Andhra HC (Pre-Telangana)
Sanghi Textiles Processors Pvt. Ltd. vs Collector Of Central Excise on 27 August, 1990
Equivalent citations: 1993ECR226(AP), 1991(55)ELT151(AP)
ORDER Lakshmana Rao, J.
1. M/s. Sanghi Textiles Processors Private Limited, a company registered under the Companies Act, 1956 owns a textile processing unit situated at Omarkhanguda, Sanghinagar, Koheda, Rangareddy District. It undertakes processing of grey fabric and holds Central Excise Licences L-4 No. 1/79 (CF) and 1/79 (MMF). The officers of the Anti-Evasion Department (Central Excise) raided the premises of the petitioner on May 11, 1989 and seized some documents and goods. Thereafter, a show cause notice dated July 6, 1989 was issued to the petitioner. It was mentioned therein that the petitioner had accounted the grey man-made fabrics supplied by the merchants whose names were mentioned in the show cause notice as if they were grey cotton fabrics and processed and coloured them as cotton fabrics on or after November 25, 1987 by availing lower rates of duties applicable for cotton fabrics. It failed to give the actual nature and composition of the fabrics in the classification list filed by it and thereby misdeclared the goods. It failed to determine the correct liability of duty on the said fabrics and removed the goods without payment of excise duty leviable in respect of such goods. It had claimed and availed wrongly the benefit of Notification No. 252/82 dated November 8, 1982 as amended by clearing and processing man made fabrics (subject to processes like bleaching, dyeing, printing etc.) as if they were subjected to processes like padding and calendaring etc.
2. The petitioner was asked by the Collector of Central Excise, Hyderabad, the respondent herein to show cause why the additional duties of excise amounting to Rs. 5,11,17,706.25 should not be levied and collected under Section 11(A) of the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act), the plants, machinery and the buildings utilised for the manufacture and clearance of the fabrics as well as the goods seized at the factory premises on May 11, 1989 should not be confiscated and penalty should not be imposed on it.
3. On July, 28, 1989 the petitioner requested the respondent to provide personal hearing after granting permission for cross-examining all those witnesses on the basis of whose statements the show cause notice had been issued. It also requested for the return of the documents that were seized from its premises on May 11, 1989. It sought permission for inspection of the documents before submitting its reply to the show cause notice. Time was granted till September 22, 1989 to submit its reply to the show cause notice and the petitioner was granted permission to inspect the documents.
4. On the ground that the respondent refused to furnish copies of the documents relied upon in the show cause notice and such refusal amounted to denial of reasonable and adequate opportunity, the petitioner filed W.P. No. 12190 of 1989 on the file of this Court seeking a writ of mandamus for setting aside the show cause notice dated July 6, 1989. That writ petition was dismissed by this Court on September 6, 1989. Aggrieved by that decision, the petitioner preferred S.L.P. No. 11569 of 1989 before the Supreme Court. The S.L.P. was disposed of by the Supreme Court on November 15, 1989 with a direction to the respondent herein to sift the seized documents in order to identify the documents essentially necessary for the Excise Department and reimburse the reasonable expenditure incurred by the petitioner in taking copies of the documents which it considered necessary. A further direction was given to the respondent therein to return to the petitioner such of those seized documents which the department did not seek to rely, within four weeks.
5. While so, the petitioner filed a writ petition in the High Court of Delhi questioning the validity of show cause notice dated July 6, 1989. Interim stay as prayed for was granted on February 5, 1990 and it was subsequently modified to the effect that it was open to the Collector to proceed with the enquiry, but however, he shall not communicate the order to the petitioner. Thereafter, the petitioner submitted his reply dated March 9, 1990 to the show cause notice.
