Bangalore District Court
State Of Karnataka vs Sri.George Varghese on 9 March, 2023
KABC010195282007
IN THE COURT OF XLVI ADDL. CITY CIVIL &
SESSIONS JUDGE AND SPECIAL JUDGE FOR CBI
CASES, BENGALURU, (CCH47)
Dated this the 6th day of March, 2023
PRESENT
Smt. E. CHANDRAKALA., B.Sc, LL.M.,
XLVII Addl. City Civil & Sessions Judge
and Special Judge for CBI cases,
C/c XLVI Addl. City Civil & Sessions Judge
and Special Judge for CBI cases,
Bengaluru
SPL.CC.NO.72/2007
COMPLAINANT: State of Karnataka
By Central Bureau of Investigation
Anti Corruption Branch,
Bengaluru.
(By Sr.Public Prosecutor)
/Vs/
ACCUSED : 1. Sri.George Varghese
S/o Late Sri. V.M.George
Aged 71 years,
Then Superintendent of Central Excise
O/o Asst. Commr. of Central Excise,
Hassan, R/at
No.407, Petra Park,
Ramamurthy Nagar,
Bangalore.
2 Spl.CC.No.72/2007
2. Sri.D.A.Ganesh
S/o Late Sri.D.N.Annaiah
Aged 71 years,
Inspector of Central Excise,
O/o Commr. of Central Excise,
Bangalore R/at
No.98, 12th A Main, Gokula,
1st Stage, 1st Phase,
Bangalore.
3. Sri.Devendra Kumar Jain @
D.K.Jain
S/o Sri. Padam Sen Jain
Aged 80 years,
Chief Executive Officer,
M/s.Amisha International,
No.7/46B, 5th Cross,
Mahadevapura PO
Bangalore560 048 and
M/s.Palgar Silks Mills Pvt. Ltd.,
No.5/1, First Floor, 15thcross,
Cubbonpet, Bangalore.
No.601(B),Wilson Manor,
13th Cross, Wilson Garden,
Bangalore.
4. M/s.Amisha International
(Represented by
Sri.Devendra Kumar Jain and
Chief Executive Officer,
No.7/46B, 5th Cross,
Mahadevapura PO
Bangalore560 048.
( By Sri.R.Nagendra Naik, Advocate for A1
to 3, A4 Company Reptd. By A3)
*****
1.Date of Commission of Offence : January, 2003
2. Date of Report of Offence : 30102005
3 Spl.CC.No.72/2007
3. Appearance of Accused : 16062007
4. Name of the complainant : C.B.I
5. Date of recording of Evidence : 22042013
6. Date of closing Evidence : 02022023
7. Offences complained of : Under Secs.120(B) R/w
Secs.420, 467, 468,
471 of IPC and
Under Section 13(2) r/w
Sec.13(1)(d) of PC Act, 1988
8. Opinion of the Judge : The accused Nos. 1 and 2 are
acquitted for the charge sheeted
offenses.
The accused No.3 and 4 are
convicted for the offense under
Sec.420 IPC and acquitted for the
offenses under Sec.120B r/w
467,468 and 471 IPC and Sec.13(2)
r/w 13(1)(d) of the Prevention of
Corruption Act,1988.
(E.CHANDRAKALA)
C/c XLVI Addl. City Civil & Sessions Judge
and Special Judge for CBI cases,
Bengaluru.
****
JUDGMENT
The Inspector of Police, Central Bureau of Investigation (in short 'CBI'), ACB, Bengaluru, has laid a charge sheet against the accused Nos.1 to 4 for 4 Spl.CC.No.72/2007 the offences punishable under Secs.120(B) R/w Secs.420, 467 468, 471 of IPC and under Sec.13(2) R/w Sec.13(1)(d) of Prevention of Corruption Act, 1988 (for brevity 'PC Act').
2. a) The summary of the prosecution case is that accused No.1 was the Superintendent of Customs in EOUIV A Range, Department of Customs, Bengaluru during the period 05062002 to 03022003 and the accused No.2 was the Inspector worked in EOUIV A Range from 01/01/2003. It was the duty of accused Nos.1 and 2 to ensure the bonding of the imported raw materials and examining the exports by 100% Export Oriented Units (for short EOU) coming in their Range. The accused No.4 is the M/s.Amisha International Company and the accused No.3 is the Chief Executive Officer of the said company. The accused No.4 Company was one of the 100% EOU units 5 Spl.CC.No.72/2007 coming under the EOUIV Range. The accused No.4 M/s.Amisha International used to import raw mulberry silk yarn from China through Chennai Sea Port, without paying customs duty. As per EOU scheme, accused No.4 Company has to export the imported raw mulberry silk yarn by processing the same into finished goods i.e., Powder Grade Silk Yarn to meet the export obligations.
b) The accused No.4 M/s.Amisha International had imported five consignments of mulberry raw silk yarn from China during the period from 21/11/2002 to 09/01/2003 through its Custom House Agent M/s.Master Stroke Freight Forwarders Private Limited, Chennai, Chennai Seaport. These imports were bonded at the premises of A4Company and the Company has to export the same by processing into Power Grade Silk Yarn. On 23/01/2003 accused No.3 submitted shipping bill No.772/2003 alongwith 6 Spl.CC.No.72/2007 Invoice No.A1/05/02 and packing list for export of 110 bales of powder grade silk yarn weighing 9271Kg, valued at Rs.88,46,209/ in a container bearing No.CLHU 2620954 of M/s.IAL Shipping Line before accused No.1 at his office for inspection and sealing.
c) The accused Nos.1 and 2 while functioning as public servants in the capacity of Superintendent and Inspector of Customs, have entered into criminal conspiracy with accused No.3, the Chief Executive Officer (CEO) of accused No.4Company have cleared the container No.CLHU 2620954 containing the goods meant for export by accused No.4 without physically verifying the same before sealing the container, which caused wrongful loss to the Government of India to the tune of Rs.26,94,251/ corresponding wrongful gain to accused No.4 Company and thereby accused have committed the 7 Spl.CC.No.72/2007 offences punishable under Secs.120(B) R/w Secs.420, 467 468, 471 of IPC and under Sec.13(2) R/w Sec.13(1)(d) of P.C Act.
3. After due investigation, the Inspector of Police filed charge sheet before the Special Court. The cognizance was taken and the presence of accused was secured. The accused have filed discharge applications under Sec.227 of Cr.P.C. The same were dismissed by this Court. Charge was framed against accused Nos.1 to 4 for the chargesheeted offences, where they pleaded not guilty and claimed to be tried.
4. The prosecution in order to bring home the guilt of the accused, in all has examined the witnesses as PW1 to PW34 and got marked documents Ex.P.1 to Ex.P.198 and Material Objects as MOs1 and 2. The accused have been examined under Sec.313(1)(b) of Cr.P.C., regarding the 8 Spl.CC.No.72/2007 incriminating material appearing in evidence against them. The accused have denied the incriminating evidence and got marked documents Ex.D.1 to Ex.D.8, but they have not chosen to lead evidence. The accused Nos. 1 to 3 have filed separate written statement along with certain documents.
5. Heard the arguments of Ld.Sr.Public Prosecutor on behalf of prosecution and Ld. Advocate Sri.R.N.N appearing for accused Nos.1 to 4. Both have filed written submissions. The Ld.Sr.PP has furnished the following citations :
1. 1993 Supp (I) SCC 221 (State of Tamil Nadu V/s Damodaran)
2. (2005) 10 SC 471 (Hindustan Petroleum Corporation India Ltd., and Ors. V/s Sarvesh Berry)
3. (1997) 3 SCC 721 (K.I.Pavunny V/s Assistant Collector(HQ), Central Excise Collectorate, Cochin
4. 1971 (1) SCC 847 (Percy Rustomji Basta V/s State of Maharashtra)
5. AIR 1970 Madras 1065 (Illias V/s Collector of Customs) 9 Spl.CC.No.72/2007
6. SCC Judgment dt.07/08/2000 (The Assistant Collector of Central Excise, Rajamundry V/s Duncan Agro Industries Ltd., & Ors.)
7. (2002) 1 SCC 155 (Ghulam Hussain Shaikh Chougule V/s S.Reynolds, Supdt. of Customs, Marmgao).
8. AIR 1970 SC 940 (Ramesh Chandra Mehta V/s State of West Bengal)
9. 1995 Supp (4) SCC 663 (Naresh J.Sukhawani V/s Union of India)
10. Order passed by Hon'ble Madras High Court in W.P.No.33099/2015 dt. 09/06/2022 (N.C.Alexander V/s Commissioner of Customs, Madras High Court).
11. Gazette Notification of the Finance Act 2022 No.6/2022 dt. 30.03.2022 relevant page 58, 59, 60, 61.
11.
6. The Ld. Advocate appearing for accused has placed the following citations :
1. Circular dated 08/12/1998 by Ministry of Finance, Department of Revenue, Central Excise and Customs, New Delhi
2. Circular dated 22/06/1999 by Ministry of Finance, Department of Revenue, Central Excise and Customs, New Delhi 10 Spl.CC.No.72/2007
3. Circular dated 23/01/2002 by Ministry of Finance, Department of Revenue, Central Excise and Customs, New Delhi
4. Civil Appeal No.1400/2022 (Tarak Dash Mukherjee & Ors. V/s State of Uttar Pradesh & Ors.) dated 23.08.2022.
5. (2004) 2 SCC 731 (K.C.Builders and Anr. V/s Asst. Commissioner of Income Tax)
6. (2005) 13 SCC 558 (Joseph P.Bangera V/s State of Maharashtra and Anr.)
7. (2001) 6 SCC 181 (T.T.Antony V/s State of Kerala and Ors.)
8. (2013) 6 SCC 348 ( Amitbhai Anil Chandra Shah V/s CBI and Anr.).
9. (2022) 7 SCC 124 (Vijaykumar Ghai and Ors. V/s State of West Bengal and Ors.)
10. (2015) 13 SCC 198 (IVRCL Infrastructure and Projects Ltd., V/s Commissioner of Customs, Chennai)
11. (2011) 12 SC 298 (Nirmal Singh Pehalwan Alias Nimma V/s Inspector, Customs, Customs House, Punjab)
12. (2000) 7 SCC 53 (Asst.Collector of Central Excise, Rajamundry V/s Duncan Agro Industries Ltd., and Ors.)
13. 1993 Suppl(1) SCC 475 (Supt. Of Customs V/s Bhanabhai Khalpabhai Patel and Anr.) 11 Spl.CC.No.72/2007
14. 2022 SCC Online 1080 (Ram Sharan Chaturvedi V/s State of Madya Pradesh)
15. 2005(12) SCC 631 K.R.Purushottaman
16. (2016) 12 SCC 273 (A.Shivaprakash V/s State of Kerala)
17. (2005) 12 SCC 631 (K.R.Purushothaman V/s State of Kerala)
18. (2016) 12 S.C.C 273 (A.Sivaprakash V/s State of Kerala)
19. 1996(9) SCC 1 (P.S.Rajya V/s State of Bihar)
20. (2009) 6 S.C.C 77 (S.V.L.Murthy V/s State Reptd. By CBI, Hyderabad)
20. (2020) 9 S.C.C 636 (Ashoo Syurendranath Tewari v/s Deputy Superintendent of Police, EOW, CBI and Anr.)
21. 2021 S.C.C OnLine S.C 200 (Canon India Private Limited V/s Commissioner of Customs)
22. Orders passed in W.P.No.5388/2021 by Hon'ble High Court of Chhattisgarh (Vijay Baid @ Vicky V/s Union of India through Addl.Director, DRI).
7. Perused the charge sheet, charge, evidence, documents and principles of law held in the citations placed on record.
12 Spl.CC.No.72/2007
8. In the light of above material on record, the points that arise for consideration of the court are under:
1) Whether the prosecution has obtained valid sanction under Sec.19 of PC Act to prosecute the accused Nos.1 and 2 in the case ?
2) Whether the prosecution proves beyond reasonable doubt that accused No.1 being a public servant working in the capacity of Superintendent of Customs, and accused No.2 working as public servant in the capacity of the Inspector of Customs, EOUIV Range, Bangalore during January 2003, had entered into criminal conspiracy with accused No.3, the CEO of accused No.4M/s.Amisha International, agreed to do and caused to be done illegal acts and cleared the container No.CLHU 2620954 containing the goods meant for export by M/s.Amisha International without physically verifying the same before sealing the container and allowed export of bricks wrapped in tangled textile yarn waste in the place of Power Grade Silk Yarn and thereby cheated the Government of India by corrupt and illegal means to obtain pecuniary advantages to yourselves and corresponding loss to the Government of India and thereby the accused committed an offence punishable under Sec.120(B) of IPC ?
3) Whether the prosecution proves beyond reasonable doubt that accused No.1 being 13 Spl.CC.No.72/2007 a public servant working in the capacity of Superintendent of Customs, EOUIV Range, Department of Customs, Bangalore during January, 2003 had entered into criminal conspiracy with accused No.2 and 3, and in furtherance of the criminal conspiracy fraudulently and dishonestly addressed a letter dated 23/01/2003 to the Deputy Commissioner of Customs, International Cargo Division, Bangalore certifying that he had physically examined at 110 bales of powder grade silk yarn as per the Invoice and shipping bill and stuffed the same into container No.CLHU 2620954 with one lock (OTL) No.001721 and wire sealed with lead seal bearing No.1/93 alongwith certified invoice and packing list and accused had also certified that he had opened and examined the container and the content of the same to be correct and as per the invoice while mentioning the sealing Plier No.1/93 and thereby accused has committed the offence punishable under Sec.468 of IPC ?
4) Whether the prosecution proves beyond reasonable doubt that accused No.2 during the year 2003 being a custodian of sealing plier No.1/93 in furtherance of the criminal conspiracy fraudulently and dishonestly handed over the same to one Sri.Manju Harloor Munireddy instructed to hand over to accused No.3 who used the plier for sealing the export container and thereby committed an offence punishable under Sec.467 of IPC ?
5) Whether prosecution proves beyond reasonable doubt that accused No.3 at the 14 Spl.CC.No.72/2007 instructions of accused No.2, collected and sealing plier from Manju Harlur Munireddy and dishonestly and fraudulently made use of the same for sealing the container, with an intention to cheat the Government of India and thereby committed the offence punishable under Sec.471 of IPC ?
6) Whether prosecution proves beyond reasonable doubt that accused No.3 CEO of accused No.4 company, during the year 2003, entered into a criminal conspiracy with accused Nos.1 and 2 in the matter of rawmulberry silk and export of powder grade silk yarn under the 100% EOU scheme and in furtherance of the criminal conspiracy, dishonestly and fraudulently imported raw mulberry silk from China claiming duty exemption and diverted the same to the domestic market while showing fraudulent export of ready products by concealing mud brick wrapped in waste silk materials which resulted in evading of Customs Duty to the tune of Rs.26,94,251/ and thereby accused have committed the offence Cheating punishable under Sec.420 of IPC?
7) Whether the prosecution proves beyond reasonable doubt that the accused No.1 and 2 being a public servants, during January 2003, had entered into criminal conspiracy with accused No.3, the CEO of M/s.Amisha International in the matter of export of powder grade silk yarn under the 100% EOU scheme by abusing official position made false declaration on shipping bills and allowed export without 15 Spl.CC.No.72/2007 verifying the goods physically and accused No.2 handed over the plier to the exporter for sealing and obtained pecuniary advantage for accused No.3 in the form of exemption of custom duty and caused loss to the government and thereby committed the offence punishable under Sec.13(2) R/w Sec.13(1)(d) of the P.C Act, 1988 ?
8) What order ?
9. My findings on the above points are as hereunder:
Point No.1 : In the Affirmative
Point No.2 : In the Negative
Point No.3 : In the Negative
Point No.4 : In the Negative
Point No.5 : In the Negative
Point No.6 : In the Affirmative
Point No.7 : In the Negative
Point No.8 : As per final order for the following:
REASONS
10. POINT NO.1: The gist of the prosecution case is that, during January 2003, the accused Nos.1 and 2 being Superintendent and Inspector of Department of Customs, EOU IV Range, Bangalore, entered into criminal conspiracy with accused No.3 16 Spl.CC.No.72/2007 the CEO of accused No.4 company, have cleared the shipping bills without physical verification and accused No.2 handed over the Plier to the shipping party to seal the container and the accused No.3 being the CEO of A4Company submitted false shipping bills claiming that he was exporting powder grade silk yarn weighing 9271 Kgs worth Rs.88,46,209/ against the import material and fraudulently diverting duty free imported mulberry raw silk yarn and exporting bricks and other waste materials instead of export powder grade silk yarn and thereby caused loss to the Government in paying the duty to the tune of Rs.26,94,251/ and corresponding wrongful gain to the accused No.4 company.
11. Before adverting to the case of prosecution, it is proper to state the admitted facts in the case. It is undisputed that accused No.1 was the 17 Spl.CC.No.72/2007 Superintendent and accused No.2 was the Inspector in Customs Department, EOU IV Range, Bengaluru during the period 2003 i.e., on the alleged date of submission of shipping bill 23012003 and date interception at Cochin Port 29012003. It is further undisputed that the Office of Assistant Commissioner of Customs, Bengaluru had issued licence for providing bonded warehouse to the accused No.4 Company. As per the licence, A4 Company has to carry on the operations relating to the manufacture of powder grade silk yarn under 100% EOU scheme and export the same subject to terms and conditions mentioned in the licence. A4 Company is 100% EOU Unit. Accused No.3 is the CEO of A4Company. It is further undisputed that A4company imported duty free mulberry silk yarn from China and it has to export the powder grade silk yarn. The accused have denied the charges leveled against them. To prosecute the accused 18 Spl.CC.No.72/2007 Nos.1 and 2, the sanction is required under Sec.19 of the PC Act, as they were public servants at relevant point of time. Let us see, whether the prosecution obtains valid sanction order for prosecuting the accused Nos.1 and 2.
SANCTION
12. The first and foremost point submitted by the Ld. Defence Counsel is with regard to competency and validity of sanction order. It has submitted that witness PW3 has no competency to issue sanction order, as the accused No.1 was serving as on the date of the offences in the Department of Customs, whereas the sanction has been accorded by the Commissioner of Central Excise. Those two Departments having separate Commissionerate and the services of the Officers and the officials in those two Departments cannot be interchanged, the sanction accorded by the 19 Spl.CC.No.72/2007 Commissioner of Excise under Ex.P.11 is an invalid sanction. It has further submitted that P.W.3 has not applied her mind before issuing sanction order and only on the pressure of CBI, the sanction order was accorded though it was initially rejected by the competent authority. The Ld. Counsel has relied upon the decision reported in 2020(9) S.C.C 636 in Ashoo Surendranath Tewari V/s The Deputy Superintendent of Police, EOW, CBI & Anr.
13. On the otherhand, the Ld. Sr.P.P has contended that the witness PW3 is the competent authority to accord sanction to prosecute the accused Nos.1 and 2 and accordingly she issued Ex.P.11 and Ex.P.12 the sanction orders. The accused No.1 was initially appointed in the Department of Excise, but as on the date of the alleged offences, he was serving as a Superintendent in the Department of Customs. However, as on the 20 Spl.CC.No.72/2007 date of sanction, he was sent back to the Department of Excise, as such, it was the Excise Commissioner who had the power/authority to remove the accused No.1, thus the sanction has been accorded by the Commissioner of Central Excise is proper. The Hon'ble High Court of Karnataka has resolved the competency of issuance of the sanction order and now the accused cannot raise such contention before the Court. She relied upon the decision of Hon'ble Supreme Court reported in State of Tamil Nadu V/s Damodaran 1993 Suppl.PartI Sec.221.
14. At this juncture, it is apposite to refer Section 19 of the P.C Act,1988, which reads thus:
"19. Previous sanction necessary for prosecution; (1) No Court shall take cognizance of an offence punishable under Sections 7, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction save as otherwise provided in the Lokpal and Lokayuktas Act, 2013. 21 Spl.CC.No.72/2007
(a) xxxxxxxxx
(b) xxxxxxxxx
(c) in the case of any other person, of the authority competent to remove him from his office."
The above provision states that, the sanction is required under Section 19(1)(c) for prosecuting the accused Nos.1 and 2 for the offense Punishable under Sec.13(2) r/w 13(1)(d) PC Act .
15. To support the contention, the prosecution has produced Exs.P.56, 57 and 58, the Service Registers and Office Order relating to accused Nos.1 and 2. The Notifications regarding the transfer and placement of the accused persons, on different dates, during service would go to show that, the accused No.1 joined as Inspector on 30091974 in the Central Excise, Mangaluru Divisional Office. He was transferred to Bangalore Collectorate of Central Excise on the date 21061976. Later, he was 22 Spl.CC.No.72/2007 transferred to the Additional Collector's Office, Mangaluru, on the date 20031987. There, he was promoted as Superintendent on the date 2806 1991. He was made over from Customs Division, Mangaluru. Then he was transferred to Belgaum Head Quarters on 02/04/1992. By order dated 13/05/1996, he was posted to Hubballi A Range from Belgaum A Range. Later, under Order dated 07/04/2000, he was transferred from A Range Hubbali Division to Customs, Bangalore. The said order of transfer was made under Annual General Transfers in the grade of Superintendent of Customs and Central Excise, by the Office of the Commissioner of Central Excise, BangaloreI Commissionerate vide Establishment order No.29/2000 dated 07042000. Thus, the said order of transfer was an Annual General Transfer in the grade of Superintendents of both Customs and Central Excise done by none else than the 23 Spl.CC.No.72/2007 Commissioner of Central Excise only. The copy of the order (dated 07042000), which would goes to show that, both the Central Excise and Customs were coming under the Department of Revenue, which was under the Ministry of Finance. Thus, it is not the Commissioner of Customs, who has passed that order, but it was the Commissioner of Central Excise. Later, by order dated 30042002 passed by the Additional Commissioner of Customs, Headquarters, Bangalore, which was in pursuance of the Establishment Order dated 19042002 of the Commissioner of Central Excise, BangaloreI Commissionerate, the accused No.1 was transferred from Customs Godown, Bangalore to Customs Division Bangalore. Thus, under the Establishment Order passed by the Commissioner of Central Excise, the Additional Commissioner of Customs effected the said transfer. Therefore, the Commissioner of Central Excise was, throughout, 24 Spl.CC.No.72/2007 been the Controlling Authority of the accused No.1 and 2. The accused No.1 has attained the age of superannuation, from the services of the Department of Central Excise only. Thus, as on the date of the sanction order at Ex.P.11, which is dated 26032007, he was serving in the Department of Excise and P.W. 3 the Commissioner of Central Excise, who accorded the sanction was the authority who was empowered to remove him from the services.
