Madhya Pradesh High Court
M/S R.S. Industries vs Commissioner Of Central Excise on 8 February, 2017
Author: Rajeev Kumar Dubey
Bench: Rajeev Kumar Dubey
-1-
HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE
DIVISION BENCH: HON'BLE Mr. JUSTICE S. C. SHARMA &
HON'BLE Mr. JUSTICE RAJEEV KUMAR DUBEY
C. E. A. No.24/2012
M/s. R. S. Company
Versus
Commissioner of Central Excise
C. E. A. No.25/2012
Natwarlal Sharda
Versus
Commissioner of Central Excise
C. E. A. No.26/2012
M/s. R. S. Industries
Versus
Commissioner of Central Excise
Shri A. M. Mathur, learned Senior Counsel with Shri Abhinav Dhanodkar,
learned counsel for the appellant.
Shri Prasanna Prasad, learned counsel for the respondent.
O R D E R
th (Delivered on this 08 of February, 2017) As per S. C. Sharma, J.
-2-
Regard being had to the similitude in the controversy involved in the present cases, the appeals were analogously heard and by a common order, they are being disposed of by this Court. Facts of Central Excise Appeal No.24/2012 are narrated hereunder.
02- The appellant before this Court M/s. R. S. Company has filed present appeal under Section 35-G of the Central Excise Act, 1944. They are engaged in the manufacturing business of the Pan Masala containing tobacco (Gutkha) falling under Chapter Heading 21.06 of the schedule to the Central Excise Tariff Act, 1985.
03- The appellant is registered with Central Excise Department and are clearing the goods on payment of Central Excise duty at the rate applicable and are availing the CENVAT Credit of duty paid on inputs. As stated in the appeal, the appellant is a partnership firm having three partners. On 19/02/2000, a search was conducted by the Directorate General of Central Excise Intelligence (DGCEI) at the premises of M/s. Suresh Enterprises, the supplier of scented tobacco and proceedings were initiated against them. Searches were also conducted in the premises of certain transporters viz. M/s. Sarita Roadways, M/s. Vijayant Travels and M/s. Hari Roadways Corporation (based in Pune) and documents were seized. -3- Statements of owners and other employees of the transporters were also recorded.
04- It has also been stated that simultaneously, searches were conducted in the factory premises of the appellants and during the search 529 Kilograms of scented tobacco was found in excess than that recorded in the books. 3200 Kilograms of Gutkha in bulk packing was also seized. It has been further stated that during the course of search at the appellant's premises, the DGCEI Officers seized 35 pouches making machines valued at Rs.14,00,000/-, 529 Kilograms of scented tobacco valued at Rs.79,350/- and 3200 Kilograms of Gutkha valued at Rs.8,00,000/-.
05- Further investigations were carried out by DGCEI Officers and on the basis of the investigations, the DGCEI came to conclusion that the present appellant was involved in clandestine manufacture and clearance of 39,44,21.52 Kilograms of Gutkha or 1,97,21,05,260 number of pouches of 2 Grams each and a show cause notice was issued to the appellant alongwith 12 other notices demanding Excise Duty amounting to Rs.39,44,21,052/- and interest thereon and proposal for imposing penalty was also made for evading the Central Excise Duty on the aforesaid amount.
06- A reply was filed to the aforesaid show cause notice. -4- A demand was raised in respect of period w.e.f. 25/04/1998 to 17/02/2000. Reply was submitted to the show cause notice dated 30/01/2004 and after hearing the appellant as well other persons, an order dated 23/04/2003 was passed dropping the proceedings by Commissioner of Central Excise. The department went in appeal against order passed by the Commissioner before the Tribunal and the Tribunal has passed the final order on 06/03/2012 holding that the appellant has clandestinely manufactured and cleared Gutkha and have evaded payment of Excise Duty.
07- Against the order passed by the Tribunal, appeal has been preferred before this Court under Section 35-G of the Central Excise Act, 1944 and this Court has admitted the appeal on the following Substantial Questions of Law:-
"i) Whether, in the facts and circumstance of the case, in the absence of any tangible of evidence about manufacture and and removal of the goods the department could draw the inference about clandestine manufactured and removal merely on the basis of presumptions and assumptions?
ii) Whether, in the facts and circumstances of the case, the Tribunal is justified in coming to the conclusion that the appellants have clandestinely manufactured Gutkha and cleared the same without payment of excise duty merely on the basis of LRs (Lorry Receipt) when there is no proof of actual delivery of the raw materials said to have been transported under the LRs. to the appellant and the persons said to have accompanied the trucks could not be identified?
iii) Whether, the alleged receipt of one of the raw materials viz. scented tobacco by itself was sufficient to hold that -5- there was corresponding manufacture and clandestine clearance of "Gutkha" (pan masala) when there is no evidence of purchase of other major ingredients like supari, katha, lime, menthol and kimam and there is also no evidence regarding manufacture of "Gutkha" as also in respect of clearance and financial transactions the same?"
08- It has been vehemently argued by learned Senior Counsel Shri Mathur that the order passed by the Tribunal is not based upon the tangible evidence about manufacture and removal of the goods and the department has drawn the inference about clandestine manufacture and removal merely on the basis of presumptions and assumptions. (Substantial Question of Law No.1) 09- Shri Mathur, learned Senior Counsel has also vehemently argued before this Court that the Tribunal has erroneously arrived at a conclusion that the appellant has clandestinely manufactured Gutkha and cleared the same without payment of Excise Duty merely on the basis of Lorry Receipt in absence of actual proof of delivery of the raw material which was allegedly transported under the Lorry Receipt to the appellant. It has also been vehemently argued that the present case is a case of no evidence regarding manufacturing of Gutkha and also in respect of clearance and financial transactions of the same.
10- While assailing the impugned order various grounds -6- have been raised in appeal and it has been argued that the Tribunal has confirmed the part of the demand raised in the show cause notice and remanded the matter for quantification of the same on verification of the records. It has been further argued that the Tribunal has failed to appreciate that the learned Adjudicating Authority has considered all the evidences on record in detail and only thereafter, had dropped the duty demand on the appellants and discharged the appellants from the allegation of clandestine removal for not having evidence. 11- He has stated that the Tribunal in the impugned order has held that the evidence pertaining to Sarita Roadways is reliable without appreciating the findings of the adjudicating authority and the contentions of the appellants is that in the present case, the confirmation of demand is based on only the Lorry Receipts and statement of one Mr. Devi Prasad Pande, owner/partner of M/s. Sarita Roadways. The Tribunal has relied on these evidence despite the fact that the Lorry Receipts and the statement of Shri Devi Prasad Pande does not conclusively prove that the goods were in fact transported to the factory of the appellants. This is particularly so, when the Commissioner has accepted the submission of the appellants that the Lorry Receipts do not indicate the weight of the product and there was no evidence of any payment having been received by the -7- transporter for transporting the goods. In such a situation, huge demand cannot be fastened on the appellants merely based on such Lorry Receipts and statement of the owner of the transport firm, when there is no other corroborative evidence like receipt of other raw materials, manufacture of the goods, selling of the same, payment received etc. 12- The other evidence pertaining to receipt of packing material i.e. laminated films is also not borne out from the facts inasmuch as there are several manufacturers who manufacture the same brand of goods. There is no evidence that the address of the factory of the appellants were found on the laminated films manufactured by the Laminar. The mere statement of the partner of Laminar without there being any corroborative evidence like receipt of payments by Laminar, transportation of the goods, receipt of the same by the appellants, manufacture and clearance of relevant quantity of finished products attributable to the laminated films, is not sufficient. The fact that the Laminar has themselves carried out misdeeds of clandestine manufacture of goods shows that their statements cannot be accepted without corroboration. Hence, the relevant part of the impugned order is not sustainable and therefore, that part of order of the Tribunal dated 06/03/2012 which is against the appellants is totally unsustainable and the same is liable to be set aside. -8- 13- Learned Senior counsel has vehemently argued that the Tribunal has blindly accepted the Lorry Receipts of Sarita Roadways as the ultimate proof for confirming the part of the demand pertaining to raw materials purported to have been transported by them and therefore, his submission is that the Lorry Receipts of M/s. Sarita Roadways cannot be relied upon because the respondents have failed to prove that the material i.e. scented tobacco/kimam covered vide LRs of M/s. Sarita Roadways was actually delivered at the factory premises of the appellants.
