Madras High Court
The Deputy Commissioner Of Central ... vs M/S.Southern Press Tools on 23 March, 2018
Author: M.V.Muralidaran
Bench: M.V.Muralidaran
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.03.2018
CORAM:
THE HONOURABLE MR.JUSTICE M.V.MURALIDARAN
Criminal Appeal No.827 of 2005
The Deputy Commissioner of Central Excise,
Headquarters, Legal Cell,
Central Excise, Coimbatore. ... Appellant
Vs
1.M/s.Southern Press Tools,
Represented by its Managing Director,
Shri A.C.Mahesh,
368, Chettipalayam Road,
Malumichampatty,
Coimbatore – 641 021.
2.M/s.Universal Radiators Ltd.,
Unit-I, Rep. by its Managing Director A.C.Mahesh,
38, Mettupalayam Road,
Coimbatore – 641 043.
3.B.Venkatachalam,
Authorised Signatory and
Executive Director,
M/s.Southern Press Tools.
4.R.Ramkumar,
Authorised Signatory and
Senior Executive (Marketing)
M/s.Universal Radiators Ltd.,
Unit-I, 38, Mettupalayam Road,
Coimbatore – 641 043 ... Respondents
Prayer: Criminal Appeal filed under Section 378 of the Criminal
http://www.judis.nic.in
2
Procedure Code, against the judgment acquitting the respondents in
C.C.No.217 of 2004 dated 09.06.2005 passed by the learned Chief
Judicial Magistrate, Coimbatore and prays to set aside the same.
For Appellant : Mr.A.P.Srinivas
For Respondents : Mr.K.Jayachandran (for R1 & R2)
Mr.B.Venkatachalam (for R3)
Mr.Ramkumar (for R4)
JUDGMENT
This criminal appeal is preferred by the appellant against the judgment passed by the learned Chief Judicial Magistrate, Coimbatore, acquitting the respondents in C.C.No.217 of 2004 dated 09.06.2005.
2.Brief case of the appellant:
The appellant, Deputy Commissioner of Central Excise filed the complaint against the respondent/accused alleging that the 1st respondent/accused in collusion with 2nd respondent/accused intentionally evaded payment of duty to the tune of Rs.52,69,414/- and thereby contravened Rules 9(1) 51, 52A, 553,54, 173B, 173G, 173C, 173 F, 174 and 226 of the erstwhile Central Excise Rules 1944 and liable to be punished under sections 9 and 9AA of the Central http://www.judis.nic.in 3 Excise Act 1944 and the respondents/accused Nos.3 and 4 also willfully conspired together and intentionally evaded payment of duty and thereby contravened Rules 9(1) 52A,53, 173B, 173 C, 173 G and 226 of the erstwhile Central Excise Rules 1944 and are liable to be punished under Section 9 of the Central Excise Act 1944.
3.Before the trial Court, the prosecution examined one witness on their side. Exhibits-1 to 22 were marked. One of the accused examined as DW1 and Exhibits-D1 to D5 were marked on their side.
4.After trial, the learned trial judge found that accused No.1 and 2 are not guilty under Rules 9(1), 51, 52A, 53, 54, 173B, 173C, 173G, 173F, 174 and 226 of the erstwhile Central Excise Rules 1944 and are not liable to be punished under Sections 9 and 9AA of the Central Excise Act 1944 and the accused Nos.3 and 4 are also not found guilty under Rules 9(1) 52A, 53, 173B, 173C, 173G and 226 of the erstwhile Central Excise Rules 1944 and not liable to be punished under Section 9 of the Central Excise Act 1944 and acquitted all the accused under Section 248(1) of Cr.P.C.
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5.The learned counsel for the appellant submits that the trial Court erred in law in its reasoning that the prosecution guidelines are to be treated on par with the circulars issued under Section 37B of the Central Excise Act.
6.The learned counsel for the appellant submits that the trial Court ought to have seen that in economic offences collecting evidence is a highly delicate exercise and hence ought not to have rejected the story of the prosecution on extraneous aspects which does not affect the fundamental case of the prosecution and the case on hand, the reasoning that there is discrepancies in the seizure of 56 delivery advice books as deposed by PW1 and 50 delivery advice books as per mahazar dated 23.08.1996 as Exhibit-P3 is not so fatal so as to reject the prosecution story as a whole since there could be possibility of human error in counting or dubious resemblance in number as “6” instead of “0” and these hyper technical lapses would not falsify the entire prosecution case and the credibility thereon and on consideration of the same by the trial Court is bad in law.