16. The decision of Hon'ble Apex Court rendered in State of Tamil Nadu v/s Damodaran cited above is aptly applicable to the case. Which reads thus:
" Prevention of Corruption Act, 1947 Ss.5(1)(d) and 5(2) read with S.161, IPC Nonapplication of mind and grant of sanction mechanically by sanctioning authority Basis of acquittal by High Court High Court deeply influenced in its decision by the fact that a model sanction order was enclosed with the record sent to the sanctioning authority Held, acquittal not 25 Spl.CC.No.72/2007 justified There was no infirmity in the order granting sanction Criminal Procedure Code, 1973, S.197."
The Hon'ble Apex Court has held that when all the relevant material was placed before the sanctioning authority and after applying mind, the sanction granted, then there is no infirmity in the order granting the sanction. The Hon'ble Apex Court in the decision of Ashoo Surenderanath Tewari has discussed when the sanction for prosecution not be accorded.
17. In the back drop of the relevant provision and principles of law enunciated by the Hon'ble Apex Court referred above, it is apposite to peruse the evidence of PW3 and documents Exs.P.11, 12, Ex.P.57 and Ex.P.58, the Service Registers of the accused. From the above registers, it would reveal that accused Nos.1 and 2 are public servants within the meaning of Sec.2 (c) of the PC Act and they are 26 Spl.CC.No.72/2007 working at EOUIV Range on the date of the offence. The evidence of PW11 also substantiates the documents Exs.P.57 and 58. The Hon'ble High Court of Karnataka has resolved the question of competency of the sanctioning authority to accord sanction and now the question before the Court is validity of sanction. It is well settled principles of law that validity of sanction can be raised during the trial. The documents Exs.P.195, 196, letter and disciplinary authority rules would reveal that PW3 had issued sanction order for prosecuting accused Nos.1 and 2. As per CCA rules, the Collector of the Customs was competent authority to remove the Superintendent and Inspector of Customs. PW3 is the Commissioner of Central Excise. But as per the Finance Amendment Act, 1995 which came into effect on 26/05/1995, the Commissioner of Central Excise, Bengaluru is competent to remove the accused Nos.1 and 2 from service. As per Ex.P.196, 27 Spl.CC.No.72/2007 P.W.3 is competent authority to remove the accused persons from the duties. The evidence of PW3 would depict that she perused the papers submitted by CBI, office note and letter was issued as per Exs.P.11 and 12. The witness was crossexamined at length in regard to her competency to issue Exs.P.11 and 12. She has specifically deposed that Commissioner of Customs or Central Excise is the ultimate authority to deal with the service conditions of the respective employees. Further, she stated that Commissioner of Excise is not bound by the terms of CVC in regard to according sanction. She denied the contention of the defence that she issued Exs.P.11 and 12 only at the pressure of the CBI. It is very important to note that during the crossexamination itself, it was suggested that accused Nos.1 and 2 were serving in the Customs department at relevant point of time. As I have stated supra, the Hon'ble High Court of Karnataka in Crl.R.P No.1193/2012 28 Spl.CC.No.72/2007 dated 15/07/2022 has held that Commissioner of Central Excise was competent to issue the sanction orders as per Exs.P.1 and 2. Only for the reason that CBI furnished the draft will not vitiate the sanction order. As per the decision, since the draft model sanction order was enclosed alongwith the documents to the sanctioning authority, it will not vitiate the sanction accorded by the sanction authority. In the case on hand also, PW3 has specifically denied the suggestion that she issued sanction order without looking into required material. The defence counsel has got marked Exs.D.3 to 6 during the course of crossexamination of PW3. She admitted her signature on Exs.D.3 to
6.
18. The Ld. defence counsel has also brought to the notice of the office note dated 18/12/2006 and submitted that sanction authority had reached to 29 Spl.CC.No.72/2007 the conclusion that material does not disclose to initiate criminal prosecution against accused Nos.1 and 2 and utmost it amounts to departmental enquiry. The office note reveal that accused No.1 was penalised of Rs.10,00,000/ and accused No.2 was exonerated from the charges. The office copy only recommend the authority to consider the observations made therein, but orders Exs.P.11 and 12 which goes to show that sanctioning authority has applied her mind and issued the sanction orders for prosecuting accused Nos.1 and 2.
19. The object of the Legislature seems to be clear. The principle that where a public servant is prosecuted for an offence which challenges his honesty and integrity, the issue in such a case is not only between the prosecutor and the offender but the State is also vitally concerned in it as it affects the morale of the public services and also the 30 Spl.CC.No.72/2007 administrative interest of the State. For these reasons the discretion to prosecute was taken away from the prosecuting agency and was vested in departmental authorities for they could assess and weight the accusation in a far more dispassionate and responsible manner. The State obviously was only concerned with those offences, which were committed by public servants while functioning that capacity and for which they were sought to be prosecuted while holding such an office.
20. The order of sanction is only an administrative act and not a quasijudicial one nor is a lis involved. Therefore, the order of sanction need not contain detailed reasons in support thereof. But the basic facts that constitute the offence must be apparent on the impugned order and the record must give the reasons in that regard. Proper application of mind to the existence of primafacie 31 Spl.CC.No.72/2007 evidence of the commission of the offence is only a precondition to grant or refuse the sanction. When the Government accorded sanction, Sec.114(e) of the Evidence Act raises presumption that the official acts have been regularly performed. As rightly argued by Ld.Sr.P.P, mere furnishing the draft sanction order will not vitiate the entire sanction orders. The accused have also produced the copies of letters issued by CBI to the Customs department. The letters clearly goes to show that CBI only issued reminders to the sanction authority for issuance of sanction order to expedite filing of the charge sheet and same was held up for want of sanction orders. That apart, the letters does not disclose that CBI forced/pressurized PW3 authority to issue sanction orders. Therefore, in view of the whole observations made, the court has reached to conclusion that prosecution has proved that they obtained valid sanction for prosecuting the accused Nos.1 and 2 in 32 Spl.CC.No.72/2007 the case. Thus, Point No.1 is answered in the Affirmative.
21. POINT NOs.2 to 7: These points are taken together for common discussion as they are emanated from similar set of facts and to avoid repetition of facts and reasoning.
The prosecution to prove the guilt of accused persons has examined the witnesses as P.Ws 1 to 34 in the case. P.Ws1, 2, 19, 29, 32 and 33 are the then Superintendents and Inspectors of the Customs office, Bengaluru. They have spoken about procedure adopted by the Customs Department relating to Bonding and Sealing the import and export consignments and also speaks about the Plier No.1/93.
22. P.Ws4, 5, 6, 11, 18 and 26 are the Officers of DRI. They spoke about the seizure of the products and waste materials in the container belonged to A4 33 Spl.CC.No.72/2007 Company and also about the verification of the vehicles which was alleged to have been used by A4 Company for transportation of goods. P.Ws20, 25 and 30 are the Superintendent and Inspectors of Inland Container Depot (for short 'ICD'). They have deposed about the verification of container of A4 Company and let the container for export. They also stated about the lead seal and One Time Lock (for short 'OTL') No.1/93 on the container. P.Ws16 and 16 are the commission agents who introduced sellers to accused No.3 for sale of silk yarn to the domestic market. P.Ws.7 to 9 are the independent witnesses to the Seizure MahazarsExs.P.27 to 29. P.Ws10 and 33 are the independent witnesses who have handedover the Plier No.1/93 to accused No.3 at the instructions of accused No.2. P.W3 is the Chief Commissioner, Central Excise who issued sanction orders at Exs.P.11 and 12 for prosecuting the accused Nos.1 and 2. P.W12 is the independent 34 Spl.CC.No.72/2007 witness to the Search MahazarEx.P.46. P.W13 is the Superintendent in DRI, he speaks about the search mahazar Ex.P.14. P.W14 is the Officer of DRI who conducted search at the premises of A4 firm as per Ex.P.61. P.W15 is the then Inspector in Central Silk Board, Bengaluru. He speaks about the preshipment inspection of A4firm regarding certification of the goods. P.Ws22 and 23 are the Chemical Examiners. They stated about Exs.P.35(a) and 36(a). PW24 is the Appraiser in EOU group of the office of Commissioner of Customs, he speaks about the verification of correctness of the declaration and description of the goods. P.W27 is the shop agent of A4company. P.W28 is the Sr.Manager of Federal Bank Ltd., he speaks about the statement of accounts of A4Company. P.W31 is the Tax Assistant in Customs House, he speaks about the procedure followed in the process of 35 Spl.CC.No.72/2007 import clearance. P.W34 is the Investigating Officer who filed charge sheet of the case.
FIR
23. The Prosecution has examined the Investigating Officer (for short 'IO') as PW34. He has deposed that on the basis of source information, the SP, CBI has registered the FIR as per Ex.P.179 against the accused persons including PW29 the Inspector of Customs for the offences punishable under Sec.102(B) r/w Secs.420,467,468,and 471 IPC and Sec.13(2) r/w 13(1)(d) of the PC Act. He has further deposed that as per the Court order, Section 120(B) was made correct in FIR at Ex.P.180. A perusal of FIREx.P.179, it would goes to show that SP, CBI registered the FIR against accused Nos.1 to 4 and PW29 Ashok Mehtri. After registration of the case, file was handed over to PW34 for investigation.
36 Spl.CC.No.72/2007
24. The Ld. Defence counsel would submit that the CBI has no jurisdiction to register the FIR and conduct the investigation of the case. Registration of 2nd FIR by the CBI is not permissible in law, as the Customs officers laid a complaint against accused No.3 before Economic Offence Court, Bangalore. Initially, the departmental proceedings were initiated against accused Nos.1 and 2. He has relied on the decisions reported in :
a) (2001) 6 S.C.C 181 (T.T.Antony V/s State of Kerala)
b) (2013) 6 S.C.C 348 (Amit Shah V/s CBI)
c) Crl.A.No.1400/2022 (Tarak Dash Mukharjee & Ors., V/s State of Uttar Pradesh and Ors.)
d) 2022 (7) SCC 124 VijayKumar Gai V/s State of West Bengal On the otherhand, the Ld. Sr.P.P has repelled that as per the Notification of the Government, the CBI has jurisdiction to conduct the investigation.
The investigation conducted by the DRI and the 37 Spl.CC.No.72/2007 investigation by the CBI are for two different purposes. Therefore, registration of FIR by the CBI is sustainable in law. She referred the decision reported in 2005(10) SCC 471 Hindustan Petroleum Corporation Ltd., & Ors., V/s Sarvesh Berry.
25. The Government of India has authorized the officials of CBI under Delhi Establishment Act to conduct the investigation for the offences under Prevention of Corruption Act and offences under other Statutes as per Ex.P.197. Initially, the Sec.102B was included in the FIR. On the request application Ex.P.180, the court has permitted to include Sec.120(B) IPC in place of 102B. After registration of the case, the IO has collected the documents from the DRI, Customs department and submitted the charge sheet. As per Government Notification, the CBI has power to register the FIR and to conduct the investigation as the offenses 38 Spl.CC.No.72/2007 alleged against the accused are under IPC and PC Act and not under Customs Act. It is to be noted that, Ex.P.197 is the notification issued by the Government of Karnataka on 10/01/2005 empowering CBI to conduct the investigation of all types of cases involving either Central Government servants or offices belonging to public sector undertaking under the Central Government under the States and Central Acts. The said notification was issued under Sec.6 of Delhi Special Police Establishment Act, 1946. As per Ex.P.198, Government of India issued notification under Sub section (1) of Sec.5 R/w Sec.3 of Delhi Special Police Establishment Act, 1946, empowering the CBI to make investigation of all types of cases involving Central Government or other officers under the State and Central Acts. As per the above Notification, CBI has power to conduct investigation and register FIR against the employees of Central Government. The 39 Spl.CC.No.72/2007 complaint filed against accused No.3 is under Customs Act and not under the provisions of IPC and P.C Act. Further, Departmental Enquiry (DE) proceedings initiated against accused Nos.1 and 2 are not under I.P.C and P.C Act. The principles of law held in decisions referred above are not applicable to the present case on hand. On the basis of source of information, CBI has registered the case against accused Nos.1 to 4 for the fraudulent acts committed and loss caused to the Government of India. The FIR registered by CBI is not second FIR.
26. The Ld. Defence counsel has further submitted that accused persons cannot be tried twice for same offense and it amounts to double jeopardy under Sec.300 of Cr.P.C. It has submitted that accused No.3 was already discharged from the case initiated by Customs Officers under the Customs Act, 1962. Further, no proceedings is 40 Spl.CC.No.72/2007 pending against accused Nos.1 and 2 as on today. In this regard, he has relied upon the decision reported in 2005(13) S.C.C 568 in the case of Joseph P. Bangera V/s State of Maharashtra and another. On careful reading of the said decision, the Hon'ble Apex Court has held that in view of the penalty imposed against appellant under the provisions of the Customs Act, has been deleted by CEGAT on merit, it would be just and expedient to quash the prosecution as continuance thereof would amount to abuse of the process of the Court.
27. Per contra, the Ld. Sr.P.P has relied upon the decision reported in (2005) 10 S.C.C 471 in the case of Hindustan Petroleum Corporations Ltd., and others V/s Sarvesh Berry, wherein the Hon'ble Apex Court has held that :
A. Service Law Departmental enquiry Criminal proceedings Purposes and nature of, compared Standard of proof required When can both proceed simultaneously When should 41 Spl.CC.No.72/2007 court stay departmental proceedings initiated during pendency of criminal proceedings Proceedings to be stayed when they are based on same facts and evidence is common Test is whether departmental enquiry would seriously prejudice common Test is whether departmental enquiry would seriously prejudice the delinquent in his defence at the criminal trial. But where there is delay in disposal of criminal case, departmental proceedings can be proceeded with so as to facilitate early conclusion Criminal case against respondent employee under S.13(1)(e) of Prevention of Corruption Act for possession of assets disproportionate to his known sources of income During pendency thereof, departmental enquiry initiated against him on same charges and also nondisclosure or nonsubmission of property returns as required under the Rules Held, both can proceed simultaneously How assets were acquired and from what source of income, being within the special knowledge of respondent, would not amount to disclosure of defence in departmental enquiry and no prejudice would be caused to the respondent by such enquiry, to justify stay of the enquiry proceedings Hindustan Petroleum Management Employees' (Conduct, Discipline and Appeal) Rules, 1976, R.13(1)(c) Prevention of Corruption Act, 1988.Ss.13(1)(e) & (2).
A careful reading of the above decision, the Hon'ble Apex Court has held that, criminal case against the accused under the provisions of PC Act, and during pendency thereof, departmental enquiry initiated 42 Spl.CC.No.72/2007 against him on same charges, both can proceed simultaneously, it would no way prejudice to the accused by the said enquiry. From the aforesaid decision, it is clear that purpose and nature of departmental enquiry and criminal proceedings are quite different and both cases can proceed simultaneously.
28. The point is whether the departmental enquiry would seriously prejudice the delinquent at the criminal trial is the test to be verified by the Court. At this stage, it is apposite to reproduce Sec.300 of Cr.P.C., which reads thus :
300. Person once convicted or acquitted not to be tried for same offence.
(1) A person who has once been tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under sub section (1) of section 43 Spl.CC.No.72/2007 221, or for which he might have been convicted under sub section (2) thereof.
On careful reading of the aforesaid provision of law, it says that any person once has been tried by the court of competent jurisdiction for an offence and convicted or acquitted of such offence shall not be liable to be tried again for the same offence or on the same facts for any other offence.
29. It is to be noted that customs authority had filed complaint against accused No.3 under the provisions of Customs Act,1962 before the Special Court of Economic Offences, Bengaluru, wherein the Special Court has discharged the accused No.3 for the offences under Secs.135(1)(a) & (c) of the Customs Act,1962. On careful reading of the orders passed by the Special Court, it would goes to show that accused No.3 was discharged for the offences, on the ground that adjudicating authority quantifies the evasion of duty by holding that officer to issue or 44 Spl.CC.No.72/2007 cause notice at a jurisdiction where prosecution of criminal case arises. It is further clarified that complainant has right to file fresh complaint in case the order in original held sustainable. As rightly submitted by the Ld.Sr.P.P, dismissal of complaint or the discharge of the accused is not an acquittal for the purpose of this section.
30. The Explanation of Sec.300 of Cr.P.C., is very clear that dismissal of complaint or discharge of the accused is not an acquittal for the purpose of this section. Moreover, this case is filed by CBI under the provisions of IPC and PC Act, with regard to fraudulent and dishonest intention of accused No.3 to commit the offence of cheating and CC No.171/2013, initiated by the Customs Officers for evasion of Customs duty based on adjudication proceedings which culminated in passing the order in original dated 30/08/2008. Therefore, initiation 45 Spl.CC.No.72/2007 of this case against accused No.3 is no way amounts to double jeopardy under Sec.300 of Cr.P.C. Both cases filed for different purpose and under different penal Acts. Thus, court do not find any force in the contention of Ld. Counsel that this case is hit by Sec.300 Cr.P.C.
31. The entire case of prosecution revolves around the import and export of goods by the accused No.4 company. Therefore, it is necessary to know about the details of accused No.4 Amisha Internationals( hereafter referred to A4 company) and its business.
IMPORT
32. The A4 company was doing import and export business of mulberry silk yarn under 100% EOU Scheme. Ex.P.8 and 9 are the licenses which depicts that the Assistant Commissioner of Customs, Custom Division, Bangalore issued licence to the A 46 Spl.CC.No.72/2007 4 company to carry business relating to manufacture of powder grade silk yarn under 100% EOU scheme on certain terms and conditions The condition No.2 of Ex.P.8 specifies that "the entire quantity produced using imported non paid duty goods and materials should be exported with permissible wastage". At Ex.P.9, the authority issued licensed under Sec.58 of the Customs Act,1962 as 100% EOU private bonded warehouse at the factory premises for storage without payment of duty on importation of goods as prescribed under Custom Notification No.53/97 dated 03.06.1997. Further, as per condition, every month the A4 company should furnish details of import and export of the unit and maintain the statutory records. The accused No.3, the CEO of the company has admitted the license and conditions referred above in his examination under Sec.313 of Cr.P.C. From the above documents it is crystal clear that the A4 47 Spl.CC.No.72/2007 company is a 100% EOU unit. The Government of India exempted the customs duty for import only on the condition that the company has to export the powder silk yarn with permissible wastage.
33. PW24 who was the Appraiser in EOU Group, the Office of Commissioner of Customs, Custom House, Chennai has deposed with regard to correctness of the bills of entries, invoices of EOU of the company regarding imported goods. It was his duty to verify the correctness of the declaration, description of the goods, value and eligibility for duty exemption. The Exemption Certificates were issued to the company which are eligible for exemption. After verification of the bill of entries, it will go for examination of goods in the shed. He further deposed that in the port, customs officer will verify the declaration with reference to the goods and documents to give out of the charge from customs. 48 Spl.CC.No.72/2007 Thereafter, the bill of entry will be presented before the Assistant Commissioner of Customs, where the goods allowed and moved to the factory or to the EOU unit. PW24 in his evidence has asserted that CBI have confronted certain documents of the A4 company relating to import for the period November 2002 to January, 2003. He has identified the documents Exs.P.145 to 150 as follows:
Sl.No. Date Bill No. Value Duty Exhibits Rs. Exemption 1 21-11-2002 441863 15,93,491.51 45.05% Ex.P.145 2 04-12-2002 445609 18,03,656.58 45.05% Ex.P.146 3 12-12-2002 447678 18,56,589.68 45.05% Ex.P.147 4 30-12-2002 451780 11,71,356.57 45.05% Ex.P.148 5 09-01-2003 454568 15,26,253.12 45.05% Ex.P.149 6 24-01-2003 458706 18,98,973.96 45.05% Ex.P.150 According to the bill of entries, the A4company had imported mulberry raw silk weighing 11.499.22 Kgs from 21/11/2002 to 24/01/2003. The witness further deposed that as per Sec.25 of the Customs Act, 1962, the Government of India had issued 49 Spl.CC.No.72/2007 Notification bearing No.53/1997, the EOU Units are exempted from customs duty in respect of imported raw materials and capital goods. He further deposed that unless there will be goods, the bill of entry cannot be filed by the importer. In the cross examination, has elicited that as per the procedure, the goods will be sent from Assistant Commissioner, Chennai, Bond Department and Assistant Commissioner, Customs, Bengaluru. The evidence of this witness establishes with regard to import of mulberry raw silk by the A4company during the period 21/11/2002 to 24/01/2003 and further establishes that goods imported were duty exempted.