14- He submits that the respondents have attached an Annex.-6 with the show cause notice prepared on the basis of LRs of M/s. Sarita Roadways on the basis of which it has been alleged that the appellants have received 31 consignments of the raw materials. Out of these 31 consignments, 27 bear vehicle numbers as per the LRs. The respondents have failed to produce even a single statement from the drivers/transporters of these vehicles showing the delivery of the material at the appellant's factory. This is necessary because the transporter could not identify the person who accompanied the goods and to whom the goods were handed over and in view of the fact that there are manufacturers making fake products and therefore, the appellant submits that even though the LRs bear the name of the -9- appellant, the same cannot be relied upon as a reliable evidence of the delivery of the material at the appellant's factory. 15- It has been further contended that it is not the case of Department that the investigating officers were not aware about the importance of the recording of statements of the drivers/owners of the vehicles to collect as a piece of evidence against the appellants. They have already recorded the statements of three drivers though proving unsuccessfully the transportation of the material to the appellants factory. Hence in all probability some of the driver might have been contacted and they might have stated that the places of delivery was otherwise than the factory premises of the appellants, which have not been taken on record by the investigating officers as this did not support their version.
16- Learned Senior counsel has further submited that the Tribunal in para 10.09 of the final order has recorded the contents of the affidavit submitted by Shri Devi Prasad Pande and the same reads as under:-
"10.09. In his sworn affidavit dated 22.1.2004, received on 6.2.2004, Shri Devi Prasad Pande affirmed that LRs in the name of RSC and RSI at Indore were prepared as per the information given by persons who approached them and SE had nothing to do with the names of the consignees. He further deposed that the names of the consignees i.e. RSC and RSI were given by the buyers themselves and the transport company was not concerned with the question whether the actual buyers were RSC or RSI. He has further affirmed that SE never paid
- 10 -
anything for the consignments and the payment was made by the buyers themselves to the drivers on carrying the goods to destination and that he did not know any person of RSC and RSI of Indore. He also confirmed that he was not aware as to where the consignments were actually delivered and stated that the goods, which were loaded in the vehicle, were accompanied by the person who availed of the services of transportation. Such person used to travel along with the consignments to Indore. At Indore the goods were (i) shifted in the other vehicles and told by the driver of the vehicle (ii) delivered in open space for disposal by the buyer (iii) shifted to other vehicles in various open spaces at Dewas Road, Indore and that the goods were never delivered as per the report of the drivers at any factory premises and that since the owner accompanying the goods was always there, they have never taken any acknowledgment as they were assured that the goods were delivered to the right persons."
17- The inescapable evidence as revealed in the sworn affidavit of Shri Devi Prasad Pande is that even though the LRs were in the name of the appellants, still they did not prove the delivery of material at the appellant's premises which was a factory. The Tribunal has not given any finding on the said sworn affidavit of Shri Devi Prasad Pande. Hence, the final order placing reliance on the Lorry Receipts and statement of Shri Devi Prasad Pande pertaining to Sarita Roadways is not sustainable. The Tribunal has taken note of the affidavit filed by the persons whose cross examination was denied by the Commissioner and held that no purpose would be served in sending back to the case for cross examination after 12 years. Shri Pande in the affidavit stated that the goods were not delivered at the factory of the appellant, despite nothing that as a good piece of evidence,
- 11 -
the Tribunal erred in relying on the LRs of Sarita Roadways. 18- In the show cause notice, there is a reference to the Lorry Receipts of transport arrangements made by M/s. Sarita Roadways, Wagholi, Pune wherein details such as date, name of the consignor and consignee, quantity and description of the goods stated to be transported from M/s. Suresh Enterprises to the appellant at Indore have been mentioned. According to the show cause notice, in the year 1998-99, the appellant has received 1517 bags of 45.510 MTs. Of scented tobacco. The appellant submits that these Lorry Receipts cannot be relied upon to allege that appellant has received scented tobacco from M/s. Suresh Enterprises for the reason of non-corroboration by any document recovered from the appellant in regard to such alleged receipt of scented tobacco/kimam.
19- It has been further contended that the order passed by the Tribunal to calculate the demand on the basis of LRs of Sarita Roadways is totally arbitrary and does not stand the scrutiny of law. The operating portion of the final order under para 27 is reproduced as under:-
"27. We find from the copies of LRs submitted at pages 50 to 88 of the copies of relied upon documents being those LRs recovered from Sarita Roadways that some of them are in the name of RSC and some are in the name of RSI. All the LRs do not figure in Annex.-6 to SCN. May be some of these LRs correspond to material accounted by these firms. So adjudicating authority may re-check the documents and identify the LRs no
- 12 -
accounted for in the books of the respective firms and work out duty demand on the basis that clandestine removals are proved only in respect of such quantities of scented tobacco as evidenced by LRs recovered from M/s. Sarita Roadways showing the names of these firms and goods that are not accounted in their books. Penalty under section 11AC may also be re- determined accordingly. While determining and communicating the penalty the adjudicating authority should give the option to the respondents that if duty, interest and 25% of the duty amount as penalty are paid within thirty days of receipt of the order that will be in full discharge of the penalty under section 11AC of the ACT."
20- The Tribunal has ordered to calculate demand merely on the basis that some of LRs prepared by M/s. Sarita Roadways have been shown as consigned to the appellant. But mere issue of LRs by the transporter is not a proof of delivery of the material at the appellant's premises. In any case, the so- called LRs by themselves do not establish that the goods were delivered to the appellant as no receipts for delivery of the goods or receipt of payments or the identity of the employees of the appellant who are said to have accompanied the goods has been established. This is more so, when Shri Devi Prasad Pande of Sarita Roadways has stated that at Indore, the goods were (i) shifted to other vehicles as told by the driver of the vehicle (ii) delivered in open space for disposal by the buyer (iii) shifted to other vehicles in various open spaces at Dewas Road, Indore and the goods were never delivered as per the report of the drivers at any factory premises.
