2019 (11) TMI 1846 - HC - Central Excise

Clandestine removal - removal of excisable goods without payment of Excise Duty - statements and documents presented by the prosecution is substantive evidence against the accused under the Central Excises and Salt Act 1944 (CESA) or not - invocation of Section 9-D(1)(a) of the CESA - HELD THAT - From Section 9-D of the CESA it can be inferred that a Statement of a person recorded by any Central Excise Officer of a Gazetted rank can be treated as a substantive piece of evidence without he being examined in the Court provided the Department is able to establish the existence of the conditions set out in sub-section (a). The conditions set out in sub-section (a) are in pari materia with the ones set out in the first clause of Section 33 of the Evidence Act. Ex hypothesis the Department should first adduce evidence before the Court that the deponent is dead or cannot be found or is incapable of giving evidence etc. as a condition precedent for treating his Statement recorded under Section 9-D(1) of the CESA as a substantive piece of evidence. Section 9-D(2) of the CESA is a little different. In that if the deponent turns hostile the Court can rely upon his previous statement in the interests of justice. In this case the Department has failed to prove the ingredients of Section 9-D(1)(a) of the CESA. An endorsement by the Public Prosecutor or the Complainant that he is giving up the examination of the Witness on the ground that they are not able to trace him is not enough. An Officer should testify in the Court about the conditions set out in Section 9-D(1)(a) of the CESA and subject himself to the cross-examination of the defence. Otherwise merely admitting such Statements as substantive evidence on the ipse dixit of an endorsement made by the Prosecutor or the Officer in the Memorandum of evidence would lead to undue prejudice to the Accused. The provisions of Section 9-D(1)(a) of the CESA being in pari materia with Section 33 of the Evidence Act the principles governing the invocation of Section 33 ibid. will apply to a case under Section 9-D(1)(a) of the CESA as well. It is an Exculpatory Statement and not an Inculpatory Statement to qualify as a confession. Though all these documents including the Statements of Witnesses can be used in the Adjudication proceedings as substantive evidence the same cannot be put to use in a criminal trial unless they pass the relevancy and admissibility tests laid down by the Evidence Act read with the special rules of evidence under the CESA. Adjudication Order under the CESA and the payment of penalty therein cannot ipso facto prove the commission of the offence by the Accused in a Criminal prosecution. In the words of late lamented Professor Dr. V. Nageswara Rao the celebrated author of the book Indian Evidence Act - A Critical Commentary absence of evidence of guilt is not evidence of absence of guilt . Thus the Accused are acquitted only on the ground of absence of evidence and it is made clear that their acquittal will not in any way have bearing on the Adjudication proceedings under the CESA. Conclusion - i) The statements and documents can only be treated as substantive evidence under the CESA if the specific conditions set out in Sections 9-D and 36-A are strictly met. ii) There is a necessity for the prosecution to prove the conditions for admissibility of evidence under Section 9-D(1)(a) which were not satisfied in this case. iii) The presumption under Section 36-A of the CESA requires the documents to be produced or seized from the accused which was not the case here. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the statements and documents presented by the prosecution, specifically Ex. P9-Series and Ex. P11, could be treated as substantive evidence against the accused under the Central Excises and Salt Act, 1944 (CESA).
• Whether the conditions for invoking Section 9-D(1)(a) of the CESA were satisfied, allowing the statements made by witnesses before Central Excise Officers to be admitted as substantive evidence.
• Whether the presumption under Section 36-A of the CESA could be applied to the documents produced by persons not accused in the case.
• Whether the trial court's conviction and sentencing of the accused were justified based on the evidence presented.
• Whether the appellate court could acquit co-accused who did not file an appeal.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Admissibility of Statements and Documents as Substantive Evidence

