanation. – For the needs of this rule, “first stage dealer” and “second stage dealer” shall have the meanings allotted to them in CENVAT Credit Rules, 2004].

Rule 23. Power to prevent and search. –

Any Central Excise Officer, might search any conveyance carrying excisable product in respect of that he has reason to believe that the products area unit being carried with the intention of evading duty.

The higher than same rules offer power to seize the products solely. The officer of the Central Excise will seize the products or detain the products if there’s a violation in payment of Central Excise duty. however in no circumstances he has the ability to seize the money on the market within the premises searched, underneath the Central Excise rules.

As no power is obtainable with the Central Excise officer to seize the money as per statutory provisions of the Central Excise Act and Rules, sometimes the provisions on the market within the Custom Act area unit invoked. Section 121 of the Custom Act 1962 provides the officer of the department to seize the cash/ Indian currency. an equivalent browse as follows:

SECTION 121. Confiscations of sale-proceeds of black-market product.-

“Where any black-market product area unit sold-out by someone having data or reason to believe that the products, the sale-proceeds therefrom shall be prone to confiscation”.

Indeed the higher than same section authorise the officer to seize the money however an equivalent is to be exercised with nice caution. The payoff should be concerning the sale of products that area unit to blame for arrogation. it’s well settled mere possession of currency is not any offence and can’t be confiscate once a proof for an equivalent is obtainable. (Smt. Malhar vs.CCE(1988)33 ELT, Abdul Razak v.CC 1999(108)ELT 283).

It is timeworn law that for invoking section 121 of the Customs Act, the subsequent ingredients should be available:

There is a procurement.

Sale should be concerning the products prone to arrogation.
At the time of seizure the officer should be having reason to believe that currency confiscate is said to the products to blame for arrogation.
In this regard law is settled within the following judgements :

Indian Charge Chrome v. UOI(2003) 152 E.L.T 269 (Del HC DB).
Pradeep Kumar Singh v. CC-1998 (104) E.L.T. 111.
CC v. Asian country Kumar-1999 (109) E.L.T. 552.
CC v. M Raja (2003) 151 E.L.T. 689.
The Hon’ble court within the matter of M/S Sunrise Metal Industries Vs. Commissioner of Central Excise, Daman 2009(248) ELT 699 (Tri.- Ahmedabad) had an incident to trot out the seizure of money that were punctually accounted and control as follows:

“Tribunal within the case of Ramchandra v. CC according in 1992 (60) E.L.T 277 (Tribunal) has control that for invocation of Section 121 of the Customs Act, the ingredients of an equivalent area unit needed to be happy. an equivalent area unit that there should be a procurement, the sale should be of black-market product, the sale should be by someone, having data or reason to believe that the products area unit of black-market origin and therefore the marketer and buyer and therefore the amount of products should be established by the customs authorities. within the case of Commissioner of Customs, Mumbai v. Sadashiv R. Lele according in 2005 (191) E.L.T. 841 (Tri.-Mumbai), it absolutely was control that the encumbrance to prove that Indian Currency underneath seizure is prone to arrogation is on the department. intrinsically by perceptive that besides accusatory statement there was nothing on record to prove that the currency was sale payoff of black-market liquor, advantage of doubt was extended to the appellant and arrogation was put aside. The facts of Sipani Fibres restricted v. CCE., city according in 2007 (212) E.L.T. 374 (Tri.-Bang.) = 2007 (6) S.T.R. 197 (Tribunal) area unit additional or less pari materia to the facts of this case. in that allegations were created concerning the unauthorized availment of Cenvat credit on the granules purchased however pleased and not utilised. court once perceptive that not one instance stands given by the investigation for purchase of plastic granules from the appellant, arrogation of the currency can not be sustained.

By applying the quantitative relation of the higher than precedent judgments to the facts of this matter, I notice that the Revenue has not created even associate degree iota of proof to indicate that the currency in question is thought available of the foreign however pleased material. Even the allegations of diversion is that the subject material of another proceedings that haven’t earned determinateness. Shri Mehta, body and Finance Controller of the commercialism firm has accepted and claimed the possession of the Indian Currency of Rs. four lakhs and has additionally created accounts and statement of money balance, that stand rejected by the authorities below on the bottom of once thought, while not examining an equivalent. In any case having control that there’s no proof of any sale purchase of the foreign stuff, the ingredients of Section 121 don’t stand consummated justifying arrogation of Indian Currency or imposition of penalties upon the appellants. As a result, the impugned orders area unit put aside and every one the appeals area unit allowed with eventful relief to the appellants.”