- 13 -
21- Assuming but not conceding that even though there was any receipt of material covered under the said LRs at the appellant's factory, there is no an iota of evidence that these were used for clandestine manufacture and clearance of Gutkha which needed other principal raw materials like supari, katha, lime, menthol, kimam and lamination to manufacture the same. 22- It has been further contended that the Tribunal has assumed clandestine manufacture and removal of Gutkha on the basis of certain corroborated evidence without appreciating the evidence produced by the respondents as well as the defence of the appellants objectively which is bad in law. 23- Learned counsel submits that the appellant has already explained to investigating officers the circumstances under which 43 Nos. of "form, filling and sealing"
machines/pouch making machines were purchased in the factory while actually 8 of them were actually installed at a time as per the declaration. This fact was very much evident when the investigation officers had actually found that merely eight machines were installed in the factory whereas other machines were lying uninstalled in the bonded store room. When the investigating officers had themselves verified this fact, there was no scope to interpret that the other machine were kept for clandestine manufacture. The appellant had clearly pointed out
- 14 -
the circumstances under which the excess machines were kept in the factory as has been rightly taken on record by the Tribunal in para 8.4 of the final order and the same reads as under:-
"8.4 RSC point out that Shri N. L. Sharda of RSC explained in his statement dated 14.06.2001 that different machines were used for different brands and at the time of visit only five brands were being made. The other machines were either under repair of maintenance. The machines were also kept for future expansion. The respondents submit that form filling and sealing machines were operated by untrained labourers and often these machines becomes non-operational due to frequent fault such as burning/short circuiting of heating element, eye mark adjustment out, spacing our between pouches, panel board fault, defective cutting blade, gear problem, panel board fault, defecting cutting blade, gear problem, belt loosening etc. and that is the reason that they had extra machines."
24- It has been further stated and argued that the appellants have sufficiently explained the possession of the machines and there is no ground for suspicion. In any case, mere excess capacity does not automatically lead to the conclusion that the appellants manufacture Gutkha clandestinely and cleared without payment of the duty. Learned Senior Counsel has stated that at the most it may lead to suspicion. It is settled law that suspicion, however, grave it cannot take the place of proof. The Hon'ble Apex Court Bhajan Lal reported in 1975 AIR 258 has held that suspicion, howsoever, strong cannot take the place of a proof. Hence, mere fact of excess capacity cannot lead to an inference that the appellants have
- 15 -
clandestinely manufactured and cleared Gutkha without payment of duty, mere so, when the possession of machines have been explained.
25- Heavy reliance has been placed by learned counsel for the appellant upon the judgment delivered in the case of Commissioner of Central Excise Vs. Brims Products reported in 2011(271 ELT 184 (Pat.), Avadh Sugar Mills Ltd. Vs. Union of India reported in 1978 (2) ELT J172 (SC), Premier Packaging Pvt. Ltd. Vs. CCE reported in 1986 (26) ELT 333 (Tribunal), Icy Cold Commercial Enterprises Vs. Collector of C. Ex., Calcutta-1 reported in 1994 (69) ELT 337 (Tribunal), Krishna & Co. Vs. Collector of Central Excise, Jaipur reported in 1998 (97) ELT 74 (Tribunal), Gurpreet Rubber Industries Vs. Collector of C. Ex., Chandigarh reported in 1996 (82) ELT 347 (Tribunal), Metal Fitting (P) Ltd. Vs. Collector of Central Excise, Delhi reported in 1997 (93) ELT 747 (Tribunal), Commissioner of Central Excise, Chandigarh Vs. Dashmesh Castings (P) Ltd. reported in 2000 (40) RLT 1077 (CEGAT), M/s. Raj & Sandeep Vs. CCE, Chandigarh reported in 1999 (31) RLT 324, Kothari Pouches Ltd. & Anr. Vs. Commissioner of Central Excise, News Delhi reported in 2000 (41) RLT 209 (CEGAT), Chariot Cement Co. Vs. CCE reported in 2003 (110) ECR 205 (Tribunal) and Durga Trading
- 16 -
Co. & Ors. Vs. CCE reported in 2003 (59) RLT 273 (CEGAT- Del.).
26- This Court has carefully gone through the aforesaid judgments relied upon by the learned counsel for the appellant and also heard learned counsel for the respondent. Learned counsel for the respondent has placed reliance upon judgment delivered in the case of Collector of Customs, Madras Vs. D. Bhoormall reported in (1974) 2 SCC 544, Shah Guman Mal Vs. State of Andhra Pradesh reported in (1980) 2 SCC 262 and K.I. Pavunny Vs. Asst. of Collr. (HQ), C.Ex. Reported in (1997) (90) ELT 241 (SC) and his contention is that the order passed by the Tribunal does not warrant any interference as purely findings of fact has been arrived at by the Tribunal and there is enough evidence available about manufacture and removal of goods and about clandestine manufacture and removal of Gutkha and the Tribunal has rightly arrived at conclusion based upon the evidence discussed in appeal that goods was cleared without the payment of Excise Duty.
27- Learned counsel has read out the relevant portion of the evidence before this Court in order to apprise this Court about the evidence available on record based upon which the order has been passed.
28- In order to decide the substantial questions of law,
- 17 -
the three core issues as submitted below and allied vital portions of the private paper book filed by the appellant are as under:-
A. Pleadings of revenue apropos to clandestine manufacturing of tobacco product by appellant carved out in appeal memo before the CESTAT. B. Important paragraphs of order of CESTAT marshaling the evidence on record.
C. Vital statements recorded under Section 14 of Central Excise Act.
29- The precise description of the above core issues and their portion and their page number in the paper submitted by the appellant is as under:-
A. Pleadings of revenue apropos to clandestine manufacturing of tobacco product by appellant carved out in appeal memo before the CESTAT:-
a) The intelligence backdrop of the case is reflected on page no. 302 which is portion of appeal memo filed by the Revenue before the learned CESTAT.
b) The evidence related to receipt of scented tobacco is on page no. 305 and 306 of the compilation i.e. paragraph no. 3.1 and 3.2 of the appeal memo. The same reads as under:-
"3. Evidence linking receipt of scented tobacco clandestinely cleared by SE, Pune and its received by RSC / RSI, Indore.