7.The learned counsel for the appellant submits that the trial Court erred in its decision that the statements recorded by Central http://www.judis.nic.in 5 Excise Officers is not relevant since there is non compliance of section 9D(1) of the Central Excise Act since the “Lex loci” is that it is duty of the criminal Court to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any premises envisaged in section 24 of the Evidence Act as ruled in the case of M/s.Duncan Agro Industries reported in 2000 (120) ELT 280 SC.
8.The learned counsel for the appellant submits that the trial Court finding that the entry of Excise Officers in SSI unit violates the mandatory provisions of Excise Act and Rules is incorrect in law since the officers entered into the second unit which is neither declared as SSI unit nor registered as SSI unit and when the entry in one unit is lawful entering into another unit is a continuous process in their detection of fraudulent evasion of excise duty and hence the findings in this regard is unacceptable in law.
9.The learned counsel for the appellant submits that the trial Court that at the time of passing order-in-original necessary recommendations has to be incorporated in the O-in-O itself and the same being not followed the approval granted by the Chief Commissioner of Central Excise is not in order and the circular being http://www.judis.nic.in 6 binding on the Central Excise Officers on the premise that it is issued under section 37B of Central Excise Act is contrary to law since the prosecution guidelines circular No.15/90 CX 6 dated 9.8.1990 is issued only for the Principal Collectors and Director General of Anti-Evasion/revenue intelligence and it is not meant for trade and as such it cannot be treated as circular under section 37B of the Central Excise Act and further now the law is well settled that any circular is binding only if it is in accordance with law.
10.I heard Mr.A.P.Srinivas, learned counsel for the appellant, Mr.K.Jayachandran, learned counsel for the respondents 1 and 2, Mr.B.Venkatachalam, learned counsel for the 3rd respondent and Mr.Ramkumar, learned counsel for the 4th respondent and perused the entire materials available on record.
11.It is seen from the records that the first respondent/accused M/s.Southern Press Tools represented by its Managing Director A.C.Mahesh is holding central excise registration certificate and are manufacturing tools, dies, jigs, fixtures and sheet metal components in their licenced premises as per the evidences adduced by the prosecution.
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12.It is also an admitted fact that the second accused M/s.Universal Radiators Limited represented by its Managing Director is having their unit No.4, at 38, Mettupalayam Road, Coimbatore. On 23.8.1996 PW1 Superintendent, Headquarters Central Excise Department, Coimbatore and other officers of the department attached to the Head Quarters preventive unit, Coimbatore visited the above second premises located adjacent to the licenced premises at Coimbatore but not licenced or registered under the Central Excise Act 1944. At the time of visit the third respondent/accused B.Venkatachalam, the authorized signatory of the first respondent/ accused M/s.Southern Press Tools and the 4th respondent/accused R.Ramkumar, the authorized signatory of the second respondent/accused viz, M/s.Universal Radiators Ltd, were present. The officers of the excise department found branded radiators of M/s.Universal Radiators in packed condition in the second premises of the first respondent/accused at 368, Chettipalayam Road, Malumichapatty. There, they further noticed manufacturing of radiators and components, sub assembly of T72 cooling systems. The respondents/ 3rd and 4th accused were present at the time of the inspection. It is a fact that the 3 rd respondent/accused informed PW1 http://www.judis.nic.in 8 the Superintendent of Central Excise Department that the unit functioning in the second premises is also their sister concern. On further enquiry he informed PW1 that they have not intimated about the manufacture of components and radiators to the excise department and found Ex-P1 series 56 numbers of delivery advice books and other records. A perusal of the above documents reveals that the respondents/accused were manufacturing radiators and components, sub assembly, assembly of T72 cooling system in the above second premises without intimating about the manufacturing activities to the central excise department and without maintaining records and have evaded payment of excise duty to the tune of Rs.52,69,414/- from the year 1992.