The Hon’ble court once more within the matter of M/S commonplace Greese and personal restricted Vs Commissioner of Central Excise and S.T., Vapi 2014(303)E.L.T 434 (Tri.-Ahemdabad) put aside the arrogation of the money that were punctually accounted and ascertained as follows:

“So so much as arrogation of money of Rs. 30,62,500/- is bothered, it’s ascertained that appellant did turn out the records before the adjudicating authority to justify that the money recovered from the residential premises of Shri Asian country Vyas was mirrored within the money book of the appellants and alternative corporations. If the proof created by the appellants weren’t acceptable then an equivalent might are countered on the premise of some positive proof collected throughout investigation and can’t be dismissed on presumption or thanks to the very fact that appellants didn’t furnish any plausible rationalization at the time of seizure of the money as has been tried by the adjudicating authority in Paras seventy three.2 and 73.3 of the assessment order. Appellants relied upon the judgment of CESTAT metropolis within the case of Pandit D.P. Sharma v. CCE, Calcutta-II (supra) that was additionally upheld by the Apex Court. In Para twelve of the higher than metropolis Bench order, the subsequent observations were created by the court, that have additionally been upheld by the Apex Court [2003 (157) E.L.T. A201 (S.C.)]:-

We find force within the higher than submissions of the learned Advocate. it’s been ordered down time and once more in numerous judgments that the encumbrance to prove that the Indian currency in question is that the sale payoff of the clandestinely removed product is upon the Revenue, that is needed to be discharged by production of associate degree affirmative tangible and positive proof. within the instant case, we discover that the money was recovered from totally different places and from the possession of various persons. Nothing has been placed on record to indicate that an equivalent is that the sale payoff of the products removed clandestinely throughout February, 1994 to August, 1994, once an equivalent were recovered within the month of Oct, 1995. As such, we have a tendency to totally accept as true with the submissions of Dr. Chakraborty, learned Advocate for the appellants, that it’s extremely unbelievable that the money confiscate would represent the sale price of the products created throughout February, 1994 to August, 1994. consequently, we have a tendency to hold that the condition precedent for arrogation of Indian currency doesn’t stand happy within the instant case. we have a tendency to consequently put aside the portion of the Order confiscating the Indian currency and order its unleash to the appellants.”

In the gift proceedings additionally it’s not established by the investigation that the money seize represent the sale payoff of clandestinely removed inputs/finished product either by approach of a press release or by a documentary proof. On presumptions alone it can not be control that money seize from the residential premises represent the sale payoff of clandestinely removed inputs/goods within the absence of any affirmative, tangible and positive proof. consequently, cash of Rs. 30,62,500/- is ordered to be discharged to the appellant by setting aside the arrogation.”

The Hon’ble court, once more within the matter of Imtiyaz Iqbal Pothiawala vs Commissioner of Customs, 2016(335) E.L.T. 747 (Tri. Del.) reiterated the abovesaid read and put aside the arrogation of money once its not connected with the importing activities. The relevant para is as follows:

“15. The Indian currency of Rs. twenty one lakhs was confiscate on the bottom that it’s in respect of the sale proceed of black-market gold as we have a tendency to area unit setting aside the arrogation of the gold on the bottom that it’s the lawfully purchased by Imtiaz Iqbal Pothiawala and therefore the sale is out of that wrongfully procured gold. Therefore, arrogation of currency is additionally put aside. Consequently, the arrogation of auto from that the gold is recovered and penalties also are put aside. Appeals area unit allowed”.

Once the money is confiscate and punchnama is drawn one ought to approach the department with correct rationalization of the money punctually supported with the documents and if not came then one has the remedy underneath law that should be exercised.

The money may be a vehicle to run the business associate degreed an unwarranted seizure solely place breaks on the movement of the business. Not solely this has the seizure {of money|of money} additionally affected individual liberty therefore unless and till there’s clear sturdy nexus between on the market money and excisable product sold-out clandestinely the cash shouldn’t be confiscate. The seizure of money definitely can’t be a method to pressurise the business for any demand that is wrongfully unsustainable.

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