3.1 As already stated above, it was found that SE, Pune had
- 18 -
transported 61.8 MT of scented tobacco and 170 drums of kimmam to RSC and RSI during period 98-99 through Sarita Roadways, 7.53 MT during 15.06.1998 -24.10.1998 through Vijayant Travels and 171.780 MT between the period 20.06.1999 19.02.2000 through Hari Roadways. In brief, the evidence relating to transportation and receipt of scented tobacco by RSC / RSI is as follows :-
3.2 Evidence regarding transportation by Sarita Roadways (7.53 MT) a. Recover of Lorry Receipts (LRs) from Sarita Roadways, Pune giving details like name, name of consignment, quantity and description which clearly shows that 2060 bags of scented tobacco and 172 drums of kimmam were transported by them from SE Pune to RSC and RSI, Indore during 1998-99.
b. Statement dated19.03.2000 of Shri Devi Prasad Pande, owner / partner of M/s. Sarita Roadways, Pune wherein he has stated these consignments were produced by SE, Pune an that Shri Ramesh Pardeshi from SE Enterprises and Shri Ramesh Pardeshi from M/s. Suresh Enterprises used to visit them for booking consignments to Indore parties, that M/s. RSC, RSI and Shri Suresh Jajra proprietor of M/s. SE,Pune used to make enquiry if there were any delays in transportation of goods.
c. Statement of Shri Suresh Jajra, Prop. Of SE, Pune dated 17.04.2000 wherein when confronted with evidence recovered from Sarita Roadways, he admitted clandestine clearance of entire 70.86 tons of scented tobacco manufactured and transported through M/s.Sarita Roadways, Indore Further in his statement dated 08.05.2000, Shri Suresh Jajra stated that he accepted the Central Excise Duty liability on the entire quantum of scented tobacco manufactured and cleared through M/s. Sarita Roadways, Pune. Accordingly Rs. 1 crore of duty amount was deposited by them voluntarily (para 17 of order in original dated 15.05.2002 in the case of SE Pune refers)."
c) On page no. 315 and 316 precisely paragraph no.
- 19 -
2.1 to 2.8 of the compilation, there is precise description of the documents recovered from Sarita Roadways. These documents have been filed by the appellant along with appeal memo as Annex.-6 starting from page no.366 upto page no.403 of the paper book.
B. Important paragraphs of order of CESTAT marshaling the evidence on record:-
a) The learned CESTAT has dealt with the evidence related to supply of scented tobacco to the appellant in paragraph no. 10 of the order which is on page no.
339.
b) In Paragraph no. 10.02, Lorry Receipts have been considered.
c) In paragraph no. 10.04, the statement of Suresh Jajra has been considered.
d) Findings and conclusion regarding all such evidence is in paragraph no. 10.10 i.e. upto page 342.
"10.01 Here copies of Lorry Receipts and statements of Devi Prasad Pande, owner / partner of firm are relied upon.
10.02 Lorry Receipts (LRs) were recovered from the premises of M/s. Sarita Roadways, Pune giving details like date, name of consignee, quantity and description which clearly show that 2060 bags of scented tobacco and 172 drums of Kimam were transported by them from SE Pune to RSC and RSI, Indore during 1998-99.
- 20 -
10.03 Statement of Shri Devi Prasad Pande of Sarita Roadways Pune was recorded on 09.03.2000 wherein he stated that these consignments were produced by SE Pune and that Shri Ramesh Pardeshi from SE used to visit them for booking consignments to Indore parties, that RSC, RSI and Shri Suresh Jajra proprietor of SE, Pune used to make enquiries, if there were any delays in transportation of goods.
10.04 Shri Suresh Jajra proprietor of SE in his further statement dated 17.04.2000, when confronted with evidence recovered from Sarita Roadways, admitted clandestine clearance of entire 70.86 tons of scented tobacco manufactured and transported through M/s. Sarita Roadways to Indore. Further, in his statement dated 08.05.2000, shri Suresh Jajra stated that he accepted Central Excise Duty Liability on the entire quantum of scented tobacco manufactured and cleared through M/s. Sarita Roadways, Pune. Accordingly Rs. 1 crore of the duty amount was deposited by them voluntarily (as seen in para 17 of order-in-original dated 15.05.2002 in case of SE Pune), it appears that this demand got subsequently set aside because of findings that scented tobacco was not excisable.
10.05 The respondents submit that there is no mention of goods in LRs. The weight has been calculated on the basis of the statement dated 09.03.2000 of Shri Devi Prasad Pande of M/s. Sarita Roadways wherein he stated that the consignment of scented tobacco was received in gani bags weight 30 kgs. each approx.
10.06 The respondent submits that the statement of Shri Pande that in case the consignments were delayed, the persons from respondent or some time Shri Suresh Jajra proprietor of SE, Pune used to contact him his office to make enquiries regarding whereabouts the delayed consignments is a very vague statement and can not be given any credence.
10.07, 10.08 and 10.09 which is on page no.340 and 341 and the same are not reproduced for the sake of brevity).
10.10 We have considered the rival submissions, what we
- 21 -
noticed is that LRs. clearly shows the name of RSC and RSI. One of the LRs viz. C No. 1009 dated 25.04.1998 shows the quantity as 16 bags of loose tobacco scented and two drums of kimmam. The weight is given as 530 kgs and the value of the consignment is shown as 74,600 in another LR C.N 1030 dated 08-07/98 the quantity shown is 40 bags of loose scented tobacco and the value shown is Rs. 174000/-, no weight is shown, similar is the case with most of other L.Rs. on over all appreciation of documents we do not find any substance raised by the respondents that LRs do not show quantity in Kgs and therefore, this evidence can not be accepted. The argument that the names of consignee were indicated in LRs. as told by the persons, who brought the cargo and accompanied the cargo can not take away evidentiary value of LRs, transporters may not conduct verification about owner of each and every consignment but they go by trust. These are documents which were maintained in ordinary course of business and has to be taken to be correct unless rebutted with clear evidence to show that the names were indicated maliciously, no such evidence is forthcoming, so we find that the evidence gathered from this transporter is of reliable quality, further the supplier SE did not have any explanation for this unaccounted supplies and opted to pay Rs. 1 crore readily towards excise duty not paid. This is a relevant evidence though the demand was found to be not sustainable for the reasons that the goods were not liable for excise duty".
e) Conclusion of the order of the CESTAT is in paragraph no. 27 i.e. page no. 363 and the penalty has been imposed in subsequent paragraph upto paragraph no. 29.3 i.e. upto page no. 365.
C) Vital statements recorded under Section 14 of the Central Excise Act:-
a) Statement of Devi Prasad Pande which is page no.
- 22 -
406 to 410 of the private paper book filed by the appellant, the same reads as under:-
"Statement of Shri Devi Prasad Pande, Partner of M/s Sarita th Roadways, 7 Milestone, Ahmed Nagar Road, Ubale Nagar, Wagholi, Pune- 412207, Pune , Age: 36 years, residing at the same address near by, recorded under Section 14 of the Central Excise Act, 1944 before the Sr. Intelligence Officer, DGCEI (CEX) PRU, Pune on 9/3/2000.
In response to your summons I have appeared before you today th at your office at 6 floor, vora Kothari building, 1025, sudashiv peth, pune ,for giving my statement. Before giving this statement I was explained the provision of section 14 of the Central Excise Act 1944 and according to which I understand that during this course of this enquiry I am bound to state only the truth. I am also made aware that if my statement or part there of proves to be false later on, I shall be punishable under the provision of section 174, 175 of the Indian Penal Code. With this understanding I shall proceed on giving my truthful statement here in under.