13.PW1 the Superintendent of the Central Excise Department and other officers recorded the statement of Arumugam and Ganesan, who were present there. The officers of the excise department seized Ex-P1 series 56 numbers of delivery advice books and Ex-P2 statement of work under the mahazar Ex-P3. The above said witnesses Arumugam, Ganesan and the Inspector of Central Excise Thiru.Rajendran affixed their signatures. The third and 4 th accused also affixed their signatures. Simultaneously the officers examined http://www.judis.nic.in 9 Manickam, Sundararjan, Venkatachalam and Ramkumar and recorded Ex-P4, Ex-P5 and Ex-P6 their statements. The 3rd respondent/ accused Venkatachalam also made a statement Ex-P7 which was recorded by Ganesan, which was signed by him and Ganesan also affixed his signature. On 02.09.1996 the 3rd respondent paid a sum of Rs.2,50,000/- into Indian Bank. On 15.01.1996 Sundararjan made an additional statement Ex-P12 to the officers. On 09.09.1996 Thulasiram, the Project Incharge of the second accused made Ex-P13 statement to the officers. On 29.08.1996 the 2 nd respondent/accused sent Ex-P14 the cost list. On 05.09.1996 the 2 nd respondent/accused sent Ex-P15 reply. On 02.09.1996 the first respondent sent Ex-P17 letter about the payment of Rs.2,50,000/- on 29.10.1996 and sent Ex.P18 price list Ex.P19 is the chalan for payment of Rs.2,50,000/-.
14.PW1 and other officers seized 298 numbers of Radiators found at the above premises under Ex-P3 seizure mahazar which were valued at Rs.9,71,771/- They handed over the radiators to the respondents/accused. The proceedings commenced on 23.8.1996 till morning of 24.08.1996. On 20.02.1997 the Commissioner of Central Excise, Coimbatore issued Ex-P8 show cause notice to the respondents/accused Nos.1 and 2 annexing the details of the evasion http://www.judis.nic.in 10 of excise duty and they gave their replies under Exs.P9 and P10 respectively.
15.The Commissioner of central excise and customs, who has not satisfied with the explanation passed Ex.P11 orders imposing duty of Rs.52,69,414/- on the components manufacturers and cleared from M/s.Southern Press Tools under Rule 9(2) of the Central Excise Rules 1944 r/w section 11A of the Central Excise Act 1944 and also appropriated an amount of Rs.2,50,000/- already paid by the first respondent/accused towards the above liability, confiscated 398 numbers of M/s.Universal Radiators Limited brand radiators valued at Rs.9,71,771/- providing an option to redeem the above radiators on payment of Rs.2,50,000/- under Section 34 of the Central Excise Act, imposed a penalty of Rs.5,00,000/- on the second respondent/accused M/s.Universal Radiators Limited under Rule 209A of the Central Excise Rules 1944 and directed the 1st respondent to pay interest as per section 11AB of the Central Excise Act 1944.
16.Aggrieved by the above order of the Commissioner of Central Excise, Coimbatore, the respondents/accused preferred an appeal to the customs, Excise and Gold (Control) Appellate Tribunal. On http://www.judis.nic.in 11 23.08.2002 the customs, Excise and Gold (Control) Appellate Tribunal passed an order in Ex.P20 remanding back the matter to the Commissioner of Central Excise, Coimbatore for denova consideration.
17.Again after appreciation, the Commissioner of Central Excise, Coimbatore passed an order in Ex.P21 confirming the earlier order passed by him imposing a penalty of Rs.53,00,000/- on the first respondent/accused M/s Southern Press Tools Limited under Rules 9(2) 173 Q and 226 of the central excise Rules 1944 r/w section 38(A) of the Central Excise Act 1944 and demanding an excise duty of Rs.52,69,414/- under Section 9(2) of the Central Excise Rules 1944 r/ w 38A and 11A of the Central Excise Act 1944. He also ordered for confiscation of the seized 398 numbers of Universal Radiators Limited brand radiators valued at Rs.7,71,771/- under Rule 9(2) and 173 Q of the Central Excise Rules 1944 r/w section 38A of the Central Excise Act 1944 and also imposed a penalty of Rs.5,00,000/- on the second accused M/s.Universal Radiators Limited under 209A of the erstwhile Central Excise Act 1944 r/w 38A of Central Excise Act 1944.
18.On 09.05.2002 the Chief Commissioner of Central Excise, Chennai granted administrative approval for lodging prosecution http://www.judis.nic.in 12 against the accused under Ex.P22.
19.Thereafter the complainant filed this complaint against the respondents/accused alleging that the first accused in collusion with the second accused have intentionally evaded payment of duty to the tune of Rs.52,69,414/- and thereby contravened Rules 9(1) 51, 52A, 53, 54, 173B, 173C, 174G, 173F, 174 and 226 of the erstwhile Central Excise Rules 1944 and are liable to be punished under section 9AA of the Central Excise Act 1944 and the accused Nos.3 and 4 have also willfully conspired together and intentionally evaded payment of duty and thereby contravened Rules 9(1), 52A, 53, 173B, 173C, 173G and 226 of the erstwhile Central Excise Rules 1944 and are liable to be punished under Section 9 of the Central Excise Act 1944.
