Search, Seizure, Arrest, Offence, Penalty, Prosecution
In every statute, to ensure due compliance of law, preventive and investigative provisions are incorporated. Under the Central Excise Act, 1944 and the Rules made thereunder for collection of appropriate amount of excise duty the preventive and investigative provisions such as search, seizure, summons, arrest are provided for. Some of these measures are not expressly provided under the Central Excise Act, 1944 but have been adopted from the Customs Act, 1962 vide notification no. 68/63-CE dated 4.5.63 as amended issued under section 12 of the Central Excise Act, 1944.
An officer not below the rank of Inspector of Central Excise, duly authorized can search at any time, any premises where the officer authorizing search has reason to believe that excisable goods are manufactured or stored in contravention of the provisions of the Act or Rules or where he has reason to believe that the evidence pertaining to manufacturing and removal of such goods is available. The authorization for search is called Search Authorization or Search Warrant. For a registered premises or for stopping and searching any conveyance in transit no such warrant is required. The Search warrant is issued by an officer not below the rank of the Assistant Commissioner. The search is to be carried out in the presence of two independent witnesses.
Whenever after the search of the premises or a conveyance, a proper officer of Central Excise, i.e. an officer not below the rank of Inspector forms a reasonable belief that the goods liable to confiscation or the documentary evidence pertaining to evasion of Central Excise duty is available in the premises or conveyance searched, he can seize the goods as well as the documents under section 110 of the Customs Act, 1962 as made applicable to the like matters of Central Excise. The instrumentality of the seizure is a panchanama drawn on the spot in the presence of two independent witnesses. After seizure the proper officer either takes charge of the goods or keeps the offending goods in the custody of any person for safe keeping under a superdginama . The law, however, provides for the provisional release of the goods seized, pending the order of adjudication, on execution of a bond and deposition of such security as the officer competent to adjudicate the case may require.
Under section 14 of the Central Excise Act, 1944, Superintendent or any officer senior to him, can issue summons to any person requiring him to give evidence or to produce any record etc. The persons so summoned are bound to attend and give their truthful statement and produce the summoned records/documents etc. The statement tendered under section 14 is admissible as evidence in a court of law. The summons are to be issued in writing and must bear the signature of the officer issuing it as well as his official seal, if any. At the stage of investigation under this provision, the person summoned has no right to have his lawyer present during the questioning by the officer.
Any officer not inferior in rank to an inspector is authorized to arrest any person whom he reasonably believe to be liable to punishment under the Central Excise Act, 1944. The person is to be produced before the Magistrate within 24 hrs. of his arrest.
In the absence of any express definition of the term Offence in the Central Excise law, any violation of the provisions of the law would be construed as an offence. Whether or not any offence has been committed by an assessee is to be adjudged through a process of adjudication in accordance with the principles of natural justice. The law envisages action both in respect of offending goods and the offender.
The Central Excise Act also provides for initiation of prosecution proceedings in certain cases, depending upon the gravity of the offence. Prosecutions are launched by the department through complaints in the competent jurisdictional courts leading to the trial of the accused person. If found guilty, such persons may be punished with fine or imprisonment or both.
Fines and penalties
The Central Excise Act, 1944 and the Central Excise Rules, 1944 provide for following categories of fine or penalties
- penalties on the persons who are responsible to conduct the business of the company or firm, which may include their managers, partners or directors;
- penalties on persons who abet any of the offences mentioned in Rules or Section 9 of the Act;
- penalties on the companies and firms;
- confiscation of the goods in respect of which the offence has been committed or the duty has been evaded;
- confiscation of the land, building, plant, machinery etc. used in connection with the manufacture, production, storage, removal or disposal or excisable goods; and
- penalty on a person for obstruction or giving false or misleading information.
Besides these fines and penalties, the Act provides powers under section 9(B) to publish name, place of business of persons convicted under the Act.
The property of the confiscated goods vests with the Central Govt. The owner of the goods, however gets an option to redeem the goods on payment of fine imposed by the competent adjudicating authority.
The evasion of Central Excise duty is considered a very serious offence and penalty imposable in certain serious cases is equivalent to the amount of duty evaded. It is, therefore, desirable that the assessee should ensure proper maintenance of Central Excise records, payment of proper duty at proper time and due observance of the provisions of law. The law also contains provisions for charging of interest where the duty is not timely paid.
Besides the departmental adjudication, prosecution can also be launched under Central Excise Act, 1944 for offences described under section 9(1) of the Act. The law also provides for prosecution against any person, director, manager, secretary or other officer of a company or partner of the firm or proprietor of a concern who is responsible for the conduct of the business of the company/firm/concern and is found guilty of the offences under the Central Excise law.
The prosecution proceedings are generally initiated in serious cases having substantial revenue involvement.
If as a result of the trial the charges made in the complaint against the accused are proved the court may award the following punishments
- imprisonment up to 7 years depending upon the gravity of the case;
- imposition of fine as per the provisions;
- forfeiture of any goods in respect of which the court is satisfied that an offence has been committed - this may include vehicle used for carrying such goods, packages used for packing such goods and implements or machinery used in the manufacture of such goods; and
- publication of name, place of business etc. of persons convicted under the Act.