My name, address, location etc as mentioned above are correct. I am a graduate in Arts from Allahabad University (UP). Prior to March I was working with Syndicate Road carrier, Wagholi, and thereafter wards I became the partner of M/s Sarita Roadways, Wagholi. The other partner's name is Shri Hemant Kumar Pande. On being asked to state the number of transport vehicles owned by our firm or by myself, I have to state that no vehicle ownership is in the name of M/s Sarita Roadways or in the name of its partners. However I have to clarify that we are using the vehicles attached to nearby transport companies viz Road Transport Companies viz. Road Transport Corporation (RTC), Associated Road Carriers (ARC), Maharashtra Road Carriers (MRC) as per the availability from time to time. We offer majority of our transport service to Hyderabad, Ahmedabad, Indore, Dharwar (Karnataka). On being asked to name the industries to whom mainly transport services were given by our firm, I have to state that M/s Milton Plastics Limited Shikarpur, Pune, M/s Kana glass ltd, Saraswadi, Pune, M/s Suresh Enterprises, Wagholi, Pune, M/s Prakash corrugates pvt. Ltd., Saraswadi, are the main
- 23 -
customers. On being asked to state the transportation charges recovered by us, I have to state that we charge full truck load is charged of Rs.5500/- to Ahmedabad, Hyderabad, and Indore for M/s. Milton Plastics and for the other parties rates were not fixed and were charged according to destination, weight and market rate. On being specifically asked about the consignment booked by M/s Suresh Enterprises, Wagholi, Pune, I have to state that one Mr. Ramesh Pardeshi, from M/s Suresh Enterprises used to visit us for booking their consignments of loose scented Tabacco to Indore Parties. We used to receive their consignments in gunny bags weighing 30 kg approx and Kimam in drums, on being asked to name the parties of Indore to whom Ms. Suresh Enterprises were consigning their goods, I have to state that as per L.R. prepared by us, it mod be seen that the consigns in Indore were Ms. R.S. Company. 27, SDA Annex Dewas Naka Indore(M.P.), R.S. Industries S.R. Compound Dewas Naka Indore (M.P.), Shiv Supari Stones Siyaganj, Indore (Phone No. 531753, Mobile No. 9826020060). Some times, we have transported to silvasa, the consignments of Raw Tabacco and Kimam in drums in the name of Ms. Yogesh Associates Silvasa as consigned by Ms. Suresh Enterprises. On being asked about the mode of payments towards transport rotation in respect of consignments booked by Ms. Suresh Enterprises, I have to state that some times we asked to receive some advance payments from M/s. Suresh Enterprises and the remaining payments were being collected by the drivers from the consignees and in cases of drives not coming back immediately, we used to get some advance payments from the drives of the vehicle in which the good were transported.
We have already submitted to you five L.R. books pertaining to the period 97-98 and 98-99 (sr. no. 1001 to 1250) upto 1-6-99. It can be seen from the said L.Rs that more that 50 (fifty) M.T. of "Scented Tabacco" were transported to Indore parties from Ms. Suresh Enterprises. On being asked about take deliveries at Indore, I have to state that in such cases persons from Ms. R.S. Company or Ms. R.S. industries as the case may be used to contact over Telephone to our office making equerries about the consignment supposed to have been delivered at their factory. Some times in such cases persons from Ms. Suresh Enterprises or Shri Suresh Jajra used to contact over Telephone or in person enquiring about their consignment delayed in transit and its
- 24 -
where about. As per my knowledge the goods viz. "Scented Tabacco" belonging to Ms. Suresh Enterprises are being supplied to units manufacturing 'GUTKA' known in market in various Brands. On being asked about the last consignment of M/s. Suresh Enterprises Transported through Sarika Roadways, I have to shake that after March 99, M/s. Suresh Enterprises have stopped booking their consignment to Indore because of strained relationship with us.
On being asked about the Bills / challans covering the consignments booked by M/s. Suresh Enterprises Waghali, Pune. I have to state that, we were receiving bills of for each consignment and we were sending the same along with the consignment to its destination and no copy of the same had been retained with us. In being asked about the probable transportation arrangement adjustment of after termination of transportation through Ms. Sarika Road Ways, I have to state that on enquiry with Mr. Ramesh Pardeshi from Mr. Suresh Enterprises in was revealed that some vehicles bringing wheat, rice, dal etc. the from Indore to Pune city were hired for transporting "Scented to Tabacco" from waghali, Pune to Indore units. On being further asked about the place from which the consignment of Ms. Suresh Enterprises were lifted to Indore, I have to state that all the consignments during the said period were lifted from the Muktanand form House premises at Waghali even though M/s. Suresh Enterprises address as per the bill was of sai-satyam park, Wagholi.
The above statement is my voluntary deposition without any duress. Statement is true and correct to the best of my knowledge. I have read the statement and confirm that it has been correctly recorded as per my say".
b) Statements of Mr. Vijay Agarwal which is on page no.
69 of interim application dated 02.09.2016 for placing addl. Documents on record. Relevant portion is on page no. 72 of the application, the same is as under:-
**TkSls eSa igys crk pqdk gwa lqxaf/kr rEckdw ge ;ksxs'k ,lksfl,V~l ls [kjhnrs gS A blds fy, ge og daiuh ds Jh ewfrZ rFkk Jh
- 25 -
tktjk ls lEidZ djrs FksA Jh tktjk dk [kqn dk izksizk;Vjh daiuh lqjs'k baVjizkbZtst uke ls iwuk fLFkr gSA bldh gesa tkudkjh gSA ogka Hkh lqxaf/kr rEckdw dk mRiknu gksrk gSA ;g gesa ekywe gSA gedks lqxaf/kr rEckdw dk lIyk; lqjs'k baVjizkbZtst ls Hkh gksrk gSA vkius tks eq>s MkD;wesaV fn[kk;k ml fglkc ls esajh daiuh esa lqjs'k baVjizkbZtst lqaxf/kr rEckdw dk lIyk; dk C;kSjk uhps fy[kk gS A fnukad Ekk=k 02&01&99 55 Bags 06&01&99 58 Bags 17&01&99 56 Bags + 12 drums kimam 23&01&99 46 Bags 30&01&99 69 Bags 04&02&99 68 Bags 09&02&99 81 Bags 03&09&99 53 Bags 496 Bags bl rjg esjh daiuh esa 496 begs dk lIyk; gqvk gS A ,d cSx esa yxHkx 30 kg lqaxf/kr rEckdw gksrk gS A bl fglkc ls 14840 kg lqxaf/kr rEckdw dk lIyk; gqvk gS A es- lqjs'k baVjizktst ,oa ;ksx's k ,lksfl,V flyoklk buds fcy ds vuqlkj ftruk lIyk;
gqvk gS og gekjs fjdkMZ esa ntZ gS] tks fd vkidh dLVMh essa gSA vkids }kjk fn[kk;s gq, MkdwesV ds mij eq>s dksbZ izfrfdz;k ugha nsuh gS A -------^^
c) Statement of Mr. Suresh Jajra which are on page no.