6. The respondent posted the matter for enquiry on April 12, 1990. On that date, an objection was raised on behalf of the petitioner herein against the presence of departmental officers at the time of cross-examination of the witnesses and sought permission for cross-examining Mahazar witnesses/officers mentioned at Sl. Nos. 1 to 60 of its letter dated April 2, 1990, apart from making a request for supply of copies of some documents, return of 55 lot cards in original and testing of 1700 "samples folders" seized from its premises on May 11, 1989. The Collector overruled the objection relating to the presence of the officers at that time of cross-examination of the witnesses, stating that their assistance was necessary and their participation in the investigation was neither relevant nor material. He, however, granted permission to the petitioner to cross-examine panch witnesses and officers connected with the search of any two premises of its choice from where samples had been drawn. However, the request to cross-examine about 20 merchant manufacturers had been rejected on the ground that they were "co-notices". The enquiry was posted to June 13, 1990. On that date, the petitioner sought review of the order dated May 15, 1990 passed by the respondent herein reiterating its request for permission to cross-examine all the "notices", persons who were present at the time of drawal of samples and all range officers. It also made a further request that copies of replies filed by "co-notices" be made available. The Collector again rejected all those requests and accordingly informed the petitioner through his letter dated July 3, 1990. The enquiry was posted to July 17, 1990 and the petitioner was informed of the date of enquiry. It was made clear in that letter that no further adjournment would be granted. On July 17, 1990 when the enquiry commenced, the learned counsel appearing for the petitioner herein submitted before the respondent herein that the petitioner would like to cross-examine the witnesses in the order of the following preference, viz., (1) Brokers, (2) Panch Witnesses, (3) other dealers and (4) departmental officers. From among the witnesses from the category of brokers, the learned counsel submitted that the petitioner would like to cross-examine strictly in the following sequence : (1) Sri Ajay Kumar Agarwal, Bombay; (2) Shri Gyan Prakash Lakshman Swaroop Agarwal, Bombay; (3) Shri Naresh Kumar, Hyderabad; and (4) Shri Hashmukh M. Patel. The Collector observed that the petitioner had indicated for the first time the sequence in which it wanted to cross-examine the witnesses and the two witnesses from the category of brokers which it wanted to examine first viz., Shri Ajay Kumar Agarwal, Bombay and Shri Gyan Prakash Lakshman Swaroop Agarwal, Bombay were not available for cross-examination. They sent telegrams intimating their inability to attend the enquiry on July 17, 1990 due to sickness of the members of their family. The Collector informed the learned counsel for the petitioner herein that the witnesses viz., Shri Hashmukh M. Patel (Broker), Sri Sohan Chokani (Dealer) and three departmental offers were available for cross-examination and they may be cross-examined. It was pointed out by the Collector that if the petitioner insists that the cross-examination should be strictly in accordance with the order of preference indicated by it, it will only lead to postponement of the enquiry. As Shri Hashmukh M. Patel (Broker) was available for cross-examination, the Collector asked the petitioner to cross-examine him on July 18, 1990 in the first instance and continue with the cross-examination of other available witnesses. However, the learned counsel for the petitioner requested the Collector that the cross-examination of the three departmental officers may be taken up only after cross-examination of the panch witnesses. The Collector accordingly passed orders on July 17, 1990 posting the enquiry to July 18, 1990. On that date, the learned counsel for the petitioner reiterated that the petitioner had a right to fix the sequence in which it wanted to cross-examine the witnesses and the presence of the Investigating Officers in the enquiry would cause prejudice to the petitioner inasmuch as the statements of the persons who were to be cross-examined had been recorded by the Investigating Officers under intimidation, duress, threat and coercion and it would be difficult to elicit truth from them in cross-examination in the presence of the Investigation Officers. Both those objections were again over-ruled by the Collector by his order dated July 18, 1990. He held that the department had a right to be assisted by the Investigating Officers and unless there was specific evidence that a particular witness had been intimidated or coerced to make a statement, it could not be presumed that the presence of the Investigating Officers would intimidate or scare the witnesses. He further made it clear that in a quasi-judicial enquiry which he was holding under the provisions of the Act, it was not necessary to follow the sequence in which the petitioner herein wanted to cross-examine the witnesses and if such sequence is followed, the enquiry can never be completed. At the request of the petitioner, the enquiry was postponed by five weeks and posted to August 28, 1990. The petitioner was accordingly informed by the Collector through his letter dated July 24, 1990.
7. At that stage, this writ petition had been filed on August 10, 1990 for issue of a writ of mandamus declaring the action of the respondent in not allowing the petitioner to cross-examine the witnesses in the order of preference indicated by it and in permitting Officers of the Directorate of Anti-Evasion who had participated in the inspection, search, raids and investigation, to be present while the evidence is being recorded as illegal, arbitrary and unconstitutional being infractive of Articles 14 and 21 of the Constitution of India and violative of principles of natural justice and fair play.
8. It is submitted by the learned counsel for the petitioner :
(1) The enquiry to be conducted by the respondent is quasi-judicial in nature involving high stakes which may culminate in the levy and demand of more than Rs. 5 crores of Excise Duty apart from confiscation of huge assets of the petitioner and imposition of severe penalty. The conduct of such an enquiry should be strictly in accordance with the principles of natural justice and fair play.
(2) The Investigating Officers of the Directorate of Anti-Evasion had obtained the statements of the officers of the petitioner-company under intimidation, duress, threat and coercion. Therefore, they have a reasonable apprehension in their minds, that the statements of the other persons, viz., the brokers, the merchant manufacturers, the dealers and the panch witnesses also must have been obtained under intimidation, duress, threat and coercion. In view of that genuine and bona fide apprehension, the petitioner is afraid that it cannot elicit truth from the witnesses in the cross-examination conducted in the presence of the Investigating Officers and their presence is likely to intimidate and scare the witnesses. The absence of the Investigating Officers during the cross-examination of the witnesses will not in any way cause prejudice to the department. And (3) The petitioner who is in the position of an accused has a right to defend itself in the manner in which it desires and considers to be necessary and proper and for that purpose to seek cross-examination of the witnesses in the sequence it considers necessary.
