Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of Central Excise vs Madras Chemicals on 12 December, 1985
Equivalent citations: 1986(7)ECR202(TRI.-CHENNAI), 1986(24)ELT308(TRI-CHENNAI)
ORDER
S. Kalyanam, Member(J)
1. This appeal by the Collector of Central Excise, Madras, is directed against the order of the Collector of Central Excise (Appeals) referred to supra, setting aside the order of the Deputy Collector dated 21-5-1984 and exonerating the respondents herein of the charge under Rule 9(2) of the Central Excise Rules, 1944, hereinafter referred to as the Rules.
2. On 14-4-1982, the officers attached to the Special Anti-Evasion Squad, Headquarters Preventive Unit, Madras, proceeded to the respondents-factory and recovered a private slip and a small pocket diary with red plastic cover from A.J. Patel. A.J. Patel happens to be the son of N.D. Patel, who is one of the partners of the respondent-firm. A.J. Patel's father, J.C. Patel, who was also looking after the affairs of the respondent-firm, and one R. Jayaraman, power agent of the respondent-firm were also present at that time. The paper slip and the red pocket diary recovered from the possession of A.J. Patel contained certain accounts regarding manufacture and removal of sodium silicate pertaining to the respondent-firm and on interrogation, A.J. Patel explained the notings in the red diary and admitted that they represented clandestine removal of sodium silicate contrary to law. A.J. Patel gave a statement before the authorities on 14-4-1982 giving details about unlawful and clandestine removal of manufactured goods from the respondent-firm and explaining the various entries, figures and letters in the red pocket diary recovered from his possession. The statement recorded from A.J. Patel which was inculpatory in nature was also attested by the power agent of the respondents who also made an endorsement that what was stated in the statement was correct. J.C. Patel, father of A.J. Patel, has also attested the inculpatory statement of his son, A.J. Patel. On 20-9-1982 the mother of A.J. Patel, N.D. Patel, who is a partner of the respondent-firm also sent a communication to the Superintendent of Central Excise, Special Anti-Evasion Squad, Madras, to the effect that she was aware of the statement given by her son and would 'not deny any of the averments therein. It is in these circumstances, after further investigation, proceedings were instituted against the respondents herein by issue of a show cause notice by the Deputy Collector of Central Excise, Madras, who, by her order dated 21-5-1984 found the respondents liable to pay duty in a sum of Rs. 23,495.37 in respect of the quantities of manufactured items clandestinely removed under Rule 9(2), besides a penalty of Rs. 15,000 under Rule 173Q. The appeal preferred by the respondents before the Collector (Appeals) was allowed as against which the Collector of Central Excise has come by way 'of appeal before the Tribunal.
3. The learned SDR submitted that the Collector (Appeals) under the impugned order has misdirected himself in placing reliance on the order of the Additional Collector in respect of the charges relating to the sister concern of the respondents. It was urged that the statement recorded from A.J. Patel immediately, on recovery of the pocket diary from his possession is true and voluntary and is entitled to credence. He also drew my attention to the fact that the inculpatory statement recorded from A.J. Patel is also attested by J.C. Patel, the father of AJ. Patel, who was looking after the affairs of the respondent-firm. The learned SDR further submitted that the statement of the power agent, Jayaraman, dated 11-5-1982 would also lend support to the Department's case that the original statement recorded from AJ. Patel is true and voluntary. He also assailed the reasoning of the Collector (Appeals) in the impugned order as incorrect contending that under law the Department need not go about making enquiries with reference to the various entries found in the pocket diary recovered from A J. Patel.
4. The learned representative for the respondents submitted that the statement of AJ. Patel, even though inculpatory in nature, should not have been accepted and acted upon since he has nothing to do with the respondent-firm. It was further urged that in a situation like this the onus is squarely cast on the Department to prove and establish the charge of clandestine removal and, the Department has not discharged this onus and therefore, the impugned order is clearly maintainable. He further submitted that the quantity shown in the R.G. 1 register as removed was much more than the figures indicated in the red pocket diary and therefore reliance should not be placed on the figures in the pocket diary. Reliance was also placed on Section 34 of the Evidence Act on behalf of the respondents to contend that when accounts kept in the regular course of business are available, no reliance could be placed on any extraneous statement from a third party like AJ. Patel. Finally, it was urged that at the worst, the evidence available on record would only throw a good deal of suspicion against the respondents and the proceedings being criminal in nature, suspicion can never take the place of proof and at any rate the respondents would be entitled to the benefit of doubt. Therefore, the representative contended that the impugned order appealed against is clearly sustainable in law.