87 of the application dated 02.09.2016. Relevant portion of the statement is on the bottom of page no. 87 and the same is reproduced as under:-
**bankSj dks Hksts x;s eky ds ckjs esa Jh lqjkuk us dgk gS fd
- 26 -
'kq:vkr esa bankSj es fLFkr vkj ,l daiuh ds uke ij fcy tkjh fd;s Fks A eq>s iwNk x;k fd D;k eSa lqjs'k pna lqjkuk ds c;kuks ls lger gwaq A eSa ;g crkrk gwa fd eSa lqjs'k panz lqjkuk ds c;ku ls lger gwa A -----
Eksjh tkudkjh ds vuqlkj eSus bankSj fLFkr ikfVZ;ksa dks 1998&99 esa Hkh eky fcy ij Hkstk gS ftlesa vkj ,l diauh ,oa vkj ,l b.MLVªht 'kkfey gSA^^ 30- In back drop of above, there is cogent, clear and clinching evidence for clandestine manufacture of tobacco product and in the considered opinion of this Court, the appeal deserves to be dismissed.
31- In the Case of Collector of Customs, Madras Vs. D. Bhoormall the Hon'ble Supreme Court in paragraphs No.32, 33, 43 and 44 has held as under:-
"32. Smuggling is calendestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on, the person concerned; and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or: the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in 'Law of th Evidence', (12 Edn. Article 320, page 291), the "Presumption of innocence is, no doubt, presumption juris; but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property", though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar
- 27 -
knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice.
33. Another point to be noted is that the incidence, extent and nature of the burden of proof for proceedings for confiscation rd under the first part of the entry in the 3 column of Clause (8) of Section 167, may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to 'reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the Department furnishes prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, the Department has to prove further that the person proceeded against was concerned in the smuggling.
43. If we may say so with great respect, it is not proper to read into the above observations more than what the context and the peculiar facts of that case demanded. While it is true that in criminal trials to which the Evidence Act, in terms, applies, this section is not intended to relieve the prosecution of the initial burden which lies on it to prove the positive, facts of its own case, it can be said by way of generalisation that the effect of the material facts being exclusively or especially within the knowledge of the accused, is that it may proportionately with the gravity or the relative triviality of the issues at stake, in some special type of cases, lighten the burden of proof resting on the prosecution. For instance, once it is shown that the accused was travelling without a ticket, a prima facie case against him is proved. If he once had such a ticket and lost it, it will be for him to prove this fact within this special knowledge. Similarly, if a person is proved to be in recent possession of stolen goods, the prosecution will be deemed to have established the charge that he was either the thief or had received those stolen goods knowing them to be stolen. If his possession was innocent and lacked the requisite
- 28 -
incriminating knowledge, then it will be for him to explain or establish those facts within his peculiar knowledge, failing which the prosecution will be entitled to take advantage of the presumption of fact arising against him, in discharging its burden of proof.
44. These fundamental principles, shorn of technicalities, as we have discussed earlier, apply only in a broad and pragmatic way to proceedings under Section 167(8) of the Act. The broad effect of the application of the basic principle underlying Section 106 Evidence Act to cases under Section 167(8) of the Act, is that the Department would be deemed. to have discharged its burden if it adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. Amba Lal's case was a case of no evidence. The oily circumstantial evidence viz., the conduct of Amba Lal in making conflicting statements, could not be taken into account because he was never given, an opportunity to explain the alleged discrepancies. The status of Amba Lal viz. that he was an immigrant from Pakistan and had come to India in 1947 before the customs barrier was raised- bringing along with him the goods in question, had greatly strengthened the initial presumption of innocence in his favour. Amba Lal's case thus stands on its own facts."
32- The Hon'ble Supreme Court in the aforesaid case has held that smuggling is clandestine conveying of goods to avoid legal duties and on the principle underlying Section 106 of the Evidence Act, the burden to establish those facts is cast on the person concerned and if he fails to establish or explain those facts, an adverse inference of fact may be drawn against him which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty.
- 29 -
33- In the case of Shah Guman Mal Vs. State of Andhra Pradesh the Hon'ble Supreme Court in paragraphs No. 4 and 8 has held as under:-
"4. Analysing the essential ingredients of clause (b), it is manifest that before a conviction can be recorded under it, the prosecution must prove that the accused has acquired possession of or is in any way concerned in depositing, keeping, etc., any goods which he knows or has reason to believe are liable to confiscation under Section 111. Thus in the instant case, as no presumption under Section 123 was available, it was for the prosecution to prove affirmatively that the appellant was in possession of smuggled gold knowing full well that it was imported from outside the country so as to fall within the ambit of Section
111. Dr. Chitale, appearing for the appellant, contended that if the presumption under Section 123 is not available to the prosecution, then there is no legal evidence to show that the appellant had any knowledge or had any reason to believe that the goods were imported or were smuggled without a lawful permit. The counsel appearing for the State, however, submitted that the fact that the gold bore foreign markings and was recovered from the possession of the appellant who had admitted in his statement before the Customs officers that some unknown person had given it to him, would itself raise a sufficient presumption to attribute knowledge to the appellant that the gold was smuggled without any permit. Although the question raised by the counsel for the parties is not free from difficulty, an overall consideration of the special facts of the present case would show that there could no difficulty in holding that having regard to the admissions made by the appellant and his subsequent conduct, the onus would shift to the appellant to show that the gold found from him with foreign markings was imported without any permit to his knowledge. This will be the combined effect of the provisions of Sections 106 and 114 of the Evidence Act. The matter was considered at great length in the case of Berham Khurshed Pesikaka v. The State of Bombay(1) where this Court holding that Section 106 could not be construed to place the onus on the accused to prove the prosecution case, observed as follows :-
Section 106 of the Evidence Act cannot be construed to mean that the accused has by reason of the
- 30 -
circumstance that the facts are especially within his own knowledge to prove that he has not committed the offence. (See Attygalle v. The King-A.I.R. 1936 P.C. 169, also In re: Kanakasabai Pillai-A. I. R. 1940 Madras 1). It is for the prosecution to prove that he has committed the offence and that burden is not in any manner whatsoever displaced by section 106 of the Evidence Act.
These observations were made with respect to the peculiar facts of that case. It appears that what had happened in that case was that the appellant was found to be guilty of an offence under the Prohibition Act and the only evidence to prove his guilt was that he was smelling of alcohol. This Court held that it was for the prosecution to prove the contravention of the provisions of the Prohibition Act and to prove further that a particular intoxicant which was a liquor under the Act, was consumed by the accused and merely because the accused knew what he had taken (which was a matter within his knowledge) could not relieve the prosecution of the burden of proving that the liquor consumed was an intoxicant as defined under the Act. It is, therefore, clear that the observations made by this Court regarding the interpretation of Section 106 of the Evidence Act would not apply to the facts of the present case. In the case of Issardas Daulat Ram & Ors. v. The Union of India & Ors.(2) this Court, after discussing the admitted circumstances of the case, found that the relevant pieces of evidence would prove the guilty knowledge of the accused. That was a case which arose under Section 178 (A) of the Sea Customs Act and this Court observed as follows :-
If the gold now in question had been imported earlier it would be extremely improbable that the gold would remain in the same shape of bars and with the same fineness as when imported after the passage of this length of time. It was precisely for this reason that at the stage of the enquiry before the Collector the principal point which was urged on behalf of the appellants was to deny that the seized gold was of foreign origin and it is the nature of the defence that accounts for the order of the Collector dealing almost wholly with the consideration of that question. In order to reach his finding about the gold being smuggled, the Collector has referred to the conduct of the appellants ...... These were undoubtedly relevant pieces of evidence which bore on the question regarding the character of the
- 31 -
gold, whether it was licit or illicit. Learned counsel is, therefore, not right in his submission regarding the absence of material before the Collector to justify the finding recorded in paragraph 6 we have set out earlier.
