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PETITIONER: THE ASSISTANT COLLECTOR OF CENTRAL EXCISE, RAJAMUNDRY

       Vs.

RESPONDENT: DUNCAN AGRO INDUSTRIES LTD.  & ORS.

DATE OF JUDGMENT:       07/08/2000

BENCH: R.P.Sethi, K.T.Thomas

JUDGMENT:

     THOMAS, J.

     Is  it  necessary  to   comply  with  the  precautions envisaged  in Section 164 of the Code of Criminal  Procedure (for   short  the  Code)   when  Customs  officers  record statement  under Section 108 of the Customs Act?  A Division Bench  of  the  Andhra Pradesh High Court held  that  it  is necessary  if  the  statements were to be used  against  the maker  thereof and that view was followed by a Single  Judge of the same High Court in the present case which resulted in refusal  of  leave to appeal when an order of acquittal  was challenged  in  the  High Court.  This  appeal,  by  special leave,  is  against the said order of refusal passed by  the Single Judge.

     Certain  companies  which   engaged  in  manufacturing cigarettes,   along  with  some  of  their  Directors   were prosecuted  before  the Court of a Special  Judge  (Economic Offences)  at Hyderabad for offences under different clauses of  Section 9(1) of the Central Excise Act and under Section 120B  of  the  Indian  Penal Code.  The  trial  judge  after holding  inquiry framed charges against the respondents  for the  aforesaid offences and proceeded with the trial but  in the  end  he  acquitted  all  of  them.   The  gist  of  the allegations  against  them is that the  respondent  company, which  engaged  in the manufacture of cigarettes during  the period  between  1.9.1981  and   30.11.1985,  removed  large quantities  of cigarettes from their factories at  Biccavolu without accounting them and without paying excise duty.  The further  allegation  is that large quantities of  cigarettes were  concealed in their godowns without accounting them and in  the  above process a very huge amount of central  excise duty  was  evaded fraudulently.  Such acts were done by  the respondent  pursuant to the criminal conspiracy hatched  and perpetrated by them.

     The  Special Judge, after a detailed trial, found  the respondent  not  guilty  and acquitted him.   The  appellant filed  an appeal before the High Court of Andhra Pradesh and moved  for leave to appeal.  Learned Single Judge who  heard the  petition for leave felt that he is bound by the earlier decision rendered by a Division Bench of the same High Court in  N.S.R.   Krishna Prasad vs.  Collector of Customs  {1992 (57)  ELT  568 (AP)}.  According to the said  decision,  any inculpatory  statement  recorded  by the  authorities  under

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Section  108  of  the  Customs  Act  without  following  and complying  with the constraints prescribed in Section 164 of the  Code would be inadmissible evidence in a trial  against the  maker of that statement.  What the learned Single Judge has stated on that score is the following:

     Since  the  Excise  Officers who  have  recorded  the statements   from  the  accused  in   this  case  have   not administered  the  warning to the accused as required  under section  164  sub-  section  (2) of  the  Code  of  Criminal Procedure,   non-compliance  of   the  mandatory   provision contained  in  164 sub-section (2) of the Code  of  Criminal Procedure renders the statements inadmissible in evidence as held by the Division Bench.  Therefore, those statements are inadmissible  against the makers thereof or against the  co- accused.

     The  Division  Bench  of  the  High  Court  in  L.S.R. Krishna  Prasads  case (supra), whose decision the  learned Single Judge followed, has held thus:

     It,  therefore,  follows  that unless  the  empowered authority  under Section 108 of the Customs Act  administers the  caution  or the warning embodied under  Section  164(2) Cr.P.C.    before  recording  a  statement  of  confessional nature,  from the person summoned, the statement so recorded will be inadmissible in evidence for any purpose.

     On the above premise learned Single Judge excluded all the   confessional  statements   from  consideration.    The remaining evidence was found to be insufficient to establish the  guilt of the respondent.  Learned Single Judge declined to  grant leave to appeal by observing:  As the prosecution has  failed to make out a case to grant leave to file appeal against  the  order of acquittal passed by the trial  court, the  petition for leave to file the appeal is dismissed  and consequently  the  appeal  is also dismissed. If  the  view adopted   by   the  learned   Single  Judge  regarding   the application of Section 164 of the Code to Section 108 of the Customs Act is erroneous, the High Court should have granted leave to appeal.