• Relevant legal framework and precedents: The court examined Sections 9-D and 36-A of the CESA, which allow certain statements and documents to be treated as substantive evidence under specific conditions. The court also referenced the Indian Evidence Act, particularly Section 33, which governs the admissibility of evidence given by a witness in a judicial proceeding.
• Court's interpretation and reasoning: The court emphasized that for a statement to be admitted as substantive evidence under Section 9-D(1)(a) of the CESA, the prosecution must prove that the witness is dead, cannot be found, or is incapable of giving evidence. The court found that the prosecution failed to meet these conditions, as no evidence was presented to establish the whereabouts or status of the witness, Ramakrishnan.
• Key evidence and findings: Ex. P9-Series (gate passes) and Ex. P11 (statement of S. Srinivasan) were central to the prosecution's case. However, the court found that these documents could not be treated as substantive evidence due to the prosecution's failure to satisfy the conditions under Section 9-D(1)(a) and Section 36-A of the CESA.
• Application of law to facts: The court applied the principles of evidence law and the specific provisions of the CESA to determine that the prosecution's reliance on the statements and documents was misplaced, as the necessary conditions for their admissibility as substantive evidence were not met.
• Treatment of competing arguments: The prosecution argued for the admissibility of the statements and documents under the special provisions of the CESA. However, the court held that the prosecution's failure to prove the conditions under Section 9-D(1)(a) and Section 36-A rendered the evidence inadmissible.
• Conclusions: The court concluded that the statements and documents could not be used as substantive evidence against the accused, leading to the acquittal of all accused.

Issue 2: Presumption under Section 36-A of the CESA

• Relevant legal framework and precedents: Section 36-A of the CESA allows for a presumption regarding the truth of documents produced or seized under the Act, provided they meet certain conditions.
• Court's interpretation and reasoning: The court noted that for the presumption under Section 36-A to apply, the document must be produced by the accused or seized from their custody. In this case, the documents were produced by a third party, Ramakrishnan, who was not an accused.
• Key evidence and findings: The court found that the prosecution failed to establish that the documents were produced or seized in a manner that would invoke the presumption under Section 36-A.
• Application of law to facts: The court applied the requirements of Section 36-A and determined that the conditions for presumption were not met, as the documents were not linked directly to the accused.
• Treatment of competing arguments: The prosecution's argument for applying the presumption was rejected due to the lack of evidence showing that the documents were produced or seized from the accused.
• Conclusions: The court concluded that the presumption under Section 36-A could not be applied, further weakening the prosecution's case.

Issue 3: Justification of Conviction and Sentencing by the Trial Court

• Relevant legal framework and precedents: The court considered the trial court's application of the CESA and the Evidence Act in convicting and sentencing the accused.
• Court's interpretation and reasoning: The appellate court found that the trial court erred in relying on inadmissible evidence to convict the accused.
• Key evidence and findings: The appellate court highlighted the lack of substantive evidence supporting the trial court's findings.
• Application of law to facts: The appellate court applied the principles of evidence law and found that the trial court's judgment was not supported by admissible evidence.
• Treatment of competing arguments: The appellate court rejected the trial court's reliance on inadmissible evidence and the prosecution's arguments for upholding the conviction.
• Conclusions: The appellate court set aside the trial court's judgment and acquitted all accused due to the absence of admissible evidence.

Issue 4: Acquittal of Co-Accused Who Did Not File an Appeal

• Relevant legal framework and precedents: The court referenced the Supreme Court's decision in Dandulakshmi v. State of Andhra Pradesh, which allows an appellate court to acquit co-accused who have not filed an appeal.
• Court's interpretation and reasoning: The court applied the principle from Dandulakshmi to acquit all accused, including those who did not appeal.
• Key evidence and findings: The court found no substantive evidence against any of the accused, justifying the acquittal of all parties.
• Application of law to facts: The court applied the precedent to ensure a fair outcome for all accused, regardless of their participation in the appeal process.
• Treatment of competing arguments: The court's decision to acquit all accused was based on the lack of evidence, rather than procedural technicalities.
• Conclusions: The court acquitted all accused, including those who did not file an appeal, due to the absence of evidence.

3. SIGNIFICANT HOLDINGS

• The court emphasized that statements and documents can only be treated as substantive evidence under the CESA if the specific conditions set out in Sections 9-D and 36-A are strictly met.
• The court highlighted the necessity for the prosecution to prove the conditions for admissibility of evidence under Section 9-D(1)(a), which were not satisfied in this case.
• The court reiterated that the presumption under Section 36-A of the CESA requires the documents to be produced or seized from the accused, which was not the case here.
• The court set aside the trial court's judgment due to the reliance on inadmissible evidence, leading to the acquittal of all accused.
• The court applied the principle from Dandulakshmi, allowing the acquittal of co-accused who did not file an appeal, ensuring a just outcome based on the evidence presented.
• Final determination: The appellate court allowed the appeal, set aside the trial court's conviction, and acquitted all accused, ordering the refund of any fines paid.