5. I have carefully considered the submissions of the parties herein. The first and primary question that falls for consideration is whether the statement recorded from AJ. Patel which admittedly is inculpatory in nature and confessional in character is entitled to be accepted and acted upon. A perusal of the statement recorded from AJ. Patel clearly shows that he was assisting his father, J.C. Patel, who was looking after the affairs of the respondent-firm. A J. Patel has further stated that the entries in the pocket diary containing letters A, B, C and D are related to the accounts of the respondent-firm and the letters are also explained. Letter 'OB' would refer to opening balance; 'M' to the quantity manufactured; R to the quantity removed and 'CB' to closing balance of sodium silicate manufactured by the respondent-firm. He has also admitted removal of manufactured sodium silicate' without payment of duty and such quantity was also indicated. It is relevant to note that the statement also shows that J.C. Patel, the father of A J. Patel, who was looking after the affairs of the respondent-firm, was also aware of it. This statement of A J. Patel, as conceded by the representative for the respondents, was never retracted or resiled from. One other important circumstance that should be taken note of in this context is the fact that the inculpatory statement recorded from A.J. Patel has also been attested by his father J.C. Patel and Jayaraman, the power of attorney of the respondent-firm. As already adverted to earlier, one of the partners of the respondent-firm, Smt. N.D. Patel, the mother of A.J. Patel, has also addressed a communication to the authorities on 20-9-1982 clearly indicating that she was aware of the statement given by her son, A.J. Patel and that she would not deny any of the averments therein. Jayaraman, the power of attorney of the respondents, hits also independently sent a communication on 11-5-1982 to the authorities confirming the correctness of the inculpatory statement recorded from A.J. Patel and attested by him, and withdrawing his letter of retraction to the authorities dated 20-4-1982. A.J. Patel has not retracted his inculpatory statement and he has explained the figures and letters found in the red pocket diary and recovered from his person as denoting removal of sodium silicate manufactured by the respondent-firm without payment of duty and contrary to law. The inculpatory statement of A.J. Patel has also been attested by his father as well as by Jayaraman, the power of attorney of the respondents. The averments in the statement of A.J. Patel were further affirmed by A.J. Patel's mother, N.D. Patel, by an independent communication dated 20-9-1932 referred to supra. In these circumstances, the conclusion is inevitable that the statement recorded from A.J. Patel is true and voluntary and the Department is entitled to place reliance on the same.
6. The plea made on behalf of the respondents that A.J. Patel being an inexperienced youngster and stranger, totally unconnected with the respondent-firm is not competent to give any statement against the respondents is not legally tenable. A.J. Patel is not a total stranger but a son of one of the partners of the firm. A.J, Patel's father, according to the statement, was also managing the affairs of the firm. The power of attorney of the respondent Jayaraman, has also attested the statement of A.J. Patel. In such a situation I do not find any merit in the plea of the respondents that the statement of A, J. Patel has to be discarded on the ground that he is a total stranger to the affairs of the firm and that respondents cannot be proceeded against on the basis of a statement given by A.J. Patel.
7. The plea of the respondents that the R.G. 1 removal shows a greater quantity than the figures shown in the red pocket diary would not also avail the respondents. After all. in a situation when 'anamath' accounts are recovered showing unlawful or clandestine removal of excisable goods, the person who would be most competent to explain the same is the person who has written it. In the instant case, A.J. Patel, the son of the partner, J.C. Patel, who is also, according to him, looking after the firm's affairs, has cogently explained about the signification of the various figures and letters indicating clandestine removal of excisable goods without payment of duty. This being a factor, especially within the knowledge of J.C. Patel, it would not be proper to call upon the Department to independently elucidate and explain the various figures and entries in the 'anamath' pocket diary. It is for the respondents, on the other hand, to prove and establish with reference to evidence, oral or documentary, that the pocket diary has nothing to do with the respondent-firm. I am afraid the respondents have not been able to adduce any evidence of probabilise their plea that there was no clandestine removal. Reference to R.G. I register and removal of the quantity contained therein would not avail the respondents in any way.