8. In a later decision of this Court in the case of Commissioner of Income Tax, Madras v. Messrs Best & Co. this Court observed as follows:
When sufficient evidence, either direct or circumstantial, in respect of its contention was disclosed by the Revenue, adverse inference could be drawn against the assessee if he failed to put before the Department material which was in his exclusive possession. The process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to the other.
It is true that case arose under the provisions of the income Tax Act but the principles laid down by this Court would apply equally to the facts of the present case. In the case of Collector of Customs, Madras & Ors. v. D.Bhoormull a case under the Customs Act, while dwelling on the nature and purport of the onus which lay on the prosecution, this Court observed as follows:-
It cannot be disputed that in proceeding for imposing penalties under clause (8) of s. 167 to which s. 178-A does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi- criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cost by it, we must pay due regard to other kindred principles, no less fundamental, of universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree........ -All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue, Thus, legal proof is not necessarily perfect proof, often it is nothing more than a prudent man's estimate as to the probabilities of the case.
Similarly, while dealing with the merits of the case, this Court made the following observations :-
- 32 -
In the case before us, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector.......... The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoormull. He was simply giving him a fair opportunity of rebutting the first and the foremost presumption that arose out of the tell-tale circumstances in which the goods were found, regarding their being smuggled goods by disclosing facts within his special knowledge.
It was also pointed out that the broad effect of the application of the basic principles underlying s. 106 of the Evidence Act would be that onus is discharged if the prosecution adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of the facts sought to be proved. In the case of Labchand Dhanpat Singh Jain v. The State of Maharashtra, while this Court was again considering the extent and application of Sections 106 and 114 of the Evidence Act and in this connection, observed as follows:-
Even if we were to apply the ratio decidendi of Gian Chand's case (supra) in the case before us, we find that the result would only be that no presumption under section 123 of the Act could be used against the appellant. We do not think that the High Court or the Magistrate had used this presumption. We find that they had relied upon circumstantial evidence in the case to infer the character of the gold recovered and the accused's guilty knowledge.......... A reference to Issardas Daulat Ram & Ors. v. Union of India & Ors. [(1962) Supp. (1) S.C.R. 358] is enough to show that the conduct of the accused and the incredible version set up by him were enough to saddle the accused with the necessary knowledge of the character of the goods found in his possession............ Atleast, the burden of proving an innocent receipt of gold lay upon the appellant under section 106 Evidence Act. The totality of facts proved was enough, in our opinion, to raise a presumption under section 114 Evidence Act that the gold had been illegally imported into the country so as to (be)
- 33 -
covered by section 111(d) of the Act. The appellant had not offered any other reasonable explanation of the manner in which it was being carried.
The facts in this case appear to be very similar to the facts in the present case. Furthermore, the case of Balumal Jamnadas Batra v. State of Maharashtra was also a case under the Customs Act and there also the presumption under section 123 was not applicable. It was held therein that having regard to the conduct of the accused and nature of the articles mens rea was established. In this connection, this Court observed as follows : (SCC p.648, para 7) The very appearance of the goods and the manner in which they were packed indicated that they were newly manufactured and brought into this country very recently from another country. The inscriptions on them and writing on the boxes were parts of the state in which the goods in unopened boxes were found from which inferences about their origin and recent import could arise. The appellant's conduct, including his untruthful denial of their possession, indicated consciousness of their smuggled character or mens rea."
34- In another landmark judgment i.e. K. I. Pavunny Vs. Asst. of Collr. (HQ), C.Ex. the apex Court in paragraphs No.19 to 21, 25, 32 and 34 has held as under:-
"19. Next question for consideration is: whether such statement can form the sole basis for convition? It is seen that, admittedly, the appellant made his statement in his own hand-
writing giving wealth of details running into five typed pages. Some of the details which found place in the statement were specially within his knowledge, viz., concealment of the 200 biscuits in his earlier rented house till he constructed the present house and shifted his residence and thereafter he brought to his house and concealed the same in his compound; and other details elaboration of which is not material. The question then is: whether it was influenced by threat of implicating his wife in the crime which is the sole basis for the claim that it was obtained by threat by PW-2 and PW-5? In that behalf, the High Court has held that it
- 34 -
could not be considered to be induced by threat that his wife will be implicated in the crime and accordingly disbelieved his plea. It is seen that admittedly after the appellant gave his statement, he was produced before the magistrate though no complaint was filed and was released on bail. He did not complain to the magistrate that Ex. P-4 statement was given under inducement, threat or duress. It was raised only subsequently making accusations against PW-5, the Inspector of Customs. Therefore, obviously it was only an afterthought. The High Court, therefore, rightly has not given any weight age to the same. It is true that the Magistrate has given various reasons for disbelieving the evidence of PW-3, the panch witness who had also, at one point of time, indulged in smuggling. It is unlikely that PW-3 would bring 200 gold biscuits of foreign marking and conceal them in the compound of the appellant without appellant's knowledge for safe custody. It is not his case that he had facilitated PW-3 in concealing them in his compound. The place of concealment of the contraband is also significant at this juncture. It is just near and visible from the window of his bed-room through which he or family members could always watch anyone frequenting the place where the contraband was concealed. This fact becomes more relevant when we consider that after concealment of the contraband in the compound one would ensure that others having access to the compound may not indulge in digging and carrying away the same. As soon as the appellant and/or the members of his family had sight of such visitor or movement by others, they would immediately catch hold of such person or would charge them. Obviously, therefore, it would be the appellant who had concealed 200 gold biscuits of foreign marking in his compound at a place always visible from his bedroom window. Therefore, the High Court was right in its conclusion, though for different reasons, that Ex.P-4 is a voluntary statement and was not influenced by threat duress or inducement etc. Therefore, it is a voluntary statement given by the appellant and is a true one.