If the evidence of PW24 is coupled with bill of entries at Exs.P.145 to 149, it corroborates with each other. As per the entires made at page Nos.20 and 21 at Sl.Nos.23 to 26 and Page Nos.28, 29 at Sl.No.1, the A4Company imported mulberry raw silk. The entries were made in the Bond Register at 50 Spl.CC.No.72/2007 Ex.P.6. Importantly, at page Nos.28 and 29 at Sl.No.1, it bears the signature of accused No.2. The Bond RegisterEx.P.6 maintained by the Customs Department at EOU unit corroborates with Ex.P.51 the daily register maintained by A4Company. The accused No.3 in his examination under Sec.313 Cr.P.C., has admitted the import of raw silk yarn as per bill of entries Ex.P.145 to 150.
34. PW2 is the Inspector during the year 200001. He has also stated about the procedure of bonding sealing and duties of the Inspector. According to his evidence, whenever the duty free raw materials are imported, the documents supporting those materials namely bill of entry, invoice and packing list would be verified and then goods would be ordered to be bonded. The Inspector has to physically inspect the EOU before sealing the consignments. He has identified Exs.P.1, 2, 5, 6, 8 51 Spl.CC.No.72/2007 and 9 before the Court. He made endorsements as per Exs.P.1(b), 2(b) and 5(b) regarding physical inspection of the goods mentioned in the said shipping bills. The inspection were carried out at the unit of A4. The evidence of this witness would goes to show that it was the duty of the Inspector to make inspection of the unit where the goods were stored for bonding. He has to verify the documents alongwith the goods which are processed for bonding. After verification he has to seal the container by putting OTL and lead seal. During his tenure as Inspector has examined three consignments of A4company and endorsed the same.
35. P.W.27 is the Sr.Manager of M/s.Master Stroke Freight Forwarders Pvt. Ltd., Chennai. The said company is authorized Commission House Agent. The said company having 3 sister concerns. 52 Spl.CC.No.72/2007 They are, M/s.Arista Sky Ship Agencies Pvt. Ltd., M/s.Arun Hightech Logistic Pvt. Ltd., and M/s.Welcome Transport. The company M/s.Master Stroke Frieght Forwarders Pvt. Ltd., has licence from the Ministry of Finance, for Customs clearance in Chennai Port. As could be seen from the evidence of this witness that the said company is authorized agent of A4Company for clearing the 100% Import oriented unit. A4Company used to import Mulberry Raw Silk from China. Once the goods reached the Chennai port, the said company used to clear the documentation with the customs, examination of cargo and despatch to concerned company. The witness identifies the documents Exs.P.145 to 150,
152. According to the documents Exs.P.145 to 150, the A4Company had imported the Mulberry Raw Silk. In order to transport the consignment, the said Company used three vehicles bearing Nos.PY 01 K 6780, TN 04 J 779 and TN 04 J 3819. After 53 Spl.CC.No.72/2007 clearance of the documents, the company used to send the goods to A4Company. The company never sent any goods to M/s.Palgar Silk Mills. The witness in the crossexamination has admitted that all the goods which were transported to A4Company were bonded. He further admitted that once the goods unloaded, their work ends. He had not seen any other documents except the bills at Exs.P.145 to
150. It is important to state that as per Exs.P.145 to 150, M/s.Master Stroke Freight Forwarders Pvt. Ltd., had cleared the documentation of import of raw silk belonged to A4Company. This fact was not denied by accused No.3 in his examination under Sec.313 of Cr.P.C and so also in the cross examination of witnesses. Therefore, it manifests that A4Company imported Mulberry Raw Silk vide documents Exs.P.145 to 150.
36. The next point is whether the A4 company 54 Spl.CC.No.72/2007 had exported the processed import goods or not as per the license conditions. Before, discussing on this, it is relevant to know the procedure adopted by the customs relating to bonding and sealing of goods at 100% EOU.
EXPORT
37. The prosecution has examined witnesses P.Ws.1, 2, 19, 29 and 32 to prove the procedure followed by the customs officers while bonding and sealing. PW1 is then Superintendent of Customs Department. He worked as incharge Superintendent in EOUIV Range, Bengaluru. He has deposed regarding the procedure of bonding of sealing of import and export goods. It was the duty of Superintendent to supervise the documents which was submitted for shipping the consignment. The superintendent has to assign the work to the Inspectors based on the documents for physical 55 Spl.CC.No.72/2007 verification of finished products which are to be exported. The Inspectors do carry out physically inspect the goods which are imported and goods which are exported after processing as usual procedure and prepare the necessary documentation. He further deposed that in the event goods found in the container not tallied with the documents, the customs department would register a criminal case. The person who imports duty free raw materials should account for exact number or weightage of the finished products in consonance with the entries made in the Bond Register less permissible wastage. It was the duty of the Superintendent and Inspector to make verification of the documents and physically inspect all the export goods. On inspection, if goods found in order, the container would be locked by One Time Lock (OTL) with lead seal by using plier. The plier is a distinct equipment specially available with the 56 Spl.CC.No.72/2007 Customs Department with distinct number. The Inspector is custodian of the plier. He has to keep the plier safely. In the cross examination also it was elicited the procedure followed by the Customs Department regarding import and exporting the goods. He has stated that it was duty the Inspector to make physical supervision on the bonded warehouses before sealing the container with OTL and lead seal. A4Company is 100% duty free EOU The evidence of this witness clearly establishes the procedure to be followed by the exporter and the duties of the Superintendent and Inspector of the Customs Department while bonding and sealing.
38. PW19 was the Inspector in EOUIV Range, Bengaluru during June2002 to December2002. By that time, the accused No.1 was Superintendent in RangeIV. It was his duty to visit EOU units for bonding, sealing the export materials after 57 Spl.CC.No.72/2007 examination of the goods and allow the import goods. He used to examine the shipping bills, invoices and packing lists with the goods which are intend to export. After verification, he used to sign on the Export Register for export goods and Import Register after bonding. Thereafter, he used to put the seal on the container with lead seal and pressed with Plier which had specified number. After sealing the consignment, it will go to Inland Cargo Depot (for short 'ICD') Section for further verification. He identified the MO1Plier allotted to PW29 and also identified the signatures of PW29 at Page No.909 as per Ex.P.59.
39. P.W.29 is then Inspector in Customs Department and the predecessor in office of the accused No.2. He has deposed that it was his duty to visit EOUIV Range personally for bonding and export purpose. He has to verify the container 58 Spl.CC.No.72/2007 alongwith documents. He has handed over the Plier MO1 to accused No.2. He identified his signatures in the Register at Ex.P.6(d) and (e). He had no personal knowledge about the process of powder grade silk yarn and admitted that 100% EOU are governed by the Circular issued by the department. The evidence of witness would reveal about the procedure to be followed by the Inspector at EOU IV Range, Customs Department.
40. PW32 was the Superintendent in EOUIV Range during September 200203. According to his evidence, it was the duty of the Inspector to inspect EOU unit for bonding and examining the export goods with the documents submitted by the exporter. During 2003, there were 3 Inspectors and all of them have been provided with separate Pliers. The Inspector should not hand over the Plier to anybody including the Custom House Clearing 59 Spl.CC.No.72/2007 Agent. When the consignment sent to EOU to ICD for transshipment purpose, a separate shipping bill will be raised. The department will not provide OTL and same was provided by EOU unit. This witness has denied that practically it was difficult to visit each and every unit for examination of consignment. The evidence of the above witnesses clearly establishes the procedure followed by the customs officers i.e, Superintendent and inspectors while bonding and sealing.
41. The prosecution has examined the witnesses PWs20, 25 and 30 to prove that A4Company had exported the goods vide shipping bill dated 23/01/2003 and about the procedure followed at ICD. PW20 was the Superintendent in ICD, Bengaluru during the year 200203. As per procedure, after verification of the consignment by Superintendent and Inspector at EOU unit, it will be 60 Spl.CC.No.72/2007 sent to ICD for verification. PW20 after verification of the documents and seal of the container at ICD, having found intact, has ordered to send the shipment to Cochin Port for export. The lead seal, OTL number, bill number on the container being one and same, has forwarded the papers to Cochin Port. It further reveal that it was the duty of the witness to look after all the imports and exports. Once the cargo comes to ICD with documents, the same will be placed for verification and after verification by Inspector with regard to seal of containers, sent to the Sea Port. He endorsed on the Shipping bill Ex.P.65 at Ex.P.65(a) and signatures at Exs.P.65(b) and (c). He has deposed that as per the report, the container was found locked with OTL and lead seal. Ex.P.65shipping bill disclose the date 23/01/2003 and regarding details of the shipment i.e., 110 bales weighing 9271 Kgs valued at Rs.88,46,209/ in the form of material powder grade silk yarn. He has 61 Spl.CC.No.72/2007 further deposed that the container was transported from Bengaluru to Cochin Port through ICD rail. In his crossexamination, has stated that Exs.P.65, 69 i.e., bills, invoices and packing list were not prepared at ICD office. He admitted that after verification about the seals on the container, he allowed the container to the Sea Port. He further stated that OTL and Lead Seal found intact on the container. It was suggested that the container before reaching the Sea Port, if the seals were found missing, the same could be said that the seal was tampered. It is important to note that though aforesaid suggestion made to the witness, he has not specifically denied or admitted contention that container of A4 Company was tampered during transit from Bengaluru to Cochin Seaport. Therefore, the evidence elicited from the mouth of PW20 in this regard is noway helpful to the accused. The evidence of this witness made crystal clear that after 62 Spl.CC.No.72/2007 receipt of container belonged to A4Company from EOUIV Range, had verified the documents with container and seal of OTL, lead seal, and had allowed the container to the Sea Port.
42. PW25 was the Superintendent in Customs in ICD, Bengaluru has deposed before the Court that during the year 2002, he handled EOU and duty free bills. For exporting the goods from EOU unit, the shipping bills prepared by the party will come to ICD office for verification. As per Ex.P.65(d), the shipping bill of A4 Company had exported the mulberry raw silk yarn. He specifically stated that they have not opened the container at ICD. In the cross examination has stated that he was not present when the container sealed in ICD. According to procedure, the container will not be sealed until they verify the documents with the details mentioned on 63 Spl.CC.No.72/2007 the container and after verification of documents they allowed the export.
43. PW30, the Inspector, ICD during the year 2002 to April, 2003, has deposed that he had verified the Shipping bill dated 23/01/2003 at Ex.P.65(a) with the consignment of A4Company regarding seal and OTL and allowed the container to the Seaport. In the crossexamination, it was elicited that whenever the consignment is sent from ICD, it contains OTL and lead seal. From the evidence of PWs20, 25 and 30 it is clear that they verified the shipping bill, packing list and invoice as per Exs.P.65(a) to (d) pertaining to A4Company and so also the OTL number and seal on the container. Having found correct, they allowed the container to Seaport through ICD rail. As per the evidence and documents, A4Company mentioned the details for having exporting 110 bales of powder silk yarn 64 Spl.CC.No.72/2007 weighing 9271 Kgs valued at Rs.88,46,209/. The accused Nos.1 to 3 have not denied the procedures followed at EOU and ICD while attending bonding and sealing of import and export goods.
44. Now, story of this case begins when the container was intercepted at Cochin Port. It is the case of the prosecution that A4Company imported duty free mulberry raw silk with a condition to export the processed powder silk yarn with less wastage. But A4Company indulged in diverting the imported goods in domestic market and exported waste material wrapped with mud bricks. On the information, the consignment of A4Company was intercepted on 29/01/2003 at Cochin Port.
45. The prosecution in order to prove that accused No.3 being the CEO of A4Company had committed fraudulent act in diverting the duty free imported mulberry raw silk yarn and exported bricks 65 Spl.CC.No.72/2007 instead of exporting powder grade silk yarn, has examined the Sr.Intelligence Officer(SIO) and Assistant Intelligence Officers of Directorate of Revenue Intelligence (in short 'DRI') as PWs5, 6, 11 and the witnesses to the Seizure Mahazars at Exs.P.27 to 29 as PWs7 to 9. The evidence of the above witnesses plays important role to bring home the guilt of the accused No.3 and A4 company.
46. The Ld. Defense Counsel has submitted that the mahazars drawn at Cochin Port are not proved. There is chance of tampering the container during transit. As per the evidence of witnesses the container was opened on 28012003, but the documents reveal something different. The witnesses are not independent and they are regularly working with DRI Officials in the Port to get the clearance of their cargo. Therefore, the mahazars and evidence cannot be believed.
66 Spl.CC.No.72/2007
47. Percontra, the Ld.Sr.P.P has submitted that the witnesses have categorically deposed about the seizure of container with waste material, bricks and broken seal. The minor discrepancies in the evidence will not vanish the entire evidence. The prosecution has proved the mahazars.
48. As per Ex.P.65 to 69 shipping bill, invoice, packing lists, the A4 company had submitted shipping bill and other corresponding documents stating the company exporting 110 bales of powder grade silk yarn weighing 9271 Kgs valued at Rs.88,46,209/. The bales were numbered as 431 to
540. The shipping bill was used for transporting the cargo from exporting premises to ICD Bangalore. The consignee was Seven Star General Trading Company Limited, PO.Box No.1039, Ajman, UAE and buyer of the product was Global Product Marketing in Canada.
67 Spl.CC.No.72/2007
49. PW6 then Sr. Intelligence Officer, in DRI, Cochin has deposed that on 28 /01/2003, he had received credible information from DRI, Bengaluru with regard to export consignment being sent by the A4Company through Cochin port. Accordingly, he and his staff identified the consignment and intercepted at Rajivgandhi Container Terminal on 29/01/2003. PW6 had secured two independent witnesses and requested them to be witnesses for the purpose of opening the container and its contents thereof. PWs7 to 9 are the witnesses to the mahazar. PW7 was working as Supervisor in IAL Shipping Agencies, Willington Island, Cochin. The said company was the shipment company for A4Company to export the consignment. So, PW6 had asked PW7 to produce the shipment documents pertaining to A4company's container.
50. According to the evidence of PW7, usually 68 Spl.CC.No.72/2007 he received the documents from A4Company through courier for shipment of the container to Ajman. He had visited the Customs office, Cochin and got endorsed on the documents for clearance for export. After submission of the documents, customs officials visited the place and having confirmed the seal and number of the container, they allow the container to be exported. In this case, when PW7 received the documents from A4 Company, he was directed by P.W.6 to produce the documents pertaining to the consignment of A4 Company. Accordingly, he visited the office of PW6 at Rajivgandhi Container Terminal and produced the shipping documents. PW6 instructed him to open the container. PW7 has further specifically deposed that the seal on the container was intact and number was tallied with the shipment documents. As per the instructions of PW6, he broke open the seal.
69 Spl.CC.No.72/2007
51. PW6 has deposed that after broke open the container with the help of PW7, the samples were taken out and having perused the same it contains waste material wrapped with bricks. Due to traffic at terminal, he shifted the container to Asian Terminal for verification. All these proceedings were reduced into writing in the presence of witnesses at Ex.P.27. On the same day, the container was shifted to Asian Terminal, where it was opened in the presence of PWs5, 7 to 9. PW6 found the textile waste material wrapped with bricks and it was found exported in the place of imported raw silk yarn. The contents of the container were not tallied with the description of the documents. As per the documents, it was shown powder grade silk yarn and on the said day, 30 packages shown as silk bales were seized and remaining stock was kept as it is and sealed. He had instructed the witness to come on the next day. He has further deposed that on 30/01/2003 again he 70 Spl.CC.No.72/2007 visited the warehouse with the witnesses and conducted seizure operation and seized 80 packages shown as silk bales, drawn mahazar as per Ex.P.29 and took photos as per Exs.P.30 to 34. Later, he had taken the samples randomly from the packages for examination.
52. The witness PW5 is then Intelligence Officer, DRI Cochin, has deposed that as per the instructions of PW6, he called the witness, drew Seizure Mahazars as per Exs.P.27 to 29. The evidence of this witness corroborates with documents Exs.P.27 to 29. As per the mahazars, the container contains packages in which the waste textile yarn wrapped with bricks were found. Except suggesting that mahazars were drawn and signed in DRI office, nothing has been elicited to discard the testimony of PW5.
71 Spl.CC.No.72/2007
53. PWs7 to 9 have categorically deposed before the Court that PW6 had seized carton boxes which were in the container belonged to A4 Company on 29th and 30th of January 2003, taken out the samples for examination and drawn mahazar as per Exs.P.27 to 29 and took photos as per Exs.P.30 to 34. These witnesses have specifically stated that at the time of seizure of the container, OTL and lead seal were intact. The seal was broke open by PW7 in their presence at the instructions of P.W.6. The witnesses identified Exs.P.27 to 29 and photos Exs.P.30 to 34 before the court.
54. PW6 in his crossexamination has deposed that the seized the container was kept in the customs area of the port and the movement of goods in the customs area was duly monitored and relevant entries would be found in the registers. He did not collect the copies of the registers to 72 Spl.CC.No.72/2007 substantiate the ingress of the container. PWs7 and 8 were working in the custom's area and they are dealing with export, import transactions of number of customers. It has elicited that the photo of the container was not taken before it broke open and the photos does not disclose the entire proceedings that took place between 29/01/2003 and 30/01/203 and also admitted that OTL was provided by Customs Department. From 24/01/03 to 29/01/2003 the container was under the control of Customs Department. He denied the suggestion that Exs.P.27 to 29 were not drawn at the spot. From the suggestion made by the defence counsel itself, would goes to show that container was intercepted at Cochin Port and PWs7 and 8 were present at that time. Nothing has been elicited to disbelieve the version of P.W.6.
55. PW7 in his crossexamination has stated 73 Spl.CC.No.72/2007 that OTL and customs seal are one and the same. He signed mahazars Exs.P.27 to 29 after read over the same. The crossexamination of PW7 also would goes to show the procedure followed by the customs department at Seaport. PW7 admitted the MO2 before the Court is OTL, but he pleaded ignorance whether it was available in the open market or not. Apart from the above evidence, nothing has been elucidated to discard the evidence of P.W. 7.
56. PW8, the Shipping Clerk in Azad business combines situated at Willington Island, Cochin has deposed before the Court that PW6 asked him to cooperate to draw mahazar on 28/01/2003. On 29/01/2003 he reached Rajiv Gandhi Port Terminal wherein PW6 intercepted the container and break open the seal with the assistance of PW7 and taken out of the contents of the container wherein the 74 Spl.CC.No.72/2007 carton boxes found the textile waste material wrapped over the country bricks. He signed the mahazars Exs.P.27 to 29. He was present on all the three days when proceedings were drawn at the spot.
57. PW9 in his crossexamination has admitted that he was in touch with the customs officials for day to say business. He has specifically stated that the proceedings was drawn in the year 2003. He has stated about the details of the mahazars. He denied the suggestion of the defense counsel that mahazars were drawn at DRI Office. The evidence of this witness would goes to show that the mahazar was drawn for three days. But he has not stated, on 28012003 the container was opened.
58. PW9 in his crossexamination has admitted that he and PW7 were working in the same place i.e., Willington port. He clearly narrated the details 75 Spl.CC.No.72/2007 of mahazars Exs.P.27 to 29. He denied the suggestion that mahazars were drawn at DRI office. Only, P.W.7 has deposed that the proceedings was first started on 28th. It is to be noted that except the said sentence, the witness has withstood the cross examination. None of the witnesses have stated that the mahazar was started on 28th. So, only on the stray sentence of P.W.7 the other evidence cannot be ruled out.
59. A perusal of Ex.P.27Seizure Mahazar, it depicts that on 29/01/2003, the container bearing No.CLHU2620954 was intercepted and seized at Rajivgandhi Container Terminal, Cochin port in the presence of PWs5 to 9. The mahazar was drawn between 11.00 am to 12.45 Hrs. Under Ex.P.27, PW6 had seized the documents Exs.P.27(c) to (i). Ex.P.27(i) are the copies of the packing list, letter addressed to Assistant Commissioner of Customs, 76 Spl.CC.No.72/2007 Cochin, inland way bill, shipping bill, final weight tickets. All these documents corroborate with the details mentioned in Ex.P.65shipping bill dated 23/01/2003. In the shipping bill, it was mentioned that shipment goods are powder grade silk i.e., 110 bales weighing 9271 Kgs valued at Rs.88,46,209/. It also reveal the details of each bale number and its weight. The OTL No.001721 and plier No.1/93 found on the container and mentioned in Ex.P.27 were one and the same. Ex.P.28Mahazar was drawn on the same day i.e., on 29/01/2003 at Asian Terminal port between 3.30pm to 6.30pm in the presence of the same witness. Under Ex.P.28, 110 bales i.e., polythene sacks were seized out of which samples were taken for examination. Ex.P.29 was drawn on 30/01/2003 at Asian Terminal at 9.45am till 6.30pm. Under the said mahazar, samples were drawn and details of bale numbers, brick weight, wastage weight was also mentioned. The witnesses 77 Spl.CC.No.72/2007 PWs7 to 9, Intelligence Officers PWs5 and 6 have signed the mahazars. In Annexure1 annexed to the mahazar Ex.P.29 clearly reveal the details of number of bags, weight of brick, weight of waste and net weight.