8. The learned representative of the respondents made a fervent plea with reference to the scope of the onus of proof under law and contended that the onus has sot been discharged by the Department. It was also urged that when regularly written account books are maintained in the normal course of business, reference or reliance on a third party's statement would be against law. So far as the question relating to onus of proof is concerned, it is a settled axiomatic proposition of law that in a situation like the one, the court or a quasi-judicial authority would be merely called upon to make an effort to disengage truth from falsehood and not to come to a conclusion that because of certain discrepancy in certain matters the whole story is untrue. In other words, the court should not attempt the easy course of assembling exaggerations and discrepancies and exonerating the guilty party. I am at pains to highlight this aspect of the case because even assuming that the red pocket diary contains certain figures which may be false or wrong, that would not be a circumstance on the basis of which the entire case of the Department can be discredited. It is well settled that the maxim that falsus in uno falsus in omnibus is neither a sound rule of law or a rule of practice. Hardly one comes across a witness whose evidence does not contain a grain of untruth or at any rate exaggeration, embroideries or embellishments. It is therefore the duty of the Court to sift and scrutinise the evidence carefully and in terms of the felicitous metaphor, separate the grain from the chaff. As the Supreme Court has observed Eldorado of absolute proof being unattainable, the law accepts for it, probability as a working substitute in this work-a-day world. In fine, legal proof is not necessarily a perfect proof but only a prudent man's estimate as to the probabilities of the case. The materials recovered during the course of investigation, the statement recorded from the various persons and the surrounding circumstances, coupled with the entries in the red pocket diary clearly point to the conclusion that the charge against the respondents regarding the clandestine removal of excisable goods is clearly made out by the Department.
9. The learned SDR's submission that under the impugned order, the Collector (Appeals) has fallen into error in placing reliance on the findings of the Additional Collector in respect of a different case is well founded. First of all, I should observe that the decision of the Additional Collector in a different case would hardly have any relevance in this case and under law, it would not be relevant or admissible. Assuming for the purpose of argument that the findings of the Additional Collector in relation to certain entries relating to a sister firm of the respondents may have some relevance to the issue in the present case, as I have indicated earlier, even if those entries in the pocket diary relating to the sister concern are false, it would not logically follow that the other entries in the same diary pertaining to the instant case would also be false. Such a conclusion is neither warranted in logic nor in law. I accede to the submission of the learned SDR that the finding of the Collector (Appeals) under the impugned order that the Department should have identified the regular customers of the respondents and enquired them with reference to the receipt of consignments is not legally tenable The Department rests its case on the materials collected during the course of investigation. The only question would be whether the materials are adequate to sustain the charge levelled against the respondents. Reference may also be usefully made to Section 36A of the Central Excises and Salt Act, 1944 which says that where any document is seized from the custody or control of any person, the truth of the contents of such document shall be presumed unless the contrary is proved. A presumption in favour of the Department relating to documents as incorporated in Section 36A of the Central Excises and Salt Act, 1944 also finds a place in similar enactments like the Customs Act, 1962 under Section 139 and the Foreign Exchange Regulations Act under Section 72.
10. The ratio of the Kerala High Court ruling in Kallatra Abbas Haji v. Government of India and Ors., reported in 1984(1) E.C.C. can be usefully referred and applied to this case. The Kerala High Court while dealing with the scope of Section 139 of the Customs Act, 1962 which is almost part materia with Section 36A of the Central Excises and Salt Act, 1944 has held that the court shall presume unless the contrary is proved that the signature and every other part of the document referred to in the section is genuine. The Kerala High Court has observed :
"Section 139 places the burden upon the maker of the statement to deny the genuineness of the signature or any statement contained in the document. It is not disputed by the petitioner's counsel that the expression "document" would include the statement signed by the co-accused. Section 139 leaves no doubt that a court shall presume unless the contrary is proved that the signature of the maker is genuine and every other part of the document in equally genuine. This is the principle on which the court must act. Section 139 does not exclude the applicability of this principle in proceedings before an administrator. If it is open to a court to draw the statutory presumption it is equally open to an administrator in proceedings of this kind to draw a like presumption and conclude in the absence of evidence to the contrary that every word contained in the statement and the signature appearing on the face of it are those of the maker. This being the position in law the respondents were entitled to rely upon every word in the statement signed by the witnesses notwithstanding their attempt to retract therefrom especially when there is no evidence of threat."
11. Therefore, in the facts and circumstances of this case it is for the respondents to prove and substantiate their plea that the red pocket diary has nothing to do with the removal of manufactured excisable goods of the respondents. I, therefore, hold that the charges levelled against the respondents have been clearly substantiated by the evidence available on record and the impugned order appealed against is not legally tenable. Accordingly, I set aside the impugned order and allow the appeal.
12. The respondents have filed a cross-objection. Since the impugned order is totally in favour of the respondents, there is no scope for them to file any cross objection and the same is therefore dismissed as not maintainable.