Santosh Singh Jain vs D.G. Dir. of Central Excise Intelligence

This appeal is directed against the impugned order dated 3rd July 2008 passed by the learned Single Judge dismissing Writ Petition (C) No. 1604 of 2007 filed by the Appellant.

The Appellant who is a senior citizen wrote a letter on 25th April 2003 to the Director General, Anti Evasion Excise, Delhi informing him that one Shri Sushil Gupta of Mumbai had been manipulating records and conniving with the local excise officers of Pondicherry and Themmberwet, Meghalaya to evade the payment of central excise duty.

It is stated that pursuant to this information show cause notices were issued to M/s. Foto Industries, Meghalaya (''FIM'') and M/s. Photo Film Industries (''PFI''), Pondicherry and Shri Sushil Gupta. The case of the Department was that FIM was a fictitious firm shown to have produced photographic films and having cleared them by claiming exemption which was not permissible. The matter was ultimately referred to the Settlement Commission, Additional Bench at Mumbai. By an order dated 11th October 2005 the Settlement Commission laid down the following terms of settlement:

Keeping in view all the aspects of the case the following terms are laid down for settlement of the case in terms of Section 32F(7) of the Act.

(a) Duty of Excise: In respect of applicant 1 and 2, the C.E. duty is settled at Rs. 6,17,43,310/- and at Rs. 8,35,96,077/- respectively. It is observed that applicant 2 has deposited Rs. 7,51,40,709/-, hence the balance amounting to Rs. 84,55,368/- is to be paid by applicant 2 within 30 days from the date of receipt of this order and furnish proof thereof to the Bench and the Revenue.

With regard to the applicant 1, it is observed that Rs. 5,81,70,471/- has already been deposited by it, hence the balance amount payable comes to Rs. 35,72,839/-. The seizure on the unrelated cash amounting to Rs. 22,60,000/-made during the investigation is lifted and this amount is allowed to be adjusted towards the duty within 30 days from the date of receipt of this order and furnish proof thereof to the Bench and the Revenue.

Admittedly the Appellant was paid a sum of Rs. 1,20,00,000/- as reward for helping the Department detect the evasion of excise duty. The information given by the Appellant helped the Department detect the fraud played by Sushil Gupta who was importing jumbo rolls of cinematographic films and by subjecting them to the process of slitting and perforation at Pondicherry and converting the jumbo rolls into smaller rolls of cinematographic films. Although the cinematographic films were being manufactured only at the Pondicherry unit, they were being shown as having been manufactured in Meghalaya.

The Appellant invoked para 9 of the guidelines issued by the Government of India on 20th June 1991 stating that he had to be given an Award equivalent to 20% of Rs. 6,17,43,310/- recovered from FIM, Meghalaya as well as the balance of the award on Rs. 8,35,96,077 recovered from PFI, Pondicherry together with interest. According to the Department they managed to recover only a sum of Rs. 8,35,96,077/- from FIM, Pondicherry. Accordingly by letter dated 12th February 2007 Directorate General of Central Excise Intelligence informed the counsel for the Appellant as under:

A show cause notice was issued to PFI, Pondicherry demanding duty of Rs. 8,35,96,077 on the ground that all the excisable goods shown to have been cleared from FI Meghalaya were actually manufactured at PFI, Pondicherry. The amount of Rs. 6,10,60,927/- already refunded to FI, Meghalaya was sought to be recovered and the total duty of Rs. 6,69,96,380/- paid by FI, Meghalaya was proposed to be adjusted against the above mentioned duty liability of Rs. 8,35,96,077/-. Both PFI and FI went to the Settlement Commissioner and the Settlement Commission vide its interim order dated 27-10-04 allowed the adjustment of duty paid by FI, Meghalaya against the duty liability of PFI, Pondicherry. Later, the Settlement Commission vide its final order dated 11-10-05 settled the duty liability against PFI Pondicherry at Rs. 8,35,96,077. This amount has since been recovered from FI Meghalaya and PFI, Pondicherry.

Thus, it is incorrect to suggest that the Department has recovered Rs. 14,53,39,387/- in the above mentioned case. The department has in effect recovered Rs. 14,53,39,387/- in the above mentioned case. The department has in effect recovered only Rs. 8,35,96,077 from M/s. PFI which is the excise duty on goods actually manufactured at Pondicherry. No duty has been charged from FI, Meghalaya as no goods were manufactured there.

The reward amount has been sanctioned by the reward committee taking into account all factors including actual revenue realized by the Department in the instant case.

In view of the same, it has been decided that there is no justification for referring the matter to the Central Board of Excise and Customs for reconsideration of the reward amount. This issue with the approval of the Director General, DGCEI.

The learned Single Judge held that the Appellant had already been rewarded in terms of the applicable guidelines and that the decision of the Respondents not to award a higher amount did not suffer from any illegality.

We have heard the submissions of learned Counsel for the Appellant. We are not persuaded to take a different view in the matter. In the facts and circumstances of the case, and on the basis of the materials placed before this Court, there cannot be any mandamus issued to the Respondents to award a higher sum. If the Appellant seeks to dispute the facts mentioned in the letter dated 12th February 2007 of the Directorate General of Central Excise Intelligence and wishes to prove that any higher amount was in fact recovered, it will be open to the Appellant to institute appropriate proceedings in the civil court for that purpose.

We find no merit in this appeal and it is dismissed as such.