60. On careful evaluation of the evidence of PWs5 to 9, coupled with documents Exs.P.27 to 29, 27(e),(i), Exs.P.30 to 34photos which manifests that container belonged to A4company was intercepted at Cochin Port on suspicion and broke open the container through export shipping agent PW7 and found carton boxes which contains waste materials wrapped with bricks. From this, it is made clear that A4Company instead of exporting powder grade silk yarn as mentioned in the shipping billEx.P.65, had fraudulently sent the waste material in order to cheat the Government. Furthermore, when the accused No.3 was questioned about the interception 78 Spl.CC.No.72/2007 of A4 container during examination under Sec.313 Cr.P.C, has stated " I do not know". He has not denied the fact that the export container contains waste material and bricks. He has failed to explain the circumstances under which the container was intercepted. The photos disclose the waste materials and bricks. The accused No.3 is competent to explain the details of export container which was within his knowledge.
61. At this juncture, the question which requires to be considered is whether the burden of proof can be shifted upon to the accused. No doubt, it is the settled principle of law that burden of proof never shifts from prosecution that to accused. At the same time, the prosecution need not prove each and every aspect and the fact which is within the special knowledge of accused is required to be explained by him as per Ex.P.106 of Indian Evidence Act. It is the 79 Spl.CC.No.72/2007 settled principle of law that as per Section 106 of Indian Evidence Act, the facts which are within the special knowledge of accused is required to be explained by him. It is settled law that the court for limited purpose has looked into the statement recorded under Section 313 of Cr.P.C. The stage of recording the statement under section 313 of Cr PC is not bald entity and infact an opportunity is given to the accused to explain the incriminating circumstances available against him. It is made clear at this juncture that the court is not relying upon the said statement for the purpose of drawing any inference against the accused No.3, but only to ascertain whether any explanation has been given by the accused probablise his defense or not.
62. PW6 has taken samples from the container and sent the same for chemical examination, Customs House, Cochin vide letter dated 80 Spl.CC.No.72/2007 31/01/2003 at Ex.P.35. The prosecution has examined the experts before the Court as PWs22 and 23. These witnesses have deposed before the Court that they received samples which were bricks, waste textile materials of different types and they have examined the same and gave opinion as per Exs.P.35(a) and 36(a). PW23 in his cross examination has stated that he adopted the Microscopic and Solubility Test to test powder silk. The Laboratory is situated at Cochin. He admitted that as per letter, samples were drawn from container of A4Company by DRI, Cochin. Except this nothing has been elicited any material to disbelieve the version of PWs22 and 23 and to discard Exs.P.35(a) and 36(a). Exs.P.35(a) and 36(a) which establishes that samples which were drawn from the container are bricks and waste materials and only few pieces of silk filaments. The bale numbers mentioned in the mahazar Ex.P.29 and 81 Spl.CC.No.72/2007 expert's report are one and the same. The accused have not denied the reports Ex.P.35 and 36(a). So from this, it proves that seized materials from the container CLHU2620954 contains waste textile materials and bricks. PW6 has further deposed that he conducted the seizure proceedings as directed by DRI. Bengaluru. After closure of seizure proceedings, sent the records to DRI, Bengaluru.
63. It is submitted that the prosecution has not produced any broken lead seal or OTL before the court to show that the seal and OTL was intact at the time of interception. There are chances of manipulation during transit. It is quite interesting to state that the witnesses to mahazars Ex.P.27 to 29 have unequivocally deposed that when the container was intercepted and broke open the seal, the OTL was intact and it tallies with the numbers mentioned in the shipping bill, invoice and list. 82 Spl.CC.No.72/2007 Under Ex.P.27, the broken pieces of the one time seal (OTL) No.001721 was placed in a cover and seized as per Ex.P.27(c) to (i). But the same was not placed before the court. Only for the reason that the broken seal was not produced, it cannot be said that the container was not intact when it was intercepted. If really, the container was manipulated during transit, what prevented the accused No.3, to take such defense in the case. Even no suggestion was put to witnesses in this regard. It has stated in the written statement filed by accused No.3 that there are several instances reported in the press regarding tampering of the containers during transit. The instances reported in the news papers are not related to A4 company container. Therefore, the newspaper report clippings are way no establishes that the container in question was tampered. Further, the witnesses P.W.7 to 9 are independent witnesses. Only for the reason that they are working 83 Spl.CC.No.72/2007 in the Port, it cannot be said that they are interested and partial.
64. It is further submitted by the Ld. Defense Counsel that P.W.6 is not the "proper officer" as defined under Sec.2(34) of the Customs Act, 1962( for short "the Act"). Hence, any proceedings conducted by P.W.6 has no evidentiary value. On the otherhand, the Ld.Sr.P.P has repelled that as per The Finance Act, 2022, the acts done by the DRI Officers under Customs Act, validate the actions.
65. At this juncture it is apposite to reproduce Sec.2(34) of the Customs Act, which read thus:
"proper officer", in relation to any functions to be performed under this Act, means the officer of customs who is assigned those functions by the Board or the Commissioner of Customs.
On careful reading of the provision which empowers the officer to discharge the duties under the Act.
Admittedly, P.W.6 and 5 are the Officers of DRI. They are not customs officers under the Act. In the light 84 Spl.CC.No.72/2007 of the authoritative judicial precedents laid down by the Hon'ble Apex Court has held that the proceedings being drawn by the officers of DRI are all without any authority of law and are therefore not sustainable.
66. As per Sec.97 of The Finance Act,2022, the Government of India, Ministry of Law and Justice, validates the actions already taken and pending under the Act. For better appreciation, it is relevant to reiterate the Sec.97 of Finance Act, 2022, which reads thus :
97. Notwithstanding anything contained in any judgment, decree or order of any court, tribunal, or other authority, or in the provisions of the Customs Act, 1962 (hereinafter referred to as the Customs Act)
(i) anything done or any duty performed or any action taken or purported to have been taken or done under Chapters V, VAA, VI, IX, X, XI, XII, XIIA, XIII, XIV, XVI and XVII of the Customs Act, as it stood prior to its amendment by this Act, shall be deemed to have been validly done or performed or taken;
Validation of certain actions taken under Customs Act.
85 Spl.CC.No.72/2007
(ii) any notification issued under the Customs Act for appointing or assigning functions to any officer shall be deemed to have been validly issued for all purposes, including for the purposes of section 6;
(iii) for the purposes of this section, sections 2,3 and 5 of the Customs Act, as amended by this Act, shall have and shall always be deemed to have effect for all purposes as if the provisions of the Customs Act, as amended by this Act, had been in force at all material times.
Explanation: For the purposes of this section, it is hereby clarified that any proceeding arising out of any action taken under the section and pending on the date of commencement of this Act shall be disposed of in accordance with the provisions of the Customs Act, as amended by the Act.
In the light of the above provisions of law, the Parliament has validated the defects, in The Finance Bill, 2022 pointed out by the Hon'ble Supreme Court. The Explanation to Sec.97 of the Finance Act, 2022, saves that any proceeding arising out of any action taken under this Act, and pending on the date of commencement of this Act shall be disposed in accordance with the provisions of Act as amended by this Act. So, the DRI officers falls within the 86 Spl.CC.No.72/2007 meaning of Sec.2(34) of the Customs Act. Therefore, the contention of the Ld. defence counsel is not acceptable that the proceedings conducted by DRI has no evidentiary value.
DIVERSION TO DOMESTIC MARKET
67. The prosecution in order to prove that the A4 company diverted the processed export goods to the local market has examined has examined the Sr.Intelligence Officer, DRI as PW4. The CBI enquired him and confronted several documents in regard to A4Company. He has stated that A4 Company is 100% Export Oriented Unit which was importing duty free mulberry raw silk yarn and and process it and used to export the same in similar quantity less wastage in the process. He has deposed about the seizure of container belonged to accused No.4 at Cochin Port on 29/01/2003. 87 Spl.CC.No.72/2007
68. P.W.4 was appointed to conduct the search at the premises of accused No.3 and A4company regarding evasion of Customs duty. He has conducted the search at the residential premises of accused No.3 in the presence of witnesses as per Ex.P.13 on 29/01/2003 and seized the documents at Ex.P.14. He recorded the statement of accused No.3 under Sec.108 of the Act, at Ex.P.16. He had also examined son of accused No.3 namely Adithya Jain and recorded the statement at Ex.P.17. He has also recorded the statements of Shanmugha Sundaram, who was the Executive Officer of J.M.Baxi and Co., as per Ex.P.18. He secured two officers from Central Silk Technological Research Institute (for short 'CSTRI') and in the presence of witnesses, had taken samples for examination under Mahazar Ex.P.19. He further deposed that on verification of the documents, he came to know that A4Company instead of exporting the powder silk 88 Spl.CC.No.72/2007 yarn, had indulged in diverting the same to the local market. Therefore, he recorded the statements of agents through whom A4Company was diverting the raw silk to the local market as per Exs.P.20 and 21. He further recorded the statements of accused No.3. He has also secured the transport documents of A4 unit. On perusal of the documents, he came to know that vehicle numbers mentioned in the documents were not at all used for the transport, but the numbers were incorporated in the challans in order to make believe the authorities that transportation had taken place in routine manner. A4Company did not transport the goods in the said vehicles. The statement of driver of Autorickshaw bearing No.KA021224 was recorded. He further deposed that as per the document Ex.P.5, commodity which was being exported was shown as powder grade silk yarn. Such product can be 89 Spl.CC.No.72/2007 exported to a specified buyer. According to exporter, the buyer was M/s.Global Products Marketing, Calgary, Canada. The export was supposed to be routed via Ajman, UAE through agency called Seven Stars General Trading Company Ltd. On verification about the company with Indian Consultate at New York, he confirmed such a buyer by name Global Products Marketing was not at all in existence. So, from this, the witness found that there was no imports received in Canada which had its origin from India or Dubai belonging to A4 Company after 2000. So, the accused No.4Company had not exported the mulberry raw silk yarn after processing and violated the conditions of the import. Further, A4Company caused loss of huge revenue to the Government to the extent of Rs.5.5 Crores. During the course of cross examination, it has elicited that he was not part of the investigation that had taken place at Cochin Airport. He had not 90 Spl.CC.No.72/2007 searched EOU unit of A4Company. He admitted that Ex.P.65, shipping bills were not certified by accused No.2. The DRI conducted the investigation about the evasion of the customs duty and the investigation conducted by CBI is for different purpose. He admitted the statement given by accused No.2 before him that "regarding 35 shipping bills filed by different units. Hence, he could not open the export sealing of A4Company". According to the witness, OTL will provided by the shipping agent and the same was not available in the open market. He pleaded ignorance to the fact that OTL provided by the Customs department or not. He received the documents from Cochin Intelligence Officers. He further pleaded ignorance that how many seals were broke open by Cochin Intelligence Officers as per Ex.P.27Seizure Mahazar. He do not know the process of manufacturing powder grade silk yarn. It was suggested that Customs 91 Spl.CC.No.72/2007 Department gave permission to A4Company for transport the material from outside of EOU, but the witness stated that same was permitted only for twisting purpose. He has admitted that if there were inward remittance, it could be gathered that the export obligation was completed. He also admitted that as per the Circular of Central Government if the exporter has not exported the goods equal to the value of the duty exemption claim, has to pay the duty alongwith interest to the extent of noncompliance of export obligation. The evidence of this witness would make clear that as per the directions of the higher authority, he recorded the statement of accused No.3, commission agents and the other witnesses and also secured the documents from Cochin Intelligence Officer and also during the search conducted at the residential premises of accused No.3. The evidence further 92 Spl.CC.No.72/2007 made clear that A4Company has fraudulently diverted to export the goods which were imported.
69. PW11, the Sr.Intelligence Officer, Bengaluru has deposed that as per the instructions of the higher authority, he conducted search at the premises of A4 in the presence of witnesses Raja C.W.18 and Kumar. His evidence would reveal that about 11.00am., when he and his staff alongwith the witnesses, surrounded the A4company premises, one Swaraj Mazda truck vehicle entered the premises having registration No.TN 04 J 3819 and unloaded mat covered packets in the premises and left the premises. At the same time, another vehicle matador bearing No.KA034443 came inside the premises and loaded the mat covered packets and moved towards Hoodi side. Immediately, PW11 alongwith witnesses chased the vehicle, intercepted and enquired the driver Zaheer Pasha. The driver 93 Spl.CC.No.72/2007 informed that vehicle is carrying the imported silk yarn to deliver to hospital road as per the instructions of the owner. The vehicle was brought back to A4company premises where the son of accused No.3 was present and informed the officials that material was sent to the market as per the instructions of his father, the accused No.3. In the truck, there were 36 bales of silk yarn and 13 bales were lying inside the premises. PW11 further deposed that he recorded the statements of driver Zaheer Pasha and owner Lokesh as per Exs.P.48 and
49. He identified the documents Exs.P.50 to 58 before the Court. He had drawn the mahazar in the presence of witness at the premises of A4 at Ex.P.46. He collected the documents of the vehicle, shipping bill, invoice as per Exs.P.45 to 53. He handedover the seized materials to Sr.Intelligence Officer, DRI.
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70. P.W.11 in the crossexamination has pleaded ignorance with regard to proceedings that had taken place at Cochin port. He only received the papers from PW6. He has admitted that A4 Company is 100% EOU and exempted from Customs duty for imported goods. He pleaded ignorance with regard to procedure followed by customs officials at EOU. It is important to note that the evidence of PW11 is not denied by the defence, only suggested that as per the information and direction of DRI, Head, he seized the materials whatever available in the premises. The evidence of this witness it manifests that the A4 company diverted the export goods to local market.
71. P.W.12 is the witness to seizure mahazar Ex.P.46, has categorically deposed about the search conducted at the premises of A4 company and seizure of vehicle, silk yarn bales and documents. He 95 Spl.CC.No.72/2007 identified his signature on Ex.P.46 at Ex.46)f). This witness has denied the entire suggestions of the defense counsel and withstood the cross examination. He collected the documents of the vehicle, shipping bill, invoice as per Exs.P.45 to 53. He handedover the seized materials to Sr.Intelligence Officer, DRI.
72. It is important to state that the accused No.3 in his examination under Sec.313 Cr.P.C., has pleaded ignorance to the question No. 53 and 62 about seizure of bales at the premises of A4 company as per Ex.P.46. The accused No.3 being the CEO of the company has to explain the things traversed in his company. He has not denied the seizure of bales under Ex.P.46. The statements of driver Zaheer Pasha and owner Lokesh as per Exs.P.48 and 49 recorded under Sec.108 of Customs Act, which supports the case of the prosecution that 96 Spl.CC.No.72/2007 36 bales were taken out from the premises to deliver the same in the domestic market. From this, the prosecution able to prove that PW11 seized the vehicle alongwith 36 bales from the truck and 13 bales from the premises and so also the documents relating to imported silk yarn under Ex.P.46 in the presence of P.W.12.
73. PWs13 and 14 are the Intelligence Officers of DRI, Bengaluru, they have deposed before the Court that they conducted search at the residence of accused No.3 and drawn mahazar at Ex.P.14. PW 14 drawn mahazar at A4firm as per Ex.P.61 and seized the documents. The witness identifies the documents seized under Ex.P.14. The documents are registers, challans regarding raw silk sent to Palgar Silk Mills for job work. PW13 in his cross examination has stated that he seized documents which indicates the removal of imported raw silk 97 Spl.CC.No.72/2007 under UTP licence from the premises of A4 Company. Further, has admitted that raw silk was sent to Palgar Silk Mills for twisting purpose on job work basis. PW14 in his crossexamination has stated that seized documents disclose that A4firm was selling yarn in the local market. Though the witnesses were cross examined nothing has been elicited to disbelieve their version. The evidence of PWs13 and 14 corroborative with the mahazars Exs.P.14 and 61 regarding search conducted at residential premises of accused No.3 and A4firm and A4firm was selling yarn in the domestic market.
74. The prosecution in support of the evidence of aforesaid witnesses, has also examined the commission agents as PWs16 and 17 to prove that the imported silk yarn was diverted to local market. P.Ws.16 and 7 were doing business of mulberry 98 Spl.CC.No.72/2007 raw silk of Chinese origin. They have categorically deposed that, in the year 2002, accused No.3 contacted them over phone and requested to bring cash customers for the purpose of selling Chinese mulberry raw silk. The witnesses have introduced the weavers to accused No.3 and received commission from him. According to the evidence, the mulberry raw silk bales will be handedover the weavers at No.5/1, 15th Cross, Cubbonpet, Bengaluru. One Kuppaji RaoCW26 was also working in A4firm and he used to weigh the silk yarn. In the month of January, 2003, accused No.3 contacted P.W.16 and 17 and requested to arrange the customers for the sale of silk yarn. The accused No.3 used to sell the silk yarn to weavers at low cost than market value for the reason to get cash immediately. PW16 and 17 in the cross examination have admitted that they have no record to show the receipt of commission from accused 99 Spl.CC.No.72/2007 No.3. PW17 in his crossexamination has pleaded inability to name the persons to whom he introduced to accused No.3 for purchase of twisting raw silk. These witnesses have denied the suggestions of the defence counsel. The evidence of PWs16 and 17 corroborates with their statements given before the PW11 as per Exs.P.20(a) and 21(a). So also the evidence of these witnesses corroborates with the statement of accused No.3 given before the DRI as per Ex.P.16(a). Only for the reason that the witnesses have not maintained any record, their evidence cannot be eschewed from consideration. There is no material on record to show why the witnesses deposed against the accused No.3.
75. It is important to note that CW26, one Kuppaji Rao who is no more had given statement before the PW11 as per Ex.P.127 and 71. He was working with accused No.3 in A4firm. The Ld.P.P 100 Spl.CC.No.72/2007 has argued that statement of CW26 and statement of Thopaiah at Ex.P.73, has evidentiary value in the eye of law under Sec.33 of Evidence Act. She produced the death certificate of Kupajji Rao. [
76. At this juncture, it is relevant to note the provision of Sec.33 of the Evidence Act. It reads thus:
Section 33 in The Indian Evidence Act, 1872
33. Relevancy of certain evidence for proving, in subsequent proceeding, the truth of facts therein stated.--Evidence given by a witness in a judicial proceeding, or before any person authorized by law to take it, is relevant for the purpose of proving, in a subsequent judicial proceeding, or in a later stage of the same judicial proceeding, the truth of the facts which it states, when the witness is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or if his presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable:
Provided--
that the proceeding was between the same parties or their representatives in interest; that the adverse party in the first proceeding had the right and opportunity to crossexamine;101 Spl.CC.No.72/2007
that the questions in issue were substantially the same in the first as in the second proceeding. Explanation.--A criminal trial or inquiry shall be deemed to be a proceeding between the prosecutor and the accused within the meaning of this section.
The Sec.33 of the Evidence Act, deals with relevancy of certain evidence for proving, in subsequent proceeding, the truth of facts therein stated. The statement of Sri. Kupaji Rao and Thopaiah has evidentiary value under Sec.33 of the Evidence Act as Kuppaji Rao is died and Thopaiah could not be traced in spite of summons and warrant. The evidence of PWs11, 12, 16, 17 and the statements of CW26 and Thopaiah are corroborative with each other with regard to diversion of processed silk to the domestic market.
77. P.W.26, the Sr.Intelligence Officer in DRI, Chennai has deposed that as per the instructions of Deputy Director, he verified the particulars of the vehicles which was used for export of mulberry raw 102 Spl.CC.No.72/2007 silk by A4Company. He obtained the information about vehicles of Tamil Nadu registration and also enquired with M/s.Master Stroke Freight Forwarders Pvt. Ltd. He recorded the statement of Mr.D.Sukumaran regarding two vehicles bearing registration Nos.TN 04 J 779 and TN 04 J 3819. According to the statement of Manager of M/s.Master Stroke Freight Forwarders Pvt. Ltd., the said two vehicles were used for transportation of Mulberry Raw Silk imported by A4Company from Chennai to Bengaluru. He further stated that said vehicles did not ply in the local city of Bengaluru and only goods transferred to A4Company and not to Palgar Silks unit. He further deposed that on enquiry regarding two vehicles bearing No.TN 04 E 5787, TN 04 E 5785 and TN 33 Z 2916, there are no such owners of the vehicles found in the address. This witness was crossexamined, but nothing has been elicited to discredit his testimony. The evidence of 103 Spl.CC.No.72/2007 this witness would goes to show that A4Company used the vehicle bearing Nos.TB 04 J 779 and TN 04 J 3819 for transportation of goods from Chennai Port to A4 premises. Further, the evidence of this witness would goes to show that the A4 company falsely mentioned the vehicle numbers in the challans stating the same were used for transportation of silk yarn. But on verification with RTO about the vehicles bearing No.TN 04 E 5787, TN 04 E 5785 and TN 33 Z 2916, it found that the vehicles were not used for transportation. The numbers of the vehicles only incorporated in order to make believe the authorities that the company used the vehicles for transportation of goods. The circumstance with reveal the motive and intention of accused No.3 to commit the offense of cheating.