20.The respondents/accused have marked Ex.D1 Circular dated 09.09.1990 issued by the Central Board of Excise and Customs Ex.D2 show cause notice with annexures issued to A1 and A2. Ex.D3 inspection report dated 08.09.1996 of the defence authorities Ex.D4 Circular No.42/87 dated 01.12.1987 issued by the Central Board of Excise and Customs and Ex.D5 Mahazar dated 23.08.1996 drawn at A2’s Unit II.
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21.It is seen in the evidences that after the inspection, the Commissioner of Central Excise and Customs, Coimbatore has passed an adjudication order on 24.09.1997 under Ex.P11. PW1 has admitted in his cross examination that the present prosecution against the accused is based on the above order. However, on appeal made by the respondents/accused to the Customs Excise and Gold Control Appellate Tribunal, it passed an order remanding the matter to the Commissioner of Central Excise, Coimbatore for denovo consideration PW1 has admitted under Ex.P21 the Commissioner has passed further orders and therefore they cannot take any action based on Ex.P11. Hence as pointed out by the Learned Counsel for the respondents, Ex.P11 based on which the present complaint has been filed is non-est in law.
22.There is no recommendation in Ex.P11, the adjudication order passed by the Commissioner of Central Excise, Coimbatore dated 24.09.1997 directing the prosecution of the respondents/ accused and without any such direction, and the violation of the guide lines of the central board of excise and customs, the appellant/complainant has filed this case before the learned trial Court and it is fatal to the case http://www.judis.nic.in 14 of the prosecution. A perusal of Ex.P11 the adjudication order passed by the Commissioner of Central Excise on 24.09.1997 reveals that Commissioner has not recommended for prosecution of the respondents/accused.
23.PW1 that the Central Board of Excise and customs has issued the circular dated 09.08.1990 under Ex.D1. In the above guide lines, it is laid down that prosecution should be launched, only with the final approval of the principal collector after the case has been carefully examined by the collector in the light of the guide lines. Further it also contains a guide line to the effect that the Collector should indicate, at the time of adjudication order itself, as to whether the case is fit for prosecution, is that, it should be processed for sending it to the Principal Collector for sanction. However there is no such recommendation for prosecution by the commissioner of Central Excise in Ex.P22 for prosecuting the respondents/accused.
24.The prosecution has been launched by contravening the guide lines and therefore the learned trial Court rightly dismiss the case filed by the appellant. Though it is pointed out that the above guide lines are only recommendatory in nature and not binding on the authorities, http://www.judis.nic.in 15 the Hon’ble Supreme Court has held that the circulars issued by the Central Board of Excise and customs are binding on the subordinate officers and such circulars are not merely advisory.
25.Admittedly in the present case the above circular instructions of the central board of excise and customs have not been followed before filing the present complaint before the trial Court. Hence the case of the appellant has to be dismissed on this ground also.
26.It is seen from the documents that Ex.P22 is the order of the Chief Commissioner, Central Excise wherein he has accorded administrative approval for launching prosecution against the respondents/accused. However in the investigation report annexed there to, based on which the administrative approval has been accorded for prosecution, it is stated that material evidence against the second respondent/accused is nil. Further as per the show cause notice was issued to third and fourth respondents/accused no penalty was imposed on them. Similarly in the letter of the Commissioner of Central Excise, Coimbatore dated 22.04.2002 addressed to the Chief Commissioner of Central Excise (found with Ex.P22) recommendation has been made only for prosecuting the respondents/accused Nos.1 http://www.judis.nic.in 16 and 2. However the chief commissioner of central excise, Chennai has accorded in his undated letter viz, Ex.P22 administrative approval for launching prosecution against all the four respondents which is illegal on the face of the record.
27.In view of the above discussions, this Court comes to the conclusion that the learned trial Court rightly acquitted the respondents/accused and no interference is warranted in this appeal. Accordingly, this Criminal Appeal filed by the appellant is dismissed.
23.03.2018
vs
Note:Issue order copy on 30.01.2019
Index : Yes/No
Internet : Yes/No
To
The Chief Judicial Magistrate, Coimbatore.
http://www.judis.nic.in
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M.V.MURALIDARAN, J.
vs
Criminal Appeal No.827 of 2005
23.03.2018
http://www.judis.nic.in