9. There can be no doubt that the enquiry contemplated under the provisions of the Central Excises and Salt Act, 1944 and the rules made thereunder is quasi-judicial in nature. However, no specific procedure is prescribed either under the Act or the rules for conducting the enquiry. Even the provisions of the Indian Evidence Act, Criminal Procedure Code and Civil Procedure Code are not applicable.
10. Section 135 of the Evidence Act deals with the order of production and examination of witnesses. It reads as follows :
"The order in which witnesses are produced and examined shall be regulated by the law and practice for the time being relating to civil and criminal procedure respectively, and, in the absence of any such law by the discretion of the Court".
In Jalat Kumar Darsi v. Visveswara Dutt - ILR 39 Calcutta 245, Woodroffe, J. held that the Court had always the power, to regulate the order in which witnesses were produced either in a civil or criminal proceeding, under Section 135 of the Evidence Act. Justice Chandrasekhara Sastry pointed out in A. P. Sarma G. C. Veerayya , that the Court had inherent power to regulate the business of the Court in the way it thought best or to make any order that may be necessary for the ends of justice. Explaining the scope of the power of the Court to order witnesses out of court, the learned Judge observed that neither the Evidence Act nor the Code of Civil or Criminal Procedure contained any section or rule for ordering witnesses out of court although it was generally done by the courts as a matter of practice. In that case, arising under Section 135 of the Evidence Act, the learned Judge categorically held.
"I wish to point out that the court has always got the power to order any party or a witness or any person present in Court to leave the Court hall if he does not behave properly, or his presence is likely to embarrass or influence any of the witnesses."
In Nathusing v. The Crown - AIR 1925 Nagpur 296, a question whether the Magistrate can order the Police Officer not to remain in the court hall, came up for consideration. The learned Judicial Commissioner held therein -
"... S. 352, Criminal Procedure Code gives power to the Court of ordering that any particular person shall not remain in the room used by the Court. It makes no exception in the case of Police Officer...... When an accused person objects to the presence of a Police Officer or other person the Magistrate has to be decide whether the accused's fear of prejudice to his case is reasonable, considering the intelligence and susceptibilities of the class to which he belongs and not merely whether the presence is convenient or helpful to the Court or the prosecution."
Justice Govinda Menon of Kerala High Court, agreeing with the views expressed in the two cases referred to above, held that to ensure a fair trial, even in the absence of any specific provision in any enactment, the Court had inherent power to order that no witness who has to give evidence should be present when the dispositions of the other witnesses were being taken until he himself was examined as witness. Thus, those decisions point out that the Court has the power to prescribe the order in which the witnesses are to be examined as well as to order any party or a witness or any person present in Court to leave the Court hall if his presence is likely to embarrass or influence any of the witnesses.
11. The respondent herein is a quasi-judicial authority constituted under the provisions of the Act. The provisions of the Act and the rules made thereunder do not prescribe any procedure for regulating the order in which the witnesses are to be produced or examined before the respondent. But, the proceedings pending before the respondent being quasi-judicial in nature, it has to be ensured that the proceedings are conducted in accordance with the principles of natural justice and fair play. In the absence of any provision, the respondent has to exercise his discretion in regulating the order of production and examination of witnesses in such a manner as to ensure that the proceedings are conducted in a fair and proper manner by conforming to the principles of natural justice. It would be pertinent to note that even in a trial conducted by a court of law following the procedure laid down under the Criminal Procedure Code, the Investigation Officers are not prohibited from being present in the court when the witnesses for the prosecution are being examined or cross-examined unless the court is of the opinion that the presence of an Investigating Officer is likely to intimidate or scare a witness from speaking the truth. In such circumstances, the Court can direct the Investigating Officer to keep out of the court hall till the examination of that witness is completed. Such a procedure is followed to ensure a fair and proper trial. Generally, the prosecutor has a right to have the assistance of the Investigating Officer in conducting the prosecution.