78. PW4 has deposed that he has drawn mahazar Ex.P.19 in regard to handing over the 104 Spl.CC.No.72/2007 samples to the chemical examiner which was seized from the premises of A4Company. The mahazar was drawn at Godown, DRI Office, Bengaluru. The chemical examiner by name Nivedita and Hanumanth, both of them were present and received the samples from the seized consignment. The said mahazar was drawn on 10/02/2003. PW4 identified the documents Exs.P.1 to 40 before the Court. The sample seized under Ex.P.46 were marked as 1A,1B, and 1C. The waste material laying on the premises marked as 2A, 2B and 2C. The Chemical examiners' reports Ex.P.74 and 75 would reveal that the seized material i.e., 1A, 1B and 1C, from the premises of A4 company is 100% silk yarn and the material 2A,2B,and 2C are waste material. The chemical examiners' reports supports the case of prosecution that the material seized under Ex.P.46 is 100% silk yarn which was imported from China as referred above in the paragraph IMPORT. 105 Spl.CC.No.72/2007
79. The prosecution has examined two witnesses PWs13 and 14 to prove the search mahazar Ex.P.14. PW13 has deposed that on 29/01/2003 he assisted the SIO, DRI as per the directions of the Joint Director in conducting search at the residence of the accused No.3. He further deposed that the SIO had taken him to the residential premises of accused No.3 situated at B601, Wilson Garden, 13 th Cross, Bengaluru along with other witnesses and staff and conducted the search at Ex.P.14, seized the documents marked as Ex.P.59. As per the challans seized under search mahazar, the raw silk was sent to Palgar Silk Mill for job work. This witness in his crossexamination has admitted that the seized documents indicates the removal of imported raw silk from A4company and sent to Palgar silk Mill for twisting purpose on job work. [[ 106 Spl.CC.No.72/2007
80. PW14, the SIO, DRI has deposed that on 29/01/2003, he conducted the search at the premises of A4firm situated No.5/1, 1 st Floor, Cubbonpet, 15th Cross, Bengaluru and seized some documents which are relevant to the investigation as per Ex.P.61. This witness in his crossexamination has admitted that whenever the imported goods are taken out from EOU, the permission is required. He had not enquired the accused No.3 with regard to permission obtained for transportation of 100% silk yarn from EOU for job work. He admitted that Ex.P.61 does not reflect about selling of yarn in the local market. The witness has denied the suggestion that DRI has no authority to recover the documents with regard to evasion of tax.
81. A perusal of Ex.P.14, it would goes to show that on 29/01/2003, the DRI, Bengaluru conducted search at the residential premises of accused No.3. 107 Spl.CC.No.72/2007 The accused No.3 had also signed the mahazar and search list. As per the documents available in the house of accused NO.3 at the time of search, would goes to show that he imported raw silk and sent the same for job work to the Palgar Silk Mill. It is to be noted that this fact was not denied by the accused No.3 in his defence.
82. PW15, then Inspector in Central Silk Board, Bengaluru has deposed that it was his duty to conduct free shipment inspection of natural silk goods meant for export either at exporter premises or at his office. During the year 2000, he had conducted preshipment inspection of A4firm at its premises as per Ex.P.43(b) and packing list at Ex.P.43(c). On 10/11/2000 he visited the unit of A4company and randomly selected 5 bales for verification out of 86 bales. On verification of the 5 bales about its purity, weight and process for powder 108 Spl.CC.No.72/2007 grade yarn, he found that the bales contains natural silk yarn. Further, the selected bales were not in original colour and strength and it was chemically treated form. He submitted the report as per Ex.P.43(b). This witness further deposed that for making silk fabrics and sarees, the twisted silk yarn will be used in length and plain silk yarn will be used for width. According to his evidence, during the year 2000, in India powder grade silk yarn was not manufacturing. In the crossexamination has stated that powder grade silk yarn is not a powder and it is only treated as chemically processed yarn. He further stated that the purpose of chemical treatment is to lose its original identity. The purpose of testing is for customs clearance. He also admitted that accused No.3 was the first person who export the powder grade silk yarn during the year 2000. The evidence of this witness makes clear that if the customs department find any doubt regarding 109 Spl.CC.No.72/2007 shipment goods, the Central Silk Board, Bengaluru will go to the EOU and check the export goods by taking the bales randomly, only after confirmation the export will be allowed. This witness has examined the bales pertaining to the shipment of the year 2000.
83. PW4 has deposed that he received documents from PW6 and recorded the statements of accused No.3 as per Exs.P.15(a), 16(a), 17(a), 22(a) and 23(a) under Sec.108 of Customs Act, 1962. The statement of accused No.3 was recorded on 29/01/2003 when the container was intercepted at Cochin port. Importantly, accused Nos.3 in his examination under Sec.313 of Cr.P.C has admitted that he gave statements before PW4.
84. The Ld. Defence counsel has argued that officers of DRI are not 'proper officers' as defined 110 Spl.CC.No.72/2007 under Customs Act,1962. Therefore, the statements recorded by DRI officers' and proceedings conducted by them has no evidentiary value in the eye of law. The statements of accused No.3 cannot be used against him and coaccused. Further, the accused gave statements under the coercion and threat. Hence, the same are not voluntary. The statements are hit by Sec.25 of the Evidence Act. The Ld. Counsel has relied upon following decisions:
a) (2015) 13 S.C.C 198 (IVRCL Infrastructure and Projects Limited V/s Commissioner of Customs, Chennai)
b) 2011 (12) S.C.C 298 (Nirmal Singh Pehlwan Alias Nimma V/s Inspector, Customs, Customs House)
c) (2000) 7 S.C.C 53 (Assistant Collector of Central Excise V/s Duncan Agro Industries Ltd., and others)
d) 1993 Supp (1) S.C.C 475 (Superintendent of Customs V/s Bhanabhai Khalpabhai Patel and another).111 Spl.CC.No.72/2007
85. Per contra, the Ld. Sr.P.P has replied that the statements recorded by the DRI officers is valid and admissible in law by virtue of The Finance 2022. The judgments relied by the defence counsel will no way enure the benefit of accused persons. In this regard, she relied on the decisions as here under:
a) 1997 (3) S.C.C 721 (K.I.Pavunny V/s Assistant Collector (HQ.), Central Excise Collector Ate, Cochin)
b) 1971(1) S.C.C 847 (Percy Rustomji Basta V/s State of Maharashtra)
c) 1970 AIR 1065 (Ilias V/s Collector of Customs, Madras)
d) (2002) 1 S.C.C 155 (Gulam Hussain Shaikh Chougule V/s S.Reynolds, Supdt. Of Customs, Marmgoa)
e) (1969) 2 SCR 461 ( Ramesh Chandra Mehta V/s State of West Bengal)
f) 1995 Supp (4) S.C.C 663 (Naresh J.Sukhawani V/s Union of India).
86. Before adverting to the principles of law held in the aforesaid decisions, it is apposite to note 112 Spl.CC.No.72/2007 the relevant provision Sec.108 of Customs Act, 1962, which reads thus :
Power to summon persons to give evidence and produce documents.
(1) Any Gazetted Officer of customs shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under this Act.
(2) A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (3) All persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required:
Provided that the exemption under section 132 of the Code of Civil Procedure, 1908 (5 of 1908), shall be applicable to any requisition for attendance under this section.
(4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860).113 Spl.CC.No.72/2007
On bare reading of Sec.108 of the Act, it empowers the customs officers to investigate the matters with many powers of a police officer relating to arrest, investigation and search. The customs officer has power to examine and summon the persons.
87. The Hon'ble Apex Court in IVRL Infrastructure Project Ltd., case has held that statements made to an officer of Customs, under Sec.108 of the Customs Act, are admissible in evidence. Only, rider is the Court has to scrutinize whether the admissions were made voluntarily or otherwise.
88. The Hon'ble Apex Court in Nirmal Singh Pehalwan's case has held that Officers of Revenue Intelligence and ipso facto of the Customs department could not be said to be police officers and confession before them would hit by Sec.25 of Indian Evidence Act.
114 Spl.CC.No.72/2007
89. In Asst. Collector V/s Duncan Agro case, the Hon'ble Supreme Court has restated the object of Sec.108 of Customs Act.
90. In Superintendent of Customs V/s Bhanabhai Khalpabhai Patel and another case, the Hon'ble Apex Court has held that statements of accused under Sec.108 of the Customs Act eschewed from consideration against coaccused.
91. In all the above decisions relied by the Ld.Sr.P.P, the Hon'ble Apex Court has held the same principle regarding validity of the statements recorded under Sec.108 of Customs Act. The principle is that the statements are admissible in evidence for prosecution under Sec.135 of the Customs Act. The customs officer is not a police officer. Hence, the statements given before the customs officer under Sec.108 of the Act, is 115 Spl.CC.No.72/2007 admissible in law. It can be used as substantive evidence and the same is material piece of evidence.
92. The core question before the court is whether the Officers of DRI falls within the meaning of 'proper officer' as defined under Customs Act,1962 and the statements recorded by the Officers of DRI has evidentiary value in the eye of law. As discussed supra, the DRI Officers falls within the meaning of Sec.2(34) of the Customs Act, 1962. At the cost of repetition, when the DRI Officers are proper officers by virtue of Rule 97 of The Finance Act, 2022, they empowered to record the statements of witnesses and the accused to whom they issued summons. The decisions relied by the Ld. Defense Counsel in this aspect, has no effect or binding by virtue of implementation of The Finance Act,2022. In so far as, completed proceedings i.e., where proceedings have been dropped prior to passing of Finance Act,2022 is concerned, the proceedings cannot be 116 Spl.CC.No.72/2007 revived. However, the pending proceedings have to be decided in the light of the validation in Section 97 of the Finance Act,2022. The Explanation to Sec.97 of The Finance Act,2022 that any proceeding arising out of any action taken under this section and pending on the date of commencement of this Act shall be disposed of in accordance with the provisions of the Customs Act, as amended by this Act. Further, the Hon'ble High Court of Madras, in N.C Alexander v/s Commissioner of Customs has referred the decision of Canon India Private Ltd. v/s Commissioner of Customs and also The Finance Act,2022. The Hon'ble High Court has held in para 236 that " The Officers of the Directorate of Revenue Intelligence (DRI) have already been appointed as "Officers of Customs" under Notification issued under Sec.4(1) of the Customs Act,1962 vide Notification of the Government of India in the Ministry of Finance(Department of Revenue) No.186 117 Spl.CC.No.72/2007 Cus, dated 4th August,1981". The said notification was later superseded by Notification No.19/90Cus (N.T) dated 26.04.1990. Now, in view of the Finance Act,2022, the DRI Officers are now explicitly recognized as Officers of Customs under Customs Act,1962. Therefore, there is no force in the contention of Ld. Defense counsel that the statements recorded by the DRI Officers are not admissible in law.
93. The deceased Kupaji Rao gave statement before P.W.21 at Ex.P.127 and 71. He was working in A4 company. According to the statement, A4 company was procuring waste silk from Channapatna and processing and drying, used to export. The waste silk which was procured from Channapatna was costing Rs.48 per Kg. After 1999, A4 company started to exporting bricks and waste. It was also instructed the employees to pack the bricks and waste material to make it appear like silk 118 Spl.CC.No.72/2007 bales. Approximately, about 12 to 13 containers of bricks and waste material has been exported. He has also named the commission agents who were bringing the weavers to A4 company for purchase of raw silk. The statement of this witness substantiates the case of prosecution that A4 company diverted the imported silk in domestic market and sent waste material and bricks in the container intercepted at Cochin Port.
94. C.W.14 Sri.K.G. Subramanya had given statement before DRI at Ex.P.165, it reveal that M/s. J.M.Baxi and Co., was shipping agents for A4 Company. He was questioned about the shipping bill dated 23/01/2003 relating to container CLHU 2620954 relating to A4company. He assigned job to one P.S.Sundar to prepare documentation with regard to export clearance based on the shipping bills. On the same day he submitted the documents 119 Spl.CC.No.72/2007 to Superintendent, ICD after assessment of documents. He further stated that OTL and lead seal was already affixed when he reached A4 premises, but the lead seal had not been punched by customs officer. He pleaded ignorance whether customs officer were present or not at the time of sealing the container. The accused No.3 handedover the sealed cover containing shipping documents to be handed over to ICD. From the statement of this witness at Ex.P.165, it is made clear that he processed the shipping documents such as invoice, packing list, Let export order copy and covering letter relating to export of container and referred above relating to accused No.4.
95. The prosecution has referred the statement of accused No.3 as per Exs.P.15(a), 16(a), 22(a), 23(a), 25(a), 128 and 85. According to the case of prosecution, accused No.3 had admitted the fraud committed by him and cheated the Government of 120 Spl.CC.No.72/2007 India in exporting the waste textile material and bricks in the guise of powder grade silk yarn in order to avoid payment duty to customs department. As I have stated above, statement recorded by DRI has evidentiary value in the eye of law. Now let me peruse the statement of accused No.3 given before the DRI, whether discloses the incriminating material or not.
96. A perusal of Ex.P.15(a), the accused No.3 was summoned and enquired on 29/01/2003 by PW4. The accused No.3 has narrated the details and story regarding import of Mulberry Raw Silk and export powder grade silk yarn. He had stated that A 4 company is 100% EOU situated at Mahadevapura, Bengaluru. He was looking the entire affairs of the company as Chief Executive. He had also stated that he used to import the raw silk yarn from China without payment of duty and resultant product i.e., powder grade silk yarn had exported the M/s.Seven 121 Spl.CC.No.72/2007 Star General Trading Company, Ajman, UAE. He admitted as per the shipping bill and invoice dated 23/01/2003, he was exporting 9271 Kgs powder grade silk yarn to M/s.Seven Star General Trading company valued at Rs.88,46,209/ vide shipping bill No.01073 and container No.CLHU 2620954. The statement further reveal that "the goods were stuffed into the container was not the goods declared in the shipping bill, but contained bricks, papers, waste etc., packed in bundles and then in HDPE Bags in bale form. In all 110 bales were stuffed and packed in container." It further reveal that silk imported duty free by A4company for manufacturing of resultant export product i.e., powder grade silk yarn was diverted from EOU to the domestic market. He had stated about the details of the import of raw silk. He also stated that the letterheads of M/s.Global Products Market have been used for fraudulent export mode. The Sonic Speed.com 122 Spl.CC.No.72/2007 letterheads were to be used for the reply to the parties who had responded to their advertisement for outsourcing of software development. He admitted that he was indulged in fraudulent export and also for having sold duty free imported yarn into the domestic market.
97. The accused No.3 was further enquired by DRI on 30/01/2003. At Ex.P.16(a) wherein he had informed that 36 bales out of the above said import have been cleared from EOU units without any documents during which time DRI officers intercepted and seized the goods alongwith. Again at Ex.P.17(a), the son of accused No.3 gave statement on 31/01/2003 narrating the details of the act committed by him and also stated that Thopaiah was loaded 36 bales of silk yarn in the vehicle and he was instructed to take it to the Hospital road. Ex.P.22(a)statement reveal about the shipping details of the container CLHU 2620954. Ex.P.23(a) 123 Spl.CC.No.72/2007 statement disclose about the statement given by Kuppaji Rao is false and no instructions was given to him by accused No.3. However, the accused No.3 in his statement has stated that Kuppaji Rao was assigned the job to accompany the truck to the factory to get silk yarn unloaded and sign the receipt on delivery challan received from the clearing agent of Chennai. He also admitted that agents Shivashankar and Suresh Lohia were agents through whom he was selling the silk yarn. He used to pay commission of Rs.2/ per kg to the commission agents for getting the viewers for purchase of silk yarn from A4Company.
98. The Ld. Counsel for the accused has brought to the notice of the court about the letter written by accused No.3 to the Customs Higher Authority alleging that he was forced to give statement as referred above and the said statements are not 124 Spl.CC.No.72/2007 voluntary. The statements of accused No.3 are hit by Sec.25 of Evidence Act. In this regard, has relied upon the decision of IVRCL Intrastructure and Projects Limited V/s Commissioner of Customs, Chennai reported in (2015) 13 SCC 198, (2011) 12 SC 298, 2000(7) SCC 53, 1993 Suppl(1) SCC 475.
99. On careful reading of the aforesaid decisions, the Hon'ble Apex Court has held that statement made to Officer of Customs under Sec.108 of the Customs Act, 1962 are admissible in evidence and the Court has to scrutinize whether admissions made were voluntary or otherwise. Further, it was held that only for the reason that statement recorded by the Customs Officers, the evidence cannot eschewed from consideration. The only thing is that whether statements are made voluntarily or by threat or coercion. The accused No.3 in his examination under Sec.313 of Cr.P.C has denied the 125 Spl.CC.No.72/2007 statement of Kuppaji Rao. He has stated that the statement recorded by DRI Officer is by coercion and threat.
100. As per Sec.6 of the Customs Act, the DRI Officer empowers to conduct the investigation, to summons and record the statement of any person under the Customs Act. The Central Government by way of Notification in the official Gazette dated 30/03/2022 has empowered the DRI officers to discharge the functions assigned to them under the Customs Act.
101. The object of the Act, in empowering the customs officer to record evidence under Sec.108 is to collect information of the contravention of provisions of the Act or concealment of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the provisions of Act. Though the Customs Officer has authority within the 126 Spl.CC.No.72/2007 meaning of Sec.24 of the Evidence Act, by reason of statutory compulsion of recording the statement or the accused giving voluntary statement pursuant to his appearance to the summons cannot be characterized to have been obtained by threat, inducement or promise. Only legal duty under the Act is a person who is summoned has to reiterate the respective facts. Therefore, Customs Officers are not Police Officers and the confession though retracted is the admission and binding on the person who gave statement, the authority has power to summon and record their statements. Only exception is that statements cannot be voluntary and not by force or threat. The Hon'ble Apex Court has held that statement recorded under Sec.108 of the Customs Act is admissible in evidence. The Court has to test whether the inculpating portions were made voluntarily or whether it is vitiated on account of any principles envisaged in Section 24 of 127 Spl.CC.No.72/2007 the Evidence Act. It has further held that any statement under Sec.108 of the Act by a person against whom an enquiry is made by customs Officer is not a statement made by a person accused of an offence. Therefore, the statement made before the Customs Official is not statement recorded by police officials under Sec.161 of Cr.P.C as held in 1995 Supp (4) S.C.C 663.
102. The Ld. Sr.P.P has brought to the notice of unmarked DNo.22 and submitted that accused No.3 was produced before the Magistrate of Special Economic Offences on 30/01/2003 and on the same day, the accused was released on bail. The accused No.3 had not complained any illtreatment or threat caused by DRI Officers when he was produced before the Magistrate. Moreover, the accused was not in custody of the DRI Officers when he gave statement. Furthermore, no such single suggestion was made to officerPW4 who recorded 128 Spl.CC.No.72/2007 the statements of accused that, he recorded the statements of accused on threat or coercion. The accused No.3 had written the letter to the higher authorities after one week as per Ex.P.160. Therefore, the contention of the accused that he gave statements under threat of DRI officers is not believable one. Hence, there is no impediment on the part of the Court to consider the statement of accused No.3 given before the DRI.
103. As discussed supra, the statements of accused No.3, deceased Kupoji Rao, Thopaiah K.G. Subramanya, commission agents, driver and owner of vehicles clearly establishes the case of prosecution regarding import of duty raw silk and diversion to the local market. The statements have evidentiary value in the eye of law.
104. The Ld. Defense Counsel has relied on the decision reported in 2004(2) SCC 731 K C Builders 129 Spl.CC.No.72/2007 v/s Assistant Commissioner, wherein it has held that to attract the offense of cheating, there must be existence of fraudulent intention at the time of making promise or misrepresentation. It has further held that mere failure of the accused to keep up the promise is not sufficient to prove the existence of such intention right from the beginning.
105. In another decision, 2022(7) SCC 124 Vijay Kumar Gai v/s State of West Bengal, the Hon'ble Apex Court has summerised the principles and requisite ingredients and the distinction between mere breach of contract and cheating. In the backdrop of the decisions referred supra, to attract the Sec. 420 IPC, there must be culpable mensrea from the right at the beginning. A fraudulent or dishonest intention is an essential ingredient of the offense of cheating.
130 Spl.CC.No.72/2007
106. To attract the offence under Sec. 420 IPC, the prosecution has to establish the important essential ingredients as stated under Sec.415 IPC. The fraudulent or dishonest intention induces the person deceived to deliver any property. Therefore deception is quint essence of Sec.420 IPC. It is necessary to show that the accused had fraudulent or dishonest intention at the time of committing the act. The bare reading of the provision makes it abundantly clear that the existence of guilty intention at the initial stage when the inducement is offered is the crucks of the matter. The making of a false representation is one of the ingredients for the offence of cheating under Sec.420. The mensrea of the accused at the time of making false representation is necessary.
107. The charge was framed against the accused No.3 for the offense under Sec.420 IPC, 131 Spl.CC.No.72/2007 alleging that A4Company imported duty free raw silk yarn with a condition to export the processed silk yarn, but he sent the bricks and waste materials in the shipping container and diverted the imported silk yarn to the domestic market to get the benefit of duty exemption to the extent of Rs.26,94,251/ and committed the offence of cheating.
108. As could be seen from Ex.P.51 Daily Stock account of finished goods register at page 9 relating to A4 company, it reveal that as on 23.01.2003, the company having balance of finished goods to extent of 9509 kg out of which 9271 kg shown as export and balance 238 kg. The corresponding Register i.e, Consumption register Ex.P.52 would reveal that the silk yarn was sent for job work for Palagar Silks. Ex.P.54 and 56 the Customs Bond Register reveal about the imported goods as per Ex.P.145 to 150.
