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TMI Blog1991 (9) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... r/w Section 9(1)(d) of the Central Excises and Salt Act against A-1, A-3, A-7, A-8, A-18 to A-28, A-30, A-34, A-38 to A-40. The third charge is under Section 9(l)(b), 9(1) (bb) and 9(1)(d) of the Central Excises and Salt Act against A-1, A-4 to A-17, A-23, A-25 to A-31, A-34 to A-38, A-40. The fourth charge is under Sections 9(l)(b), 9(l)(bb) and 9(l)(d) of the Central Excises and Salt Act against A-1, A-3, A-8 to A-24. The learned Special Judge for Economic Offences found that the prosecution has failed to prove all the charges and acquitted the accused. In the memorandum of appeal a note is made which reads that A-2 was deleted by an order of Supreme Court holding A-1 and A-2 are one and the same. A-32 and A-33 were discharged while framing charges. As regards A-4, A-29 and A-31 the prosecution conceded that there is no proof against them in respect of the cigarettes from Biccavolu. Therefore, the appeal is filed against other accused. 3. The main contention of the learned counsel for the appellant is that the trial Court committed an error in discarding the statements recorded by the Central Excise Officers under Section 14 of the Central Excise Act from the witnesses and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statement should be admitted in evidence in the interest of justice. The trial Court held that all the witnesses from whom the statements are recorded by the Central Excise Officers are alive exceping one person by name N. Mallikarjuna Rao, who died and found that only Ex. P-46 an Ex. P-47 which are the statements made by C. Mallikarjuna Rao are admissible i' evidence and other statements are not admissible as the witnesses are alive. He has considered the effect of clause (b) of Section 9D also and observed that none of the witnesses from whom the statements were recorded have been treated as hostile and hence clause (b) is not applicable and therefore their statments cannot be admitted in evidence in the interest of the justice. He has stated that at best the statements can be used only for contradicting the evidence of the witnesses under Section 145 of the Evidence Act but they cannot be treated as substantive evidence in view of Section 9D of the Act. I agree with this finding of the learned Special Judge that the statements of witnesses recorded by the Central Excise Officers under Section 14 of the Central Excise Act and who are alive cannot be treated as substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidence Act. That person had no basis for supposing that by making the statement he would gain any advantage or avoid any evil with reference to the proceedings in respect of which an inquiry was being conducted by the Customs Officers. 8. He has also referred to the decision of the Supreme Court in Veera Ibrahim v. State of Maharashtra [ii] in which it is pointed out that to attract the prohibition enacted in Section 24 of Evidence Act it must be established that the confession has been obtained by reason of any inducement, threat or promise proceeding from a person in authority. 9. The learned counsel for the appellant therefore contended that the confessional statements recorded by the Central Excise Officers from the accused are not hit by Section 24 of the Evidence Act and they cannot be discarded on that ground. 10. As I have stated above, the learned Special Judge has discarded the confessional statements on two grounds. Firstly, that they are hit by Section 24 of the Indian Evidence Act and secondly the Excise Officers did not follow the procedure prescribed under Section 164 of the Code of Criminal Procedure while recording the confessions. Though Section 14 of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er such scrutiny they are considered to be voluntary, they may be received against the maker and in the same way as confessions are received and also against a co-accused jointly tried with him. Section 30 of the Evidence Act does not limit itself to confessions made to Magistrates, nor do the earlier Sections do so and hence there is no bar to its proper application to the statements such as we have here". This decision only says that as the statements recorded by the Officers under Section 171(A) of the Sea Customs Act are not confessions recorded by a Magistrate under Section 164 of the Code of Criminal Procedure and are made subject to the safeguards under which confessions are recorded by Magistrate, they must be specifically scrutinised to find out whether they are made under threat or promise from someone in authority. That decision has not considered the question whether a Customs Officer recording the confession under Section 171(A) of the Sea Customs Act has to follow the prescribed procedure under Section 164 of Code of Criminal Procedure. The Division Bench of our High Court in the case referred to above has referred to the decision of the Supreme Court m A.R. Anthulay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im in a judicial proceeding". Since the Excise Officers who have recorded the statements from the accused in this case have not administered the warning to the accused as required under Section 164, sub-section (2) of the Code of Criminal Procedure, non-compliance of the mandatory provision contained in Section 164, sub-section (2) of Code of Criminal Procedure renders the statements inadmissible in evidence as held by the Division Bench. Therefore, those statements are inadmissible against the makers thereof or against the co-accused. 