12. In the instant case, the raid was conducted by the personnel of the Directorate of Anti-Evasion on the premises of the petitioner and many others who were either merchant manufacturers or brokers or dealers in the grey fabrics. Large volume of documents and fabrics were seized. Except making a vague and general allegation that the Investigation Officers obtained statements from the personnel of the petitioner under intimidation, duress, threat or coercion, no material whatsoever, which can be said to even remotely suggest that any one of the merchant manufacturers, brokers, dealers or panch witnesses was subjected to intimidation, duress, threat coercion or undue influence in obtaining the statement, had been produced. The Collector himself specified in his order that if any such instance of intimidation or coercion was brought to his notice in respect of any witness, he would consider in such a case whether the Investigating Officers should be asked to keep out of the enquiry when that witness was being examined and pass appropriate orders. In this context, we have to bear in mind that the Excise Department which had initiated the proceedings before the Collector against the petitioner has a right to have the assistance of the Investigating Officers who gathered the material on the basis of which the proceedings had been initiated. It is stated that the documents prepared and intended to be relied upon by the Excise Department in the enquiry run into about 1,46,000 pages. If the department is debarred from availing the assistance of Investigations Officers without any reasonable basis, in our view, it would surely be prejudicial to the interest of the department.
13. It is, however, submitted by the learned counsel for the petitioner that the procedure adopted by the respondent in conducting the enquiry is arbitrary and deprives the petitioner of its valuable right to defend itself effectively. It is, thus according to the learned counsel violative of Article 14 of the Constitution of India by denying the petitioner the right to equal treatment. In support of his contention, the learned counsel has placed strong reliance on what Justice Vivian Bose had said in The State of West Bengal v. Anwar Ali , the relevant portion of which reads as follows :
"... We find men accused of heinous crimes called upon to answer for their lives and liberties. We find them picked out from their fellows, and however much the new procedure may give them a few crumbs of advantage, in the bulk they are deprived of substantial and valuable privileges of defence which others, similarly charged, are able to claim. It matters not to me, nor indeed to them and their families and their friends, whether this be done in good faith, whether it be done for the convenience of government; whether the process can be scientifically classified and labelled or whether it is an experiment in speedier trials made for the good of society at large. It matters not how lofty and laudable the motives are. The question with which I charge myself is, can fair-minded, reasonable, unbiased and resolute men, who are not swayed by motion or prejudice, regard this with equanimity and call it reasonable, just and fair, regard it as that equal treatment and protection in the defence of liberties which is expected of a sovereign democratic republic in the conditions which obtain in India today ?"
14. Having regard to the facts and circumstances of the case, we are unable to hold that by reason of permitting the Excise Department to have the assistance of its Investigating Officers, in putting forth their case before the respondent herein or by not allowing the petitioner to cross-examine the witnesses in the sequence in which it wants to cross-examine the witnesses, the petitioner is deprived of either the right to equal treatment or the right to conduct its defence in the way it wants.
15. As pointed out earlier, the respondent himself has categorically held in the order passed by him that if in any particular instance relating to any witness, the petitioner substantiates its plea that due to the presence of the Investigating Officers, a witness is likely to be intimidated or scared, he will consider the same and pass appropriated orders. So far as the sequence in which the petitioner wants to cross-examine the witnesses is concerned, he has pointed out that if such procedure is followed, it will result in procrastination and undue delay in completing the enquiry. The learned counsel appearing for the Excise Department has urged that the petitioner will not be put to any prejudice, as it will be given the option to cross-examine the witnesses who will be summoned on a particular day, in its own order of preference. It is, however, stressed that the petitioner cannot insist on the cross-examination of a particular witness who is not present, before other witnesses who are present, are cross-examined. The respondent himself had indicated in his order that if after cross-examining any witness, it was found necessary to recall that witness in view of the evidence of some other witness who was subsequently cross-examined, the petitioner can make a request for recalling the witness and if any such request is made, the same will be considered. Therefore, in view of the facts and circumstances of this case, we are unable to persuade ourselves to hold that the procedure adopted by the respondent is either violative of Article 14 of the Constitution of India or of the principles of natural justice or fair play.
16. For the reasons stated above we do not find force in any one of the contentions advanced on behalf of the petitioner and they are accordingly rejected.
17. We, however, give the following two directions to the respondent.
(1) In the case of cross-examination of any witness, if a plea is raised on behalf of the petitioner that the presence of any one or all of the Investigating Officers is likely to intimidate or scare the witness, the respondent shall consider the same having regard to material produced by the petitioner and decide whether the Investigating Officers shall be asked to keep out of the enquiry so long as that witness was examined.
(2) Regarding the sequence in which the petitioner wants to cross-examine the witnesses, the respondent shall permit the petitioner to follow its own order of preference of cross-examining the witnesses who have been summoned and are present to give evidence on a particular day. If the petitioner files any application for recalling any witness for the purpose of further cross-examination, having regard to the evidence given by the other witnesses subsequent to the cross-examination of that witness, the same shall be considered on merits and appropriate orders be passed.
18. Subject to the above directions, the writ petition is dismissed. There shall be no order as to costs.