132 Spl.CC.No.72/2007
109. The prosecution has produced EX.P.44 which is important document to establish that the alleged buyer was not in existence. P.W.4 inorder to verify the veracity of the buyer. He obtained documents relating to M/s. Global Products Marketing, Calgary, Canada and export was routed to Ajman, UAE through agency called M/s Seven Stars General Trading Company Ltd. When PW4 corresponded with Indian Consultate at New York and obtained the certificate in writing and found that buyer by name Global Products Marketing was not at all in existence. The phone number mentioned in the letterhead was relating to one Anil Jain, who is brother of accused No.3. The Consulate officials also confirmed that after 2000 there were no imports received in Canada which had its origin from India or Dubai belonging to A4Company. The said fax message was marked at Ex.P.44. The same was received from Indian Consulate, New York on 133 Spl.CC.No.72/2007 08/07/2003. This document falsifies the evidence of accused No.3 that he received the payments from export company in advance regarding shipping bill at Ex.P.65. After the year 2000, no goods were exported by A4Company to its importer i.e., M/s.Global Products Marketing, Calgary, Canada through shipping agents Seven Star General Trading Company. When there was no export after the year 2000, how can accused No.3 receive the payments for the shipping bill Ex.P.65 in advance which creates doubt in the mind of Court. However, the accused has not produced any account extract before the court to show he had received the payment from buyer. Moreover, as per the investigation, phone number mentioned in the letterhead relating to one Anil Jain who is brother of accused No.3, which clearly substantiates that accused No.4 company imported duty free goods and diverted to local market and exported waste 134 Spl.CC.No.72/2007 material with bricks instead of powder grade silk. Therefore, there is no force in the contention of accused No.3 that he received the payment in advance relating to shipping bill Ex.P.65. in this regard.
110. On perusal of the documents, P.W.4 came to know that vehicle numbers mentioned in the documents were not at all used for the transport, but the numbers were incorporated in the challans in order to make believe the authorities that transportation had taken place in routine manner.
111. After analyzing the oral testimony of the witnesses coupled with the documents on record, prosecution has successfully proved that the accused No.3 being the CEO of A4 company, had fraudulent and dishonest intention to cheat the Government of India from inception, and imported duty free silk yarn and diverted to local market 135 Spl.CC.No.72/2007 instead of processed powder silk yarn. He sent the waste material rapped with bricks by making false representation in the shipping bills and caused loss to the Government of India to the tune of Rs.26,94,251/ . Therefore, there is no impediment to hold that the accused Nos.3 and 4 have committed the offense of cheating under Sec.420 IPC.
CRIMINAL CONSPIRACY
112. It is specific case of prosecution that the accused Nos.1 and 2 in furtherance of the criminal conspiracy with accused No.3, the CEO of A4 Company have allowed the container bearing No.CLHU260954 containing the goods meant for export vide shipping bill No.772/2003 dated 23/01/2003 without verifying the goods physically before sealing the container and accused No.2 handedover the plier to PW10 who in turn 136 Spl.CC.No.72/2007 handedover the plier to accused No.3 for sealing of the container. So, it is for the prosecution to establish the criminal conspiracy between the accused Nos.1 to 4. Before adverting on this aspect, it is relevant to reiterate the definition of Criminal Conspiracy which reads thus :
120A. Definition of criminal conspiracy.--When two or more persons agree to do, or cause to be done,--
(1) an illegal act, or (2) an act which is not illegal by illegal means, such an agreement is designated a criminal conspiracy: Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Provided that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
Explanation.--It is immaterial whether the illegal act is the ultimate object of such agreement, or is merely incidental to that object.
137 Spl.CC.No.72/2007A careful reading of the above provision of law, it says that there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing by illegal means an act which itself may not be illegal. Therefore, the essence of criminal conspiracy is an agreement to do an illegal act and such an agreement can be proved either by direct evidence or by circumstantial evidence or by both, and it is a matter of common experience that direct evidence to prove conspiracy is rarely available. Therefore, the circumstances proved before, during and after the occurrence have to be considered to decide about the complicity of the accused.
113. The prosecution on two aspects alleged the criminal conspiracy against the accused Nos.1 and 2 with accused Nos.3 and 4. According to the case of prosecution, accused Nos.1 and 2 allowed the 138 Spl.CC.No.72/2007 container without physically verifying and cheated the Government. In order to establish the same, the prosecution has examined the customs officers, DRI officers, commission agents and Investigating Officers in the case. As discussed above, none of the witness have whispered single word against accused Nos.1 and 2 that they were involved in the commission of offence with accused Nos.3 and 4. As per the definition of Sec.120A of IPC, there must be meeting of minds to do illegal things or to do legal things. In the case on hand, illegal things alleged to have been committed by accused Nos.1 and 2 is allowing the container belonging to A4Company without physically verifying and handover the plier to accused No.3 to seal the container.
114. The Ld. Defense counsel has submitted that there is no iota of evidence to establish that the accused persons entered into criminal conspiracy. He has relied on the decisions reported in 139 Spl.CC.No.72/2007
a) 2022 SCC Online 1080
b) 2005(12) SCC 631
c) 2009(6) SCC 77.
The decision rendered in 2002(7) SCC 334 in Mohamaed Khalid v/s State of West Bengal held the principle with regard to criminal conspiracy:
(A) Penal Code, 1860 Ss.120A & 120BCriminal conspiracy Elements ofBasis for extending criminal liability to coconspiratorsExistence of an agreement to commit an offence or to accomplish an act which itself constitutes an offence is sufficient by itself and no overt act need be proved to establish criminal conspiracy Proof of conspiracy can be by direct evidence, though the same is rarely available, or by circumstantial evidenceCircumstances proved before, during and after the occurrence should be considered to decide complicity of the accused Confession of coaccused, even without corroboration, can be taken into consideration.
In 1970 AIR S.C 459, Hon'ble Supreme court has held that there must be a meeting of minds in the doing of an illegal acts or doing of a legal acts by illegal means. The unlawful act committed without knowledge of the conspiracy not amounts to the offence of criminal conspiracy within the meaning of Sec.120(A) of IPC. A careful reading of the decision referred above, the Hon'ble Apex Court has held that 140 Spl.CC.No.72/2007 unlawful agreement is Sine Qua Non for constituting offense under IPC and not an accomplishment. The conspiracy can be proved by direct evidence or by circumstantial evidence. It has also held that confessional statement of the accused cannot be treated as evidence within the Sec.3 of the Evidence Act. Therefore, there must be meeting of minds and unlawful agreement between the accused persons to commit the offence of criminal conspiracy. The main aspect which has been laid down by the Hon'ble Apex court is that the concept of conspiracy will be hatched in darkness and it is always based upon inferences to be drawn from circumstances. It is also been held that in case of conspiracy the same cannot be established in normal parlance by leading direct evidence.
115. To attract the offense of criminal conspiracy there must be a meeting of minds in the doing of an illegal acts or doing of a legal acts by 141 Spl.CC.No.72/2007 illegal means or there should be an agreement between persons who are alleged to conspire and the said agreement should be for doing an illegal act or for doing by illegal means an act which itself may not be illegal. By keeping the above principles of law in mind, when the evidence of witnesses is scrutinized, none of the witnesses have deposed about involvement of accused No.1 and 2 in the case. There is no direct or circumstantial evidence to connect the accused Nos.1 and 2 with the accused Nos.3 and 4. There is no single event in the case, except handing over the plier to P.W.33. Even if the evidence of P.W.33 is scrutinized with due care and caution, it would not disclose that accused No.2 handed over the plier to him, not only for sealing of the container of A4 company . Accused No.2 instructed to seal the container belonged to P.W.33 company and so also for sealing of the goods belonged to P.W.10 company. Further, the accused 142 Spl.CC.No.72/2007 No.1 had also done the same thing which P.W.1 was done earlier. If the accused No.1 and 2 have criminal intention, certainly they would have hand over the plier to accused No.3 directly. The prosecution has failed to produce any evidence whatsoever to satisfy the court that there was a prior meeting of minds between the accused persons. There is no physical manifestation of such a concurrence extractable from surrounding circumstances. Therefore, as per the decisions relied by the defense, the principal ingredient of the offense of criminal conspiracy under Sec.120B IPC is an agreement to commit the offense is absent. The court inquire whether the two persons are independently pursuing the same end or they have come together to pursue the unlawful object. Except the allegations made against accused Nos.1 and 2, there are no circumstances which warrants and believe that accused Nos.1 and 2 in connivance with 143 Spl.CC.No.72/2007 accused Nos.3 and 4 have intentionally allowed the container for export with out verifying physically. Therefore, the accused Nos.1 and 2 cannot be held to be conspirators for the guilty of an offence under Sec.120(B) of IPC. The prosecution has failed to prove the criminal conspiracy between the accused Nos.1 to 4.
CRIMINAL MISCONDUCT
116. At the cost of repetition, it is required to state the allegations made against the accused for the offense of criminal misconduct under PC Act. It is the specific case of the prosecution that accused Nos.1 and 2 in furtherance of criminal conspiracy with accused Nos.3 and 4 cleared the container containing waste material and bricks, meant for export by accused No.4 Company without physically verifying the same before sealing and the accused No.2 handed over the plier to Manju Harlur, who in turn handed over the plier to Pradeep, later he 144 Spl.CC.No.72/2007 handed over to the accused No.3 for sealing the container. The accused No.4 instead of exporting the import processed goods, had exported waste textile materials and bricks and in order to cheat Government of India and claimed the benefit of duty exemption. Therefore, accused Nos.1 and 2 by abusing their official position obtained a pecuniary advantage for accused No.3 in the form of exemption of custom duty.
117. Before going discussion on this point, it is apposite to know what is offense. The offence under Sec.3(38) of the General Clauses Act, defines that any 'act' or 'offence' shall mean any act or omission made punishable by any law for the time being in force. The word Criminal Misconduct is nowhere defined in the P.C Act and so also in the General Statue I.P.C. The word 'misconduct' as defined in Stroud's Judicial Dictionary that misconduct arising through ill motive acts. The word 145 Spl.CC.No.72/2007 'abuse' means misuse i.e., using his position for something for which it is not intended. Abuse indicates necessity for a dishonest intention on his part to bring him within the meaning of the clause.
118. Now, it is relevant to reproduce the Sec.13(1)(d) and 13(2) of P.C Act, which reads thus :
13. Criminal misconduct by a public servant.--
(1) A public servant is said to commit the offence of criminal misconduct,--
(a) xxxxx
(b) xxxxx
(c) xxxxx
(d) if he,--
(i) xxxxxxxxxxxxxxxxxxxxxx
(ii) by abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage; or
(iii) xxxxxxxxxxxxxxxxxxxxxxxxx
(e) xxxxxxxxxxxxxxx (2) Any public servant who commits criminal misconduct shall be punishable with imprisonment for a term which shall be not less than four years but which may extend to ten years and shall also be liable to fine.146 Spl.CC.No.72/2007
On careful reading of the above provision of law, it says that any public servant by abusing his official position obtains pecuniary advantage for himself or for any other person amounts to offence of criminal misconduct under law. On plain reading of the expression words used in the clause, there is no doubt that every benefit obtained by a public servant for himself or for any other person by abusing his position as a public servant falls within the mischief of the said clause.
119. The allegations made against accused Nos.1 and 2 falls within the clause 13(1)(d) (ii) of the PC Act. So, burden lies on the prosecution to prove that accused Nos.1 and 2 by abusing their position of public servants, caused mischief which resulted in loss to the Government of India and wrongful gain to accused No.3.
147 Spl.CC.No.72/2007
120. It is to be noted that in order to prove criminal misconduct of the accused No.1 and 2, the prosecution has to prove the ingredients of Sec.13(1)
(d) of PC Act:
1. They should hold office as Public Servants.
2. They should obtain any valuable thing or pecuniary advantage for any person.
3. Such obtaining of valuable thing or pecuniary advantage is without any public interest.
121. The prosecution in order to prove the offence under Secs.13(1)(d) R/w Sec.13(2) of P.C Act, has examined the Customs Officers as PWs1, 19, 29, 32 and 33. The evidence of above witness has discussed supra while considering the procedure followed by the Customs Officers while bonding and sealing. All the above witnesses have categorically stated their duties as Superintendent and Inspectors while working in EOUIV Range, Bengaluru. According to the evidence of the witnesses, it was the 148 Spl.CC.No.72/2007 duty of the Superintendent to verify the shipping bills, invoices and packing list submitted by the Exporters and on verification of the same, will direct the Inspector to make physical verification of the goods with the details mentioned in the bills. Then the Inspector after visiting EOU units personally and after verification of the container, has to seal the container by using the plier which was provided to him with lead seal.
122. Here in the case, the prosecution has alleged that accused No.1 without verifying the documents, has let the container to export which belonged to A4company and accused No.2 intentionally had not signed the shipping bills and so also registers in regard to verification of the goods at EOU. Further, accused No.2 who was the custodian of Plier No.1/93 which was not supposed to be hand over to anyone including the Customs 149 Spl.CC.No.72/2007 Housing Agent, had handed over the same to PW10 and instructed to hand over to accused No.3 for sealing.
123. The Ld. Defence counsel has argued that it was not duty of the accused No.1 to physically inspect the goods at EOU for verification and was only duty of verification of documents submitted by exporter. The accused No.1 has verified the shipping bill, invoice, list submitted by accused No.3 and let the export to ICD for further verification. It has also submitted that accused Nos.1 and 2 have followed the procedures which was followed by the predecessors in office. The Ld. Counsel has relied on the decision reported in (2016) 12 S.C.C 273 in the case of A.Sivaprakash V/s State of Kerala. In the said decision, the Hon'ble Court has referred the decision of Chenga Reddy v/s State of A.P., wherein it was held that even when codal violations were 150 Spl.CC.No.72/2007 established and it was also proved that there were irregularities committed by allotting the work in violation of circulars, that by itself was not sufficient to prove that a criminal case made out.
124. On the otherhand, the Ld. Sr.P.P would submit that it was the duty of accused Nos.1 and 2 to verify the processed finished products at EOU and only after verification, they have to let the container for export. It was further submitted that crime is an act of commission in violation of law or on omission of public duty. The offence generally implies infringement of public duty as distinguished from private rights punishable under criminal law.
125. The accused Nos.1 and 2 have submitted their statements under Sec.313 of Cr.P.C. According to the statement of accused No.1, he assumed the charge in EOUIV range in the month of June 2002 and he worked till February 2003. His duty was to 151 Spl.CC.No.72/2007 assessment of shipping bills filed by the exporters and allotment of the same to the Inspectors for verification of export cargo. When he took charge, he had three Inspectors from 01/01/2003, the Range was bifurcated into EOU IVA, EOU IV B and only one Inspector assigned for each EOU. The Range office is situated in Kendriya Sadan, Koramangala and jurisdiction was from left side of old Airport road to right side and old Madras road covering White field and its surrounding area which was about 20 25kms from the office. There are 19 manufacturing units under one Range. On an average, office used to receive 3035 shipping bills for exports and 20 applications for bonding of imported goods. He further stated that on 23/01/2003, he received shipping billEx.P.65 from A4Company at about 13.45 Hours i.e., 1.45pm. After assessment of the documents, he sent it to the Inspector for verification of the export goods and sealing of the 152 Spl.CC.No.72/2007 container. At that time, none of the Inspectors were available in the office. On earlier occasion there was surprise check in the premises at EOU and testing report from the Central Silk Board confirmed quality and quantity of the goods exported. Hence, he himself had signed the shipping bill by checking the assessment on the bonafide good impression about the exporters. Therefore, due to work load and bonafide belief the goods were not picked for random checking. There was no intention to defraud the Government. In addition to that there was lot of complaints about the delay in clearance and sealing of the container. Since he had no reason to suspect the integrity of the exporter, he signed the shipping bill in good faith. It has further stated that PW1 who was then Superintendent had also done the same work as done by the accused No.1. He produced photostat copy of shipping bill dated 03/09/2001, which was passed by PW1 and 153 Spl.CC.No.72/2007 statement of PW1 given before the DRI on 03/04/2003. It is very important to note that P.W.1 has admitted the statement given before the CBI that accused No.2 has narrated in his statement before him "regarding 35 shipping bills filed by different units. Hence, he could not open the export sealing of A4Company". According to the witness, OTL will provided by the shipping agent and the same was not available in the open market.
126. The accused No.2, has filed written statement under Sec.313 of Cr.P.C., reiterating the same averments made by accused No.1. In addition to that, it has stated that it was his duty as Inspector for bonding of imported goods and examination of export goods. Range jurisdiction has 19 manufacturing units and daily they used to receive 30 shipping bills. All the shipping bills are not allotted to Inspectors for export examination. The 154 Spl.CC.No.72/2007 document in question Ex.P.65 was not allotted to him on the day 23/01/2003 when A4 container was let to export. The accused No.2 has further stated that he joined RangeIV only on 01/01/2003. Hardly he had completed 18 working days. He was not aware of any of exporters personally including accused Nos.3 and 4. Only after his reporting to his duty, he attended the first shipping bill relating to A4Company for export. He verified the practice of handing over the sealing plier existed in the range which was adopted by earlier Inspectors which was within his knowledge and therefore only he handedover the plier to PW33 and asked him to handover the plier to accused No.3. He was not sure that as to which plier was used to seal the container of A4Company. The existing practice was only to check goods randomly when there is doubt about genuineness of the export. He never abused the power vested with him to help accused Nos.3 and 4. 155 Spl.CC.No.72/2007 He also produced the Circular issued by Government of India and shipping bill dated 02/12/2012, 23/01/2003 signed by PW1 and accused No.1.
127. According to the statement of Kupojji Rao, A4 company was procuring waste silk from Channapatna and after processing and drying, used to export. The waste silk which was procured from Channapatna was costing Rs.48 per Kg. After 1999, A4 company started to exporting bricks and waste. It was also instructed the employees to pack the bricks and waste material to make it appear like silk bales. Approximately, about 12 to 13 containers of bricks and waste material has been exported.
128. In addition to the statements of accused Nos.1 and 2, the Ld. Defence counsel has produced certain circulars issued by the Department of Customs regarding verification of import and export goods. It has submitted that as per the circulars the 156 Spl.CC.No.72/2007 accused Nos.1 and 2 need not to check each and every package of the container, only random check was sufficient. The accused Nos.1 and 2 had followed the practice of earlier Superintendents and Inspectors which was followed at EOUIV Range. On good faith accused No.1 signed the shipping bill and accused No.2 handedover the plier for sealing. That apart, they have no knowledge or motive to help the accused Nos.3 and 4 to cause loss to the Government. The Ld. Counsel further submitted that utmost if the accused Nos.1 and 2 have committed any act in allowing the container of A4, it amounts only to dereliction of the duty i.e., Civil Misconduct and not Criminal Misconduct. In this regard has relied upon the decision reported in 2016 (12) SCC 273 in the case of Shivaprakash v/s State of Kerala and 2000(6) SCC 77 in the case of SVL Murthy v/s State Represented by CBI, Hyderabad. 157 Spl.CC.No.72/2007
129. Per contra, the Ld. Sr.P.P has repelled that accused No.2 intentionally had not signed the shipping bill and export register on 23/01/2003. He had knowledge about the contents of the container. The accused No.1 in order to help accused Nos.3 and 4 had signed Ex.P.65 and let the container for export. It was the bounden duty of accused Nos.1 and 2 to physically verify the goods contained in the container and let the container for export. It was further submitted that accused Nos.1 and 2 with fraudulent intention helped accused No.3 to export goods which are contrary to the shipping bill. The circumstances in which the accused have committed the acts clearly substantiate that they have committed the criminal misconduct by abusing their official position, have favoured and obtained undue advantage for accused No.3.
130. The three Circulars dated 08/12/2018, 22/06/1999 and 23/01/2002 issued by the 158 Spl.CC.No.72/2007 Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, New Delhi, reveal that authority has placed the representations made by the various Associations of the Customs Department regarding simplification in procedure for movement of export goods from factories, 100% EOUs/EPZ etc. In order to allow removal of export goods from the factories on the basis of selfcertification, a second proviso has been added to Rule 187A of the Central Excise Rules, 1944 vide Notification No.36/98 and CX(NT) dated 02/09/1998 providing for sealing of packages or containers by the units themselves who pay duty of Rs.10.00 Crores and above or are accorded SSTH or STH status etc. The Circular No.6/2002 CusIV dated 23/01/2002 reveal about the scale of physical examination of various categories of export at the port of exports. As per Category (c), the consignment where the amount of drawback/DEPB involved is 159 Spl.CC.No.72/2007 Rs.1,00,000/ or less, which intend the export to sensitive places i.e., Dubai, Sharjah, Singapore, Hong Kong and Colombo, the scale of examination is 25% and for other nations is 2%. The circular bearing No.90/98Cus, dated 08/12/1998 and other circulars, it is stated that where there were export with duty benefit and is above Rs.1,00,000/, 10% shipments should be checked on a random basis and further in the above circular it is stated that if the goods shipped under free shipping bill, only 10% of the consignment will be selected at random. If in case of shipping bill under duty exemption certificate like Ex.P.65, 50% of the consignment would be taken for physical examination. Therefore, it is clear from the Circular No.35/99Cus, the same is applicable to 100% EOUs also. As per circular, the Government of India, Department of Revenue, Central Board Excise had issued a circular dated 08/12/2018 regarding simplification in procedure 160 Spl.CC.No.72/2007 for movement of export goods from factories, 100% EOUs/EPZ etc. On the basis of self certification, it was reduced to 0% physical examination and also reduction in 0% of physical examination of export goods. As per that circular, the selfcertification of cargo was applied to certain category of units as per Para7 of IV Circular No.90/98Customs IV dated 08/12/1998.
131. It is important to note that the above circulars will no way helpful to the accused for the reason that, it is not the defence that accused Nos.1 and 2 physically verified the consignment of A4 company randomly. The entire cross examination does not disclose that the accused Nos. 1 and 2 have randomly verified the consignment of A4Company. Even as per circulars, it was the duty of the accused to check the goods randomly, but they have not verified even randomly. The Inspectors do carry out 161 Spl.CC.No.72/2007 physically inspect the goods which are imported and goods which are exported after processing as usual procedure and prepare the necessary documentation. So, from the above material it is clear that the accused Nos.1 and 2 have not followed the procedure prescribed by the department.