12. Having discarded the statements recorded under Section 14 of the Excise Act, the learned Special Judge considered the other evidence on each charge. It may be noted that if the statements recorded under Section 14 of the Excise Act are not taken into consideration, there is no satisfactory evidence to prove the charges. I will consider the submissions made by the learned counsel for the appellant on the individual charges. The case of the prosecution under second charge is that during the period from 1-4-1983 to 30-11-1985 A-1 to A-3 companies are alleged to have sold some quantities of tobacco to A-7 company, that some tobacco was transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe Ex. D-6. He has also pointed out that apart from raw-tobacco there are other materials which are required for the manufacture of cigarettes i.e. paper, shells, slides, filter material etc. and no verification was made by the officers regarding the usage of other raw-materials in order to justify the inference that so much of raw-tobacco was used for unaccounted production of cigarettes. He has therefore come to the conclusion that the prosecution has failed to prove that there was clandestine production of cigarettes by using unaccounted tobacco on a large scale during that period. As I have stated above even if it is to be assumed that the accused have not accounted for some quantity of tobacco still the burden is on the prosecution to prove that the said tobacco was used in the manufacture of cigarettes and as the prosecution failed to establish by satisfactory evidence that there was clandestine manufacture of cigarettes during that period the finding of the learned trial judge that the prosecution failed to prove the charge cannot be said to be wrong. 13. The prosecution case on the third charge is that the accused have escaped from payment of excise duty by reducing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s asked to make further assessment. In fact, it is stated that when a show cause notice was issued the first accused has challenged it by way of writ petition in the Delhi High Court which was dismissed in the decision reported in Duncan Agro Industries Ltd. v. Union of India [vii]. Therefore, the excise authorities have to assess the duty payable by the accused company. Unless the assessment is finalised it cannot be said that there is an evasion in payment of excise duty. The learned counsel for the appellant has pointed out that adjudication of the duty is different from a prosecution and it is open to the department to pursue both the actions. He has relied upon the above decision in support of his contention. It is stated that the proceedings for the recovery of duties and imposition of penalties taken under fiscal statutes are distinct from the prosecutions in pursuance of criminal complaints. 14. The question that arose in that case was that if the department proceeds both with the show cause notice and also the criminal prosecution any statement given by the petitioner therein may be used as evidence in the criminal case and therefore it offends Article 20(3) of the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of duty shall not be required in respect of excisable goods made in a factory until they are about to be issued out of the place or premises specified under Rule 9 or are about to be removed from a storeroom or other place of storage approved by the Collector under Rule 47. So, the duty has to be paid only when they are removed from the place of manufacture i.e., the factory or from the approved store-room. It is not the case of the prosecution that 520 cartons of cigarettes are being taken out of the factory gate without paying the duty. Their allegation is that the said cartons are found in a godown which is not authorised. Rule 49 says that if they are removed from the approved store-room under Rule 47 then duty has to be paid. But there is no evidence to show that these 520 cartons were kept in an approved store-room or removed from there. Therefore, the stage of payment of duty has not yet arisen. It may be that if any violation of the Rules has been committed by keeping 520 cartons of cigarettes in an unauthorised godown, the departmental authorities may take action regarding the said violation. But, it cannot be said that the accused had evaded payment of duty by keeping ..... X X X X Extracts X X X X X X X X Extracts X X X X
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