20. The question then is: whether the retracted confessional statement requires corroboration from any other independent evidence? It is seen that the evidence in this case consists of the confessional statement, the recovery panchnama and the testimony of PWs 2, 3 and 5. It is true that in a trial and proprio vigore in a criminal trial, courts are required to marshal the evidence. It is the duty of the prosecution to prove the case
- 35 -
beyond reasonable doubt. The evidence may consist of direct evidence, confession or circumstantial evidence. In a criminal trial punishable under the provisions of the IPC it is now well settled legal position that confession can form the sole basis for conviction. If it is retracted, it must first be tested whether confession is voluntary and truthful inculpating the accused in the commission of the crime. Confession is one of the species of admission dealt with under Sections 24 to 30 of the Evidence Act and Section 164 of the Code. It is an admission against the maker of it, unless its admissibility is excluded by some of those provisions. If a confession is proved by unimpeachable evidence and if it is of voluntary nature, it when retracted, is entitled to high degree of value as its maker is likely to face the consequences of confession by a statement affecting his life, liberty or property. Burden is on the accused to prove that the statement was obtained by threat, duress or promise like any other person as was held in Bhagwan Singh V/s. State of Punjab [AIR 1952 SC 214, para 30]. If it is established from the record or circumstances that the confession is shrouded with suspicious features, then it falls in the realm of doubt. The burden of proof on the accused is not as high as on the prosecution. If the accused is able to prove the facts creating reasonable doubt that the confession was not voluntary or it was obtained by threat, coercion or inducement etc., the burden would be on the prosecution to prove that the confession was made by the accused voluntarily. If the Court believes that the confession was voluntary and believes it to be true, then there is no legal bar on the Court for ordering conviction. However, rule of prudence and practice does require that the Court seeks corroboration of the retracted confession from other evidence. The confession must be one implicating the accused in the crime. It is not necessary that each fact or circumstance contained in the confession is separately or independently corroborated. It is enough if it receives general corroboration. The burden is not as high as in the case of an approver or an accomplice in which case corroboration is required on material particulars of the prosecution case. Each case would, therefore, require to be examined in the light of the facts and circumstances in which the confession came to be made and whether or not it was voluntary and true. These require to be tested in the light of given set of facts. The high degree of proof and probative value is insisted in capital offences.
- 36 -
21. In Kashmira Singh's case the co-accused, Gurcharan singh made a confession, The question arose whether the confession could be relied upon to prove the prosecution case against the appellant kashmira Singh. In that context, Bose, J. speaking for bench of three Judges laid down the law that the Court requires to marshall the evidence against the accused excluding the confession altogether from consideration. If the evidence do hors the confession proves the guilt of the appellant, the confession of the co-accused could be used to corroborate the prosecution case to lend assurance to the Court to convict the appellant. The Court considered the evidence led by the prosecution, de hors the confession of co-accused and held that the evidence was not sufficient to bring home the guilt of appellant Kashmira Singh of the charge of murder. The appellant was acquitted of an offence under Section 302 IPC but was convicted for the offence under Section 201 IPC for destroying the evidence of murder and sentenced him to seven years rigorous imprisonment. This decision was considered by a four-judge Bench in Balbir Singh V/s. State of Punjab [AIR 1957 SC 216] where in it was held that if there is independent evidence, besides the confession, the rule that the confession could be used only to corroborate the other evidences loses its efficacy. Therefore, it was held that if the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence requires that it should be corroborated by independent evidence. Therein also, for the charges of capital offence, the trial court did not accept the confessional statement of co-accused containing inculpatory and self-exculpatory statement. The High Court reversed the acquittal and convicted the accused, accepting that part of the confessional statement of the accused which was corroborated from other evidence. This Court upheld the conviction and held that it is not necessary that each item of fact or circumstance mentioned in the confessional statement requires to be corroborated separately and independently. It would be sufficient if there is general corroboration. The ratio in Kashmira Singh's case was referred to.
25. It would thus be seen that there is no prohibition under the Evidence Act to rely upon the retracted confession to prove the prosecution case or to make the same basis for conviction of the accused. The practice and prudence require that the Court could examine the evidence adduced by the prosecution to find out
- 37 -
whether there are any other facts and circumstances to corroborate the retracted confession. It is not necessary that there should be corroboration from independent evidence adduced by the prosecution to corroborate each detail contained in the confessional statement. The Court is required to examine whether the confessional statement is voluntary; in other words, whether it was not obtained by threat, duress or promise. If the Court is satisfied from the evidence that it was voluntary, then it is required to examine whether the statement is true. If the Court on examination of the evidence finds that the retracted confession is true, that part of the inculpatory portion could be relied upon to base conviction. However, the prudence and practice require that Court would seek assurance getting corroboration from other evidence adduced by the prosecution.
32. It is true that in criminal law, as also in civil suits, the trial Court and the appellate Court should marshal the facts and reach conclusion, on facts. In a criminal case, the prosecution has to prove the guilt beyond doubt. The concept of benefit of doubt is not a charter for acquittal. Doubt of a doubting Thomas or of a weak mind is not the road to reach the result. If a Judge on objective evaluation of evidence and after applying relevant tests reaches a finding that the prosecution has not proved its case beyond reasonable doubt, then the accused is entitled to the benefit of doubt for acquittal. The question then is: whether the learned Single Judge of the High Court has committed any error of law in reversing the acquittal by the Magistrate. Not every fanciful reason that erupted from flight of imagination but relevant and germane requires tested. Reasons are the should of law. Best way to discover truth is through the interplay of view points. Discussion captures the essence of controversy by its appraisal of alternatives, presentation of pros and cons and review on the touchstone of human conduct and all attending relevant circumstances. Truth and falsity are sworn enemies. Man may be prone to speak falsehood but circumstantial evidence will not. Falsity is counted from man's proclivity to faltering but when it is tested on the anvil of circumstantial evidence truth trans. On scanning the evidence and going through the reasoning of the learned Single Judge we find that the learned Judge was right in accepting the confessional statement of the appellant, Ex. P-4 to be a voluntary one and that it could form the basis for conviction. The Magistrate had dwelt upon the controversy no doubt on
- 38 -
appreciation of the evidence but not in proper or right perspective. Therefore, it is not necessary for the learned Judge of the High Court to wade through every reasoning and give his reasons for his disagreement with the conclusion reached by the Magistrate. On relevant aspects, the learned Judge has dwelt upon in detail and recorded the disagreement with the Magistrate and reached his conclusions. Therefore, there is no illegality in the approach adopted by the learned Judge. WE hold that the learned Judge was right in his findings that the prosecution has proved the case based upon the confession of the appellant given in Ex.P-4 under Section 108 of the Evidence Act and the evidence of PWs 2, 3 and
5. The prosecution proved the case beyond doubt and the High Court has committed on error of law.
34. Having reached the finding that the appellant has committed the offences under Section 135 (1) (i) of the Act and Section 85 (1) (a) and 86 of the Gold (Control) Act, 1968 we think that instead of being committed to jail, the appellant should be sentenced to pay fine of Rs. 10,000/- and Rs. 5,000/- respectively for the two aforementioned offences, within 4 months from today. In default, he shall undergo imprisonment for a period of 2 months and 1 months respectively which are directed to run consecutively."
35- In light of the aforesaid judgment delivered by the Hon'ble Supreme Court, the Tribunal based upon the evidence has rightly passed the impugned order and in respect of substantial question of law No.1, the answer is that there was sufficient evidence about the manufacture and removal of goods and the Department has rightly drawn inference about clandestine manufacture and removal.
36- In respect of substantial question No.2, the evidence discussed by this Court which has been relied upon by Tribunal, the Tribunal was justified to coming to conclusion that appellant
- 39 -
was involved in clandestine manufacture of the goods and clearing of the same without payment of Excise Duty. 37- In respect of substantial question No.3, the receipt of raw material coupled with other evidence as discussed by this Court and by the Tribunal, the Tribunal was justified in holding that there was corresponding manufacture and clandestine clearance of Gutkha by the appellant.
38- The net result is appeals fails and is accordingly dismissed alongwith all the connected appeals.
Certified Copy as per rules.
(S. C. Sharma) (Rajeev Kumar Dubey)
JUDGE JUDGE
Tej