132. In this regard, the court is inclined to refer the evidence of PWs10, 19 and 29. P.W.1 has admitted that after 1998, the Department of Customs, Central Excise relaxed physical supervision of removal and receipt of goods for job work by EOU. But the witness has deposed that relaxation was only to an extent of escorting the goods physically, but it is the duty of the Inspector to physically verify all the goods with documents. P.W 2 in the crossexamination has stated that plier should not be handedover to any other person other than the superior or colleague. In his tenure, he had examined three consignments of A4company and 162 Spl.CC.No.72/2007 endorsed the same. The Superintendent of Customs would allot the work to Inspector to carryout the physical verification of the consignments, such as invoices, shipping bills and packing list. P.W.29 During the course of crossexamination, has admitted that practically it was difficult for the Inspector to be present in the unit physically when the goods were packed. He further admitted that the Inspector used to handover the Pliers to EOUs to seal it. He gave statement at Ex.P.90. P.W.32 in his crossexamination, has deposed that once the container sealed in EOU unit, then ICD will not open the seal to verify the goods. He has further stated that there will be two seals, one is OTL and another one is lead seal. P.W.19 has admitted that it is practically difficult for Inspectors to make verification of every units in time. It is forthcoming from the Export Register at Sl.No.8 at Ex.P.55, PW1 had not signed the Export Register at Ex.P.55. PW1 163 Spl.CC.No.72/2007 had also signed on the back side of the shipping bill as Superintendent and at the place where Inspector has to put the signature for verification of goods personally.
133. It is important to state the Ld.Sr.P.P. would submit that the shipping bill produced by the accused along with the statement is Photostat copy, hence the same is not admissible in law. The said argument has no merit for the reason that in the evidence of P.W.1 and the statement given before the CBI has stated that he had allowed the consignment belonging to A4Company vide shipping bill dated 03/09/2001. On the backside of the shipping bill, PW1 had also made same endorsement as made by accused No.1 at Ex.P.65. PW1 himself had made two endorsements with regard to physical verification of the consignment. P.W.1 in his statement before the DRI also admitted the above fact. Therefore, there is no impediment to 164 Spl.CC.No.72/2007 peruse the statement of PW1 given before the DRI which is part of case file also. As per statement, on 03/04/2003, PW1 was enquired with regard to consignment dated 03/09/2001 and so also dated 27/08/2001. The witness has admitted regarding the process of shipping bills during his tenure as Superintendent in EOUIV Range. According to the statement of witness, he had personally examined the export consignment which was of silk yarn. He admitted the signatures on the above shipping bills. Furthermore, PW1 in his crossexamination has specifically stated that the purpose of examining the consignment is to rule out of misuse of the imported goods and goods which are exported. As per prosecution document Ex.P.44, there were no imports received in Canada which had its origin from India or Dubai belonged to A4 company. The communication was received from Indian Consulate New York. Further, the statement of Kupajji Rao 165 Spl.CC.No.72/2007 relied by the prosecution itself goes to show that, A4 company was procuring waste silk from Channapatna and after processing and drying, used to export. The waste silk which was procured from Channapatna was costing Rs.48 per Kg. After 1999, A4 company started to exporting bricks and waste. Approximately, about 12 to 13 containers of bricks and waste material has been exported. When that is the fact, the doubt arise in the mind of court regarding the verification of export consignments made by P.W.1,2,19,29 and 32 after the year 1999. When there was no export of powder grade silk yarn from A4 company after 1999 . It also creates doubt about the work done by the above named witnesses.
134. At this juncture, it is apposite to refer the evidence of PW29. The witness in the cross examination has specifically admitted that "it is true to say that practically it was difficult for the Inspector to be present in the unit physically when 166 Spl.CC.No.72/2007 the goods were packed. It is true to say that it was difficult for the Inspector to visit all the factories physically for verification. It is true to say that wherever there was doubt the Inspector used to handover Pliers to EOUs to seal it". From the above evidence, it substantiates the defence of the accused that due to more number of applications for verification of shipping consignments, they could not able to verify the consignment goods physically at EOU and therefore A2 handedover the plier to PW 10, who in turn handedover to PW33 and later it was handedover to accused No.3 for sealing. The evidence further manifests that then Inspectors have followed the same procedure as followed by accused Nos.1 and 2 in the case. P.W.29 has refused to sign the deposition, after the the evidence was readover to the witness in the open court, had not raised any objection. Only when signing the deposition has contended that he had not stated that the inspectors 167 Spl.CC.No.72/2007 used to handover the Plier to the CHA.( Customs House Clearing Agent). The prosecution has also filed application seeking permission to rectify the mistake crept in the disposition of P.W.29. The said application was dismissed as the witness consciously admitted the suggestion of the defense counsel and admissions made in the cross cannot be set it right by further reexamination. P.W.29 deposed before the court what regularly transpires in the department at EOUs. In view of Sec.277(b) of Cr.P.C the signature of the witness is not mandatory. When the witness is not willing to sign the deposition, the observation can be recorded by the court as remarks under Sec.278(2) of Cr.P.C. In this regard, the court has made observation in the order sheet. Therefore, though P.W.29 had not signed the deposition, it has evidentiary value in the eye of law. So from the above material evidence, it is clear that in usual course the accused No.1 had 168 Spl.CC.No.72/2007 made endorsement on Ex.P.65 stating he physically verified the consignment and accused No.2 had handedover the Plier to PW10. The evidence of P.W.15 makes clear that if the customs department find any doubt regarding shipment goods, the Central Silk Board, Bengaluru will go to the EOU and check the export goods by taking the bales randomly, only after confirmation the export will be allowed. Therefore, there was no doubt about the bonafide of the exporter, the goods were not opened and checked by the accused NOs.1 and 2. It was contended by the Ld.Sr.P.P that the accused No.2 intentionally had not signed the shipping bill and Export Register. The contention of the prosecution is not acceptable for the reason that the accused No.1 had not instructed/directed the accused No.2 to verify the container as per rules stated by the witnesses. When the documents were not sent to the accused No.2, how he could sign the documents and 169 Spl.CC.No.72/2007 Register. It is for the prosecution to place the material which specifically describes the duties of the accused Nos.1 and 2. The prosecution has placed reliance only on the evidence of P.W.1,2,19,29, and 32. They only stated about their duties. However, the accused in their examination under Sec.313 Cr.P.C have not denied the Rules and procedures narrated by the above witnesses. However, it is the bounden duty of accused Nos.1 and 2 to follow the circulars and regulations issued by Customs Department from time to time. Of course, there is negligence in not following the rules of Customs Department regarding physical verification of consignment goods as per circulars as produced by the accused themselves, but it is crystal clear that there was no dishonest or fraudulent intention or motive by the accused Nos.1 and 2 to let the container to ICD, Bengaluru for export and to cause loss to the Government of India in turn 170 Spl.CC.No.72/2007 wrongful gain to the accused No.3. Therefore, it cannot be said that the accused Nos. 1and 2 in furtherance of criminal conspiracy have allowed the export in order to obtain pecuniary advantage for A4 company.
135. In this regard, the Hon'ble Apex Court in Union of India V/s Major I.S Khanna and Major v/s I.C Laloo reported in 1972 (3) SCC 873 has held that "as regards to the irregularities in procedure committed by the accused, the procedure might not be in accordance with the rules prescribed for purchases, but such approach of procedure did not surely meant fraud or any other criminality.
136. The Hon'ble Apex Court in AIR SC 4999 has held that where persons obtain pecuniary advantage for 3rd party by violating departmental rules or instructions are not covered under Sec.5(1)
(d) unless dishonest is established. 171 Spl.CC.No.72/2007
137. In the decision of C.ChengaReddy v/s State of A.P 1980(3) SCC 110 has held that "even when codal violations were established and it was also proved that there were irregularities committed by allotting/awarding the work in violation of circulars, that by itself was not sufficient to prove that a criminal case was made out. The Court went on to hold "On a careful consideration of the material on the record, we are of the opinion that though the prosecution has established that the appellants have committed not only codal violations but also irregularities by ignoring various circulars and departmental orders issued from time to time in the matter of allotment of work of jungle clearance on nomination basis and have committed departmental lapse yet, none of the circumstances relied upon by the prosecution are of any conclusive nature and all the circumstances put together do not lead to the irresistible conclusion that the said 172 Spl.CC.No.72/2007 circumstances are compatible only with the hypothesis of the guilt of the appellants and wholly incompatible with their innocence".
138. In order to commit an offence, the mensrea i.e,. consensus mind and motive are more important. On a careful consideration of the material on record, the prosecution has established that the accused have committed irregularities by ignoring the circulars issued from time to time. But none of the circumstances relied by the prosecution disclose the guilt of the accused. In the absence of motive and mensrea, it cannot be said that the accused Nos.1 and 2 in order to obtain pecuniary advantage for A3, have abused their official position as public servants and committed the offence of criminal misconduct. Certainly, the acts committed by accused Nos.1 and 2 falls within the meaning of dereliction of duty and not criminal misconduct. Thus, I have reached to the 173 Spl.CC.No.72/2007 conclusion that prosecution has failed to prove the offence of criminal misconduct against accused Nos.1 and 2 under Sec.13(1)(d) r/w 13(2) of the PC Act..
FORGERY & USING FORGED DOCUMENT AS GENUINE.
139. As per the allegations, the accused No.1 has committed the offence under Sec.468 of Cr.P.C, in certifying that he had physically examined all 110 bales of powder grade silk yarn as per the invoice and shipping bill and also certified that he had opened and examined the container and the content of the same to be correct. It has alleged that the accused No.2 fraudulently handed over the plier No.1/93 to P.W.10 and committed the offense under Sec.467 of IPC. The accused No.3 fraudulently made use of the plier for sealing the container, knowingly that the container does not contain the goods as per 174 Spl.CC.No.72/2007 bill and used as genuine and committed the offense under Sec. 471 of IPC. All these facts are correlated, hence the same are taken for common discussion. In order to prove the offence forgery, it is relevant to know what is forgery as defined under I.P.C. The offence 'forgery' is defined under Sec.463 of IPC. It reads thus:
"Whoever makes an false document or false electronic record or part of a document or electronic record, with intent to cause damage or injury, to the public or to any person, or to support any claim or title, or to cause any person to part with property, or to enter into any express or implied contract or with intend to commit fraud or that fraud may be committed, commits forgery."
140. To constitute the offense under Sec.468 IPC, the following requirements must be proved by the prosecution. The essential ingredients of Sec.468 are;
a) That the accused committed forgery
b) That he did so intending that the document forged shall be used for the purpose of cheating. 175 Spl.CC.No.72/2007 The intention of the accused to do particular thing is very much important for the offense under Sec.468 IPC. The accused had criminal intention to commit fraud was requisite to complete the offence of Forgery under this section. The prosecution must prove that the document is a forgery and thus the accused forged the document. That he did as above intending that the forged document would be used for the purpose of Cheating for the offence of Forgery.
141. As could be seen from the evidence discussed supra, the Court has come to the conclusion that prosecution has failed to prove the criminal conspiracy between accused Nos.1 and 2 with accused No.3 who is CEO of A4Company. The only allegation made against accused No.1 is that, he made false endorsement and signed on the back of Ex.P.65 regarding physical verification of the 176 Spl.CC.No.72/2007 goods. As discussed above, there was no dishonest intention for the accused to make endorsement on Ex.P.65 that he verified the contents of the container. He made the statement in usual course, which was followed by the predecessors in office i.e., prosecution witnesses. He had no intention to cheat the Government of India. Hence, the document cannot be a forged document.
142. Further, it has alleged that accused No.2 had handed over the plier for sealing which is valuable security. The accused No.2 was the custodian of the Plier and he has to keep it safely and not supposed to handover to third party. The ingredients of Sec.467 of IPC are:
a) The accused must have forged a document
b) The document must be one of the clauses specified in the section.177 Spl.CC.No.72/2007
Here in the case, the act committed by the accused is handing over the plier to P.W.10. The evidence of this P.W.10 buttress the contention of the accused that before, accused No.2 assumed the charge as Inspector at EOU IV Range, the Custom Housing Agents i.e., P.W.10 and 33 were used to seal the containers by themselves by using the pliers. Therefore, it is suffice to say that the accused No.2 had deliver the Plier to P.W.10 who in turn handed over to P.W.33 and lastly it was received by accused No.3 for sealing with fraudulent intention to have wrongful gain to the A4 company. In the absence of any mensrea it is not proper to say that the accused No. 1 and 2 have made false document and committed the offense of forgery .
143. It has alleged that the accused No.3 knowingly used the forged document and plier as genuine and committed the offense of Sec.471 IPC. One of the necessary ingredient to attract the said 178 Spl.CC.No.72/2007 offense is fraudulent and dishonest use of the document as genuine. Knowledge on the part of the person using the document that it is a forged one is relevant. The person using the document must have specific knowledge that the document is a forgery. In the case on hand, when the prosecution has failed to establish that the accused Nos.1 and 2 have committed the offense of Forgery under Sec.467 and 468 of IPC, the question of using the forged document and Plier by the accused No.3 as genuine does not arise at all. In the above circumstances, court is of the opinion that the prosecution has failed to the prove the ingredients of Secs.467,468 and 471 IPC against the accused Nos.1 to 3.
144. After an exhaustive and elaborate consideration of all documents and oral evidence on record, the Court has reached to the conclusion that the prosecution has failed to prove the criminal conspiracy between the accused Nos.1 to 4 with 179 Spl.CC.No.72/2007 regard to fraudulent act committed by them in allowing the container bearing No.CLHU 2620954 pertaining to A4Company without verifying and sealing the container physically by making endorsement in the shipping bill Ex.P.65. Further, the prosecution has failed to prove that the accused Nos.1 and 2 have committed the offence of forgery in certifying the shipping bill that physically verified the goods and handing over the plier to PW10 and the accused No.3 with dishonest intention made use of the Plier for sealing to cheat the Government of India beyond reasonable doubt. It is to be noted that in view of well settled principles of law, the golden thread which runs through the web of the administration of justice in criminal cases is that if two views are possible on the evidence adduced in the case, one pointing to the guilt of accused and the other to his innocence, the view which is favourable to the accused should be adopted. This principle has 180 Spl.CC.No.72/2007 a relevance in cases wherein the guilt of the accused is sought to be established by the circumstantial evidence. Here in the case there is dereliction of duty by the accused Nos.1 and 2 in not following the rules and procedures adopted by the customs department, but the prosecution has failed to prove the fraudulent dishonest intention of the accused to commit the charge sheeted offences. Hence, under such circumstances the accused Nos.1 and 2 cannot be held guilty for the charge sheeted offences. The prosecution has succeeded in proving the offence of Sec.420 IPC committed by A3 and A4. The accused No.3 being the CEO of A4Company with fraudulent and dishonest intention from the inception had submitted false shipping billEx.P.65 for export of mud bricks wrapped in waste silk material under the guise of powder grade silk yarn which resulted in evading the custom duty to the extent of Rs.26,94,251/. The accused Nos.3 and 4 caused 181 Spl.CC.No.72/2007 loss to the Government of India and corresponding wrongful gain to themselves and thereby committed offence punishable under Sec.420 of IPC. Therefore, I answer Point Nos.2, 3, 4, 5 and 7 in the Negative and Point No.6 in the Affirmative.
145. POINT NO.8 : In view of the above discussion, reasoning and hearing arguments on both the sides, the Court has come to the conclusion that prosecution has succeeded in proving guilt of accused Nos.3 and 4 for the offence punishable under Sec.420 of IPC beyond reasonable doubt by placing cogent, corroborative and convincing evidence. Further, the prosecution has failed to prove the guilt of accused Nos.1 to 4 for the offences punishable under Sec.120(B) R/w Secs.468, 467, 471 of IPC. Further the prosecution has failed to prove the guilt of accused Nos.1 and 2 for the offence of criminal misconduct under Sec.13(1)(d) R/w Sec.13(2) of P.C Act beyond reasonable doubt. 182 Spl.CC.No.72/2007 Therefore, the accused Nos.1 and 2 are entitled for acquittal of the charge sheeted offences and accused Nos.3 and 4 are found guilty for the offence under Sec.420 of IPC. Hence, the following :
ORDER Acting under Section 248(2) of Cr.P.C., the accused No.1 and 2 are acquitted for the offences punishable under Secs.120(B) R/w Secs.468, 467, 471, 420 of IPC and Sec.13(2) r/w Sec.13(1)(d) of The Prevention of Corruption Act, 1988.
Acting under Sec.248(1) of Cr.P.C, the accused Nos.3 and 4 are convicted for the offence punishable under Sec. 420 of IPC.
Acting under Section 248(2) of Cr.P.C, the accused Nos.3 and 4 are acquitted for the offences punishable under Secs.120(B) R/w Secs.468, 467, 471 of IPC and Sec.13(2) r/w Sec.13(1)(d) of The Prevention of Corruption Act, 1988.183 Spl.CC.No.72/2007
The earlier bail bond and surety bond executed by accused Nos.1 to 3 and their sureties are hereby stands discharged.
MO.1Plier is ordered to be returned to Customs Department. MO.2Sample OTL is ordered to be destroyed after appeal period as worthless.
(Dictated to the Judgment Writer, transcribed by her, corrected and then pronounced by me in open court this the 6 th day of March, 2023.) ( E.CHANDRAKALA ) C/c XLVI Addl. City Civil & Sessions Judge and Special Judge for CBI Cases, Bengaluru.
***** ORDER ON SENTENCE The judgment is pronounced by finding the offender Nos.3 and 4 are guilty of the offences punishable under Section 420 of IPC.184 Spl.CC.No.72/2007
2. On the question of the quantum of sentence to be imposed, heard the learned Sri.V.N.N. Advocate, appearing on behalf of the offenders. He submitted that the offender No.3 is aged about 80 years and suffering from various ailments. He underwent surgery. The Ld. Counsel has produced the copies of the medical documents. The accused No.4Company is a proprietorship concern. Therefore, he prays for lenient view to be taken on passing sentence.
3. On the otherhand, the Ld.Sr.P.P submitted that the prosecution has proved the guilt of accused No.3 beyond reasonable doubt for the offence punishable under Sec.420 of IPC. The accused by taking advantage of the duty free licence issued by the Government of India has cheated the Government to the extent of Rs.26,94,251/ in the year 2003. She produced memo with citation reported in 2008(9) S.C.C 800 in the case of 185 Spl.CC.No.72/2007 N.Naveen Kumar and Others V/s State of Andhra Pradesh. She prays for imposing fine amount proportionate to duty as on today. The act committed by the accused is affects the economy of the nation. The Ld.Sr. P.P also prays for award of maximum punishment and proportionate fine under Sec.63 of IPC.
4. In view of the decision of Hon'ble Apex Court in State of Madhya Pradesh V/s Mehathab (Crl.A.No.290/2015 dtd. 13/02/2005), it is the duty of the Court to award just sentence to a convict against whom charge is proved by taken into consideration of the mitigating and aggravating circumstances. The sentence has to be fair not only to the accused, but also to the victim and the society.
5. Further, the Hon'ble Apex Court in AIR 2012 S.C 3802 in the case of Alister Anthony Pareira V/s 186 Spl.CC.No.72/2007 State of Maharashtra has held that the Court has to take into consideration all aspects including social interest and consciousness of society for award of appropriate sentence.
6. On coming into the aggravating circumstances of the case, the accused No.3 being the CEO of the A4Company had imported duty free raw mulberry silk yarn subject to export the finished powder grade silk yarn less weightage and he exported waste material with bricks in place of powder silk yarn by claiming duty exemption of Rs.26,94,251/ and cheated the Government of India and wrongful gain for himself. The mitigating factors are that he is suffering from old age ailments. The offender by committing the offences has invited the risk to himself and now he cannot plead for leniency in the sentence to be imposed. The Hon'ble Apex Court in Naveen Kumar and others V/s State of Andhra 187 Spl.CC.No.72/2007 Pradesh has considered the matters to be taken into consideration for fixing the fine. The case referred in the decision was under Sec.13(2) R/w Sec.13(1)(e) of P.C Act. The Hon'ble Apex Court while imposing fine has taken the present value of property which is relevance and not the value of the asset at the relevant point of time of seizure. Further, as per Sec.63 of IPC, the Court is empowered to impose fine which may extend the amount of fine to which the offender is liable is unlimited, but shall not be excessive. Therefore, after keeping in mind above ratio laid down in judgments and the provision of law while awarding sentence, this Court should bear in mind the expectation of the society to prevent the offence committed against economy of the nation by providing prompt conviction and stern sentence.
However, it is necessary to strike the balance between the maximum and minimum punishment. 188 Spl.CC.No.72/2007
7. In this case, the offence was committed on 23/01/2003. The offender No.3 cheated the Government of India to the extent of Rs.26,94,251/ in the year 2003. Therefore in order to impose the fine, the proportionate amount which was duty exempted by the Government of India is to be taken into consideration. For the offence under Sec.420 of IPC, punishment prescribed is for a term which may extend to 7 years and shall also be liable to fine. The charge sheet filed in the year 2003. Since then the offender was attending the proceedings. Nearly 20years the offender was before the Court for facing the trial. Hence, by considering his age, old age ailments and the period for trial, it is just and correct to impose the sentence of one year Simple Imprisonment. Further, the offender from the beginning had fraudulent and dishonest intention to cheat the Government of India and he had cheated Rs.26,94,251/ in the year 2003. Certainly, now if it 189 Spl.CC.No.72/2007 is calculated, it is more than four times. Therefore, it is just and proper to impose fine of Rs.50,00,000/.
8. After considering the facts and circumstances of the case and for the reasons stated herein above, it is just and proper to pass the sentence on the offender. Accordingly, this Court proceed to pass the following:
ORDER The offender Sri.Devendra Kumar Jain @ D.K.Jain is sentenced to undergo Simple Imprisonment for One Year and shall be liable to pay fine of Rs.50,00,000/ (Rupees Fifty Lakhs only) for the offence under Sec.420 of IPC and in default of payment fine, he shall undergo Simple Imprisonment for further period of six months.
Acting under Section 428 of the Code of Criminal Procedure, the period of detention undergone by the offender if any, shall be 190 Spl.CC.No.72/2007 given set off against the sentence of imprisonment.
Free copy of the judgment be furnished to the offender forthwith.
(Dictated to the Judgment Writer on Computer, typed by her, corrected and then pronounced by me in open court this the 9 th day of March, 2023.) ( E.CHANDRAKALA ) C/c XLVI Addl. City Civil & Sessions Judge and Special Judge for CBI Cases, Bengaluru.
***** ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION :191 Spl.CC.No.72/2007
PW1 V.R.Balasubramani PW2 Parashuraman Kuntoji PW3 Joy Kumari Chandar PW4 M.V.Nagaraj PW5 Radhesh.S PW6 Sajad Mohamed PW7 Joseph Roy PW8 K.A.Joseph PW9 D.B.Mahesh PW10 Manju Harlur PW11 S.R.Shivananda PW12 S.Raja PW13 Biju Thampi PW14 R.Rajeevalokan PW15 Loganathan PW16 Shivashankar PW17 Suresh Kumar PW18 M.Manoj PW19 Sarvaotham PW20 Kavitha Podwal PW21 Girish Vaidya PW22 P.D.Jose PW23 S.Balakrishnan PW24 Senthil Murgan PW25 M.A.Hiremath PW26 Susan Varghese PW27 R.Natarajan PW28 Mani John PW29 Ashoka T.Mehathri PW30 Ashok Pattar PW31 Ramanujam PW32 K.Sreedharan PW33 Pradeep T.A PW34 M.Raja
LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE :
NIL 192 Spl.CC.No.72/2007 LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION :
Ex.P.1 Shipping Bill of M/s.Amisha Internationals
Ex.P.1(a) Signature of PW1
Ex.P.1(b) Signature of PW2
Ex.P.2 Shipping Bill of M/s.Amisha Internationals
Ex.P.2(a) Signature of PW1
Ex.P.2(b) Signature of PW2
Ex.P.3 Shipping Bill of M/s.Amisha Internationals
Exs.P.3(a) Signature of PW1
Ex.P.4 Shipping Bill of M/s.Amisha Internationals
Ex.P.4(a) Signature of PW1
Ex.P.5 Shipping Bill of M/s.Amisha Internationals
Ex.P.5(a) Signature of PW1
Ex.P.5(b) Signature of PW2
Ex.P.6 Register pertaining to the bonding of goods of
M/s.Amisha International
Exs.P.6(a) & Entries at Sl.Nos.1 to 12 at page Nos.10 to 12
(b) of Ex.P.6.
Ex.P.6(d) Signature at page No.21 Sl.No.26 Ex.P.6(e) Signature of A2 at page No.21 Sl.No.26 Ex.P.7 Register pertaining to the bonding of goods of M/s.Amisha International Exs.P.7(a) Signatures of PW2 to 7(c) Exs.P.8 & 9 License issued to A4 by Assistant Commissioner of Customs Ex.P.10 Statement given by the witness before DRI Exs.P.11 & Original Sanction orders 12 Exs.P.11(a) Signatures of PW3 & 12(a) Ex.P.13 Authorization letter authorizing to search residential premises of A3 Ex.P.13(a) Signature of A3 Ex.P.14 Mahazar dated 29.01.2003 detailing out of the seized documents (5 sheets) 193 Spl.CC.No.72/2007 Ex.P.14(a) Signature of PW4 Ex.P.14(b) Signature of A3 Ex.P.14(c) to Signature of PW13
(f) Ex.P.15 Office copy of the summons Ex.P.15(a) Statement dated 29/01/2003 at A3 Ex.P.16 Office copy of the summons of A3 Ex.P.16(a) Office copy of the statement of A3 Ex.P.17 Office copy of the summons of Aditya Jain Ex.P.17(a) Office copy of the statement of Aditya Jain Ex.P.18 Office copy of the summons of Shanmugha Sundaram Ex.P.18(a) Office copy of the summons of Shanmugha Sundaram Ex.P.19 Mahazar dated 10.02.2003 with annexures.
Ex.P.19(a) Signature of PW4
Ex.P.19(b) Signature of officers who were present.
Ex.P.20 Office copy of the summons of Shivashankar
Ex.P.20(a) Signature of Shivashankar
Ex.P.21 Office copy of the summons of Suresh Kumar
Ex.P.21(a) Signature of Suresh Kumar
Ex.P.21(b) English Translation of Ex.P.21(a)
Ex.P.22 Office copy of the summons of A3 dated
13/02/2003
Ex.P.22(a) Office copy of statement of A3
Ex.P.23 Office copy of the summons of A3 dated
14/02/2003
Ex.P.23(a) Office copy of statement of A3
Ex.P.24 Office copy of the summons of A3
Ex.P.24(a) Office copy of statement of A3
Ex.P.24(a1) Signature of PW10
Ex.P.25 Office copy of the summons of A3 dated
21/02/2003
Ex.P.25(a) Office copy of statement of A3
Ex.P.26 Office copy of the summons of owner and
driver of the autorickshaw
Ex.P.26(a) Office copy of joint statement of owner and
driver of the autorickshaws
Exs.P.26(b) Photograph of autorickshaw Exs.P.26(c) R.C Extract of autorickshaw 194 Spl.CC.No.72/2007 Exs.P.27 Mahazar dated 29/01/2013 Ex.P.27(a) Signature of PW5 Ex.P.27(b) Signature of PW6 on Ex.P.27 Exs.P.27(c) Photocopy of packing list Exs.P.27(c1) Signature of PW8 Ex.P.27(d) Covering letter forwarding the documents of the container Exs.P.27(d1 Signature of PW8 Ex.P.27(e) Copy of inland waybill Ex.P.27(e1) Signature of PW8 Exs.P.27(f) Two shipping bills & (g) Exs.P.27(f1) Signature of PW8 & (g1) Ex.P.27 (h) Two weighment slips & (i1) Ex.P.27(h1, Signature of PW9 i1) Ex.P.27(j) Signature of PW7 Ex.P.27(k) Signature of PW8 Ex.P.27(1) Signature of PW9 Ex.P.27(c2, Mahazar dated 29/01/2013 d2,e2,f2,g2) Ex.P.28 Mahazar Ex.P.28(a) Signature of PW5 Ex.P.28(b) Signature of PW6 Ex.P.28(c) Signature of PW7 Ex.P.28(d) Signature of PW8 Ex.P.28(e) Signature of PW9 Ex.P.29 Mahazar dated 30/01/2013 Ex.P.29(a) Annexures Ex.P.29(b) Signature of PW5 on Ex.P.29(a) Ex.P.29(c) Signature of CW.8 on Ex.P.29 Ex.P.29(d) Signature of PW6 on Ex.P.29 Ex.P.29(e) Signature of PW7 Ex.P.29(f) Signature of PW8 Ex.P.29(g) Signature of PW9 Ex.P.29(h) Signature of PW18 Ex.P.29(h1 Signature of PW8 & i1)) 195 Spl.CC.No.72/2007 Exs.P.30 to Five photographs of operation of opening the 34 packages and verification.
Ex.P.35 Reported dated 10.02.2003
Ex.P.35(a) Opinion of Ex.P.35 letter
Ex.P.35(b) Signature of PW23
Ex.P.36 Report dated 11.02.2003
Ex.P.36(a) Opinion of Ex.P.36 letter
Ex.P.36(b) Signature of PW23
Ex.P.37 15 letters addressed to RTO
Ex.P.38 22 reply letters to Ex.P.37
Ex.P.39 Letter dated 25/02/2003 issued by CSTRI
Ex.P.40 5 Test Certificates
Ex.P.41 Letter dated 25/02/2003 from CSTRI
Ex.P.42 Letter dated 27/02/2003 to Director, CSTRI
Ex.P.42(a) Signature of PW4 on Ex.P.42.
Ex.P.43 Summons issued to G.Loganathan CW23
dated 08/04/2003.
Ex.P.43(a) Part and parcel of Ex.P.43
Ex.P.43(b) Application
Ex.P.43(c) Three packing list
Ex.P.43(d) Report
Ex.P.43(d1) Signature of PW15
Ex.P.43(e) Application for voluntary inspection
dt.11/01/2001
Ex.P.43(f) Invoice dt.11/01/2001
Ex.P.43(g) Packing list
Ex.P.43(h) Test analysis report dt. 12/01/2001
Ex.P.43(i) Details of Certification
Ex.P.43(j) Statement of PW15 before DRI
Ex.P.44 Fax message dt.08/07/2003 from Consulate
General of India in 3 sheets
Ex.P.45 Search warrant dt. 29/01/2003
Ex.P.45(a) Signature of PW11
Exs.P.46, Mahazar dt. 29/01/2003 alongwith Annexurs
46(b), 46(c), A,B and C
46(d)
Ex.P.46(a) Signature of PW11
Ex.P.46(e) Form XXA and copies of bill of entry,
transport document, packing list, insurance copy, delivery challan, shipping bill, 196 Spl.CC.No.72/2007 commercial invoice.
Ex.P.47 Summons to Zaheer Pasha Exs.P.48,49 Statements of Zaheer Pasha & Lokesh Ex.P.50 Seizure Memo Ex.P.50(a) Signature of PW11 Ex.P.51 Export Item Register Ex.P.52 Consumption Register Ex.P.53 Stock Register of goods for production and disposal of EOU Ex.P.54 Bond Register Ex.P.55 Export Register Ex.P.56 Office order dt.02/03/2006 regarding posting of A1 and A2 Ex.P.57 Service Register of A1 Ex.P.58 Service Register of A2 Ex.P.59 FormII, Outward Challan/Twisting order pertaining to A4company Ex.P.60 Search warrant against A3 Ex.P.61 Mahazar Ex.P.61(a) Signature of PW4 Ex.P.61(b) Signature of Vijayshali Ex.P.61(c) Signature of Lakshmisha Ex.P.61(d) Signature of A3 Exs.P.62 to 3 Annexures 64 Ex.P.65 Shipping bills and two copies Ex.P.65(a) Signature of PW20 Ex.P.65(b) Report by Inspector Ashok Pattri Ex.P.65(c) Signature of Ashok Pattri Ex.P.65(d)(e) Signature of PW25 Ex.P.66 Invoice dt. 23/01/2003 Ex.P.67 Packing list dt.23/01/2003 Ex.P.68 Invoice dt.23/01/2003 Ex.P.69 Packing list dt.23/01/2003 Ex.P.70 Summons to Kuppaji Rao Ex.P.71 Statement of Kuppaji Rao Ex.P.72 Summons to Thopaiah Ex.P.73 Statement of Thopaiah Ex.P.74 Covering letter of CSTRI Ex.P.75 Report of CSTRI 197 Spl.CC.No.72/2007 Ex.P.76 Covering letter dt. 21/02/2006 Exs.P.77 & Show cause notice dt.26/07/2003 78 Ex.P.79 Letter dt.10/03/2003 to Deputy Director, DRI Ex.P.80 Summons to A1 Ex.P.81 Statement of A1 Ex.P.82 Statement of Srinivas, challan and photstat copies of RC of the vehicle Ex.P.83 Statement of Venkatesh Gowda, challan and photstat copies of RC of the vehicle Ex.P.84 Statement of A3 Ex.P.85 Summons to A3 and documents Ex.P.86 Summons to Gopal Ex.P.87 Statement of Gopal Ex.P.88 Letter dt.18/03/2003 to DRI Ex.P.89 Statement and Summons to Balasubramani Ex.P.90 Summons and statement of Ashok Mehatri Ex.P.91 Statement and summons of Smt.Rakshanda.J.Nawab Ex.P.92 Statement and summons of A.Krishnamurthy Ex.P.93 Further Statement of Balasubramani, Suptd.of Customs Ex.P.94 Summons issued to Mallesh, Puttaraju and Ramesh Ex.P.95 Letter dt. 04/04/2003 written by A4 to Jt.Director, DRI Ex.P.96 Request letter dt. 10/04/2003 to Commissioner of Customs Ex.P.97 Summons and statement of Ananda Ex.P.98 Summons and statement of Sardar Khan and documents Ex.P.99 Summons and statement of B.Jayaram Ex.P.100 Summons and statement of Ganesh and documents Ex.P.101 Copy of the patent holder of silk yarn Ex.P.102 Letter dt.08/11/2001 by Deputy Development Commissioner to M/s.Ciltex Exports Ex.P.103 Letter to Silk Root Exports dt.31/08/2001 Ex.P.104 Statement of Puttaraju and documents Ex.P.105 Statement of Rama and documents 198 Spl.CC.No.72/2007 Ex.P.106 Statement of Shivanna and documents Ex.P.107 Statement of Manju and documents Ex.P.108 Statement of Ramesha and documents Ex.P.109 Letter dt.21/04/2003 to ADG Ex.P.109(a) Statement of D.Sukumaran dt.20/03/2003 Ex.P.109(b) Statement of D.Sukumaran dt.09/04/2003 Ex.P.110 Statement of Bhaskara B.T and documents Ex.P.111 Letter dt. 12/03/2003 written to SIO, DRI Ex.P.112 Statement of Prabhakar and document Ex.P.113 Statement of Manjunath and documents Ex.P.114 Statement of Puttaraju and documents Ex.P.115 Statement of Jagadish and documents Ex.P.116 Statement of Mallesh and documents Ex.P.117 Statement of Gopi and documents Ex.P.118 Statement of Gopikrishna and documents Ex.P.119 Statement of P.Venkatesha and documents Ex.P.120 Statement of Ashok Mahatri and documents Ex.P.121 Statement of Parashuram Kuntoji and documents Ex.P.122 Statement of Rakshanand J.Nawab and documents Ex.P.123 Statement of Firoz and documents Ex.P.124 Notice of suspension of licence of A4Company Ex.P.125 Letter dt. 10/07/2003 to ADG, DRI Ex.P.126 Statement of R.Srinivasan and documents Ex.P.127 Statement of Kuppaji Rao and documents Ex.P.128 Statement of Devendra Kumar Jain and documents Ex.P.129 Letter dt. 24/02/2003 to Development Commissioner, Cochin Export Processing Zone Ex.P.130 Letter dt. 21/02/2003 to ADG, DRI Ex.P.131 Statement of Pradeep Ex.P.132 Letter dt. 27/02/2003 to ADG, DRI alongwith Project Report Ex.P.133 Letter dt.24/02/2003 to Jt.Director, DRI Zonal Office by SIO Ex.P.134 Letter dt. 03/03/2003 to DC Madras Export Processing Zone Ex.P.135 Letter dt. 03/03/2003 to ADG, DRI 199 Spl.CC.No.72/2007 Ex.P.136 Summons and statement of Ranganath Ex.P.137 Summons and statement of Muniraju Ex.P.138 Copy of letter dt. 07/03/2003 regarding samples drawn from seized yarn Ex.P.139 Statement of Abdul Khalid and documents Ex.P.140 Statement of Rangaswamy and documents Ex.P.141 Statement of Dhruvakumar and documents Ex.P.142 Letter dt. 10/03/2003 regarding investigation of fraudulent exports Ex.P.143 Summons and related documents issued to Parashuram Ex.P.144 Letter dt. 19/07/2006 from Assistant Commissioner of Customs to CBI Ex.P.145 Bill of entry dt. 21/11/2002 bearing No.441863, Invoice and packing list of A4 Company Ex.P.146 Bill of entry No.445609 dt.04/12/2002, Invoice, Packing list of A4Company Ex.P.147 Bill of entry No.447678 dt.12/12/2002, Invoice, packing list of A4Company Ex.P.148 Bill of entry No.451780 dt.30/12/2002, Invoice, packing list of A4Company Ex.P.149 Bill of entry No.454568 dt. 09/01/2003, Invoice and packing list of A4Company Ex.P.150 Bill of entry No.458706 dt.24/01/2003 of A4 Company Ex.P.150(a) Certificate U/s.65(B) of Indian Evidence Act Ex.P.151 Seizure Memo dt.05/07/2006 and its annexures Ex.P.151(a) Signature of PW26 Ex.P.152 Letter from Masterstroke Freight Forwarders addressed to CBI alongwith its annexures Ex.P.152(a) Signature of PW27 Ex.P.153 Letter from Federal Bank addressed to CBI regarding furnishing documents.
Ex.P.153(a) Signature of PW28 Ex.P.154 Five Bill Registers and extracts Ex.P.155 Letter dt.29/01/2003 to DC of Customs, ICD Ex.P.156 Carbon copy of letter dt. 29/01/2003 200 Spl.CC.No.72/2007 Ex.P.157 Letter dt. 29/01/2003 to Sr.Intelligence Officer, DRI Ex.P.158 Carbon copy of summons issued to D.K.Jain,CEO of A4Company Ex.P.159 Certified copy of the Bond Register maintained by A4company for the period 05/01/2000 to 28/01/2004 Ex.P.160 Letter dt. 06/02/2003 written by D.K.Jain to Jt.Director, DRI.
Ex.P.161 Letter dt. 13/02/2003 regarding handing over
the document to Jt.Director, DRI
Ex.P.162 Summons issued to D.K.Jain
Ex.P.163 Reply to the summons
Ex.P.164 Summons issued to K.G.Subramanyam
Ex.P.165 Statement of K.G.Subramanyam
Ex.P.166 Fax message dt.19/02/2003 sent to DRI by
advocate of A4Company
Ex.P.167 Copy of the reply dt.20/02/2003 sent to
advocate
Ex.P.168 Reply dt. 21/02/2003 by A3 to DRI
Ex.P.169 Summons dt.21/02/2003 issued to A3
Ex.P.170 Summons dt.22/02/2003 issued to
Vijaykumar
Ex.P.171 Statement of Vijaykumar
Ex.P.172 Declaration by A4Company regarding
movement of goods
Ex.P.173 Photo of D.K.Jain with address
Exs.P.174 to Statements of A2, A3CEO of A4Company, 176 Manju Haralur.
Ex.P.177 Statements of G.Velayutham alongwith xerox
copy of vehicle details
Ex.P.178 Covering letter dt.30/10/2005 by CBI
Ex.P.179 FIR
Ex.P.180 Application filed by prosecution in
Cr.No.RC.24(A)/2005/CBI to correct
typographical error as Sec.120(B)
Ex.P.181 Search list dt. 23/12/2005 conducted at
residence of A3.
Ex.P.181(a) Signature of PW34
201 Spl.CC.No.72/2007
Ex.P.182 Search list dt. 23/12/2005 conducted at
chamber of Mr.Ashok T.MahatriPW29 Ex.P.183 Search lit dt. 23/12/2005 conducted at residence at Thippanna Mahatri, father of Ashok MahatriPW29 Ex.P.184 Nil Search list dt. 23/12/2005 conducted at the residence of A1 Ex.P.184(a) Signature of PW34 Ex.P.185 Nil Search list dt. 23/12/2005 conducted at the residence of A1 Ex.P.186 Search list dt. 23/12/2005 conducted at the residence of A2 Ex.P.187 Covering letter dt.27/02/2006 addressed to CBI by Customs department Ex.P.188 Covering letter dt.06/10/2006 addressed to CBI by Customs department Ex.P.189 Attested copy of the Bond Register relating to A4 company Ex.P.190 Covering letter Dt.12/10/2006 to CBI Ex.P.191 Attested copy of the MCL register pertaining to import of raw silk bales by A4Company Ex.P.192 Letter dt. 10/02/2003 to Customs department Ex.P.193 Letter dt. 10/02/2003 sent by the DRI to Central Silk Board Ex.P.194 Letter from Customs to DRI Ex.P.195 Covering letter dt. 26/03/2007 addressed to CBI Ex.P.196 Copy of the CCI Rules Ex.P.197 Notification dt. 10/01/2005 Ex.P.198 Notification dt. 28/02/2005 LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE :
Ex.D.1 Photocopies of statement of
V.R.Balasubramani dt.22/04/2013
Ex.D.2 Further statement of V.R.Balasubramani dt.
03/04/2003
Ex.D.3 Letter dt. 20/12/2006 to Commissioner of
Central Excise
202 Spl.CC.No.72/2007
Ex.D.4 Letter dt. 06/01/2007 to Commissioner of
Central Excise
Ex.D.4(a) Signature of PW3
Ex.D.5 Letter dt. 08/03/2007 to Commissioner of
Central Excise
Ex.D.5(a) Signature of PW3
Ex.D.6 Letter No.II/39/84/2006A3b1
Ex.D.6(a) Relevant noting regarding sanction Ex.D.7 Photstat copy of EnclosureF dt. 19/02/2003 Ex.D.8 Copy of General Exemption No.42 LIST OF MATERIAL OBJECTS :
MO1 Plier
MO2 Yellow colour OTL
(E.CHANDRAKALA)
C/c XLVI Addl. City Civil & Sessions Judge & Special Judge for CBI cases, Bengaluru.
**** 203 Spl.CC.No.72/2007