     Incidentally, we may point out that the Union of India had  challenged  the  decision  in  N.S.R.   Krishna  Prasad (supra)  before this Court.  A two Judge Bench of this Court has  set  aside  the said decision on the premise  that  the challenge  made  before the High Court in that case was  not sustainable in a writ petition.  However, this Court did not express  any  opinion  on  the merits of the  case  and  the question  of  law  was  left open.  So in  this  appeal,  by special  leave,  we  are  only   disposed  to  consider  the sustainability  of  the  legal position  adumbrated  by  the Division Bench in N.S.R.  Krishna Prasad regarding.

     Section  108  of  the Customs Act reads  thus:   108. Power  to  summon  persons  to  give  evidence  and  produce documents.-(1)  Any  gazetted officer of custom  shall  have power  to  summon any person whose attendance  he  considers necessary  either to give evidence or to produce a  document or  any  other  thing in any inquiry which such  officer  is making in connection with the smuggling of any goods.

     (2) A summons to produce documents or other things may be  for  the  production of certain specified  documents  or

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things or for the production of all documents or things of a certain  description  in the possession or under control  of the  person summoned.  (3) All persons so summoned shall  be bound  to attend either in person or by an authorised  agent as  such  officer may direct;  and all persons  so  summoned shall  be  bound  to  state  the  truth  upon  any  subject, respecting  which  they are examined or make statements  and produce such documents and other things as may be required:

     Provided  that the exemption under Section 132 of  the Code  of  Civil  procedure,  1908(5   of  1908),  shall   be applicable  to  any  requisition for attendance  under  this section.   (4) Every such inquiry aforesaid shall be  deemed to  be  a judicial proceeding within the meaning of  section 193 and section 228 of the Indian Penal Code (45 of 1860).

     It  must  be remembered that Section 171A of  the  Sea Customs  Act, 1878 (which enactment has been repealed by the Sea  Customs Act) corresponds to Section 108 of the  Customs Act.   In  this context we may point out that Section 14  of the  Central  Excise Act is practically the same as  Section 108  of  the Customs Act.  So the decision rendered by  this Court  under  the other corresponding provisions will be  of much  advantage  to discern how the scope of the  provisions has been understood by this Court earlier.

     Section  164  of  the Code deals  with  recording  of confession  and  statements.   The   provision  empowers  a judicial  magistrate to record any confession or  statements made  to  him during the course of an  investigation  under this  Chapter  or under any other law for the time being  in force  or at any time afterwards before the commencement  of the inquiry or trial. It must be pointed out that the power conferred by the said provision could be exercised only by a judicial magistrate.  Even a police officer on whom power of a  magistrate has been conferred is forbidden from recording a  confession.  Sub-sections (2) and (4) deal with procedure which   such  magistrate  has  to  follow  while   recording inculpatory statements made by persons.

     Section  108  of the Customs Act does not  contemplate any  magisterial  intervention.   The power under  the  said Section is intended to be exercised by a gazetted officer of the  Customs  Department.   Sub-section (3) enjoins  on  the person  summoned by the officer to state the truth upon  any subject  respecting which he is examined.  He is not excused from  speaking the truth on the premise that such  statement could be used against him.  The said requirement is included in  the  provision for the purpose of enabling the  gazetted officer  to  elicit the truth from the person  interrogated. There  is  no involvement of the magistrate at  that  stage. The  entire  idea behind the provision is that the  gazetted officer  questioning  the person must gather all  the  truth concerning  the  episode.  If the statement so extracted  is untrue its utility for the officer gets lost.

     In this context we bear in mind that a confession made to  a  police officer can be recorded by him without any  of the  constraints incorporated under Section 164 of the Code. But the safety of the confessor who makes such confession to the police officer is that the same is forbidden from use in evidence.   The ban contained in Section 25 of the  Evidence Act  is  an  absolute ban.  But it must be  remembered  that there  is  no  ban in regard to the confession made  to  any person  other  than  a  police  officer,  except  when  such

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confession  was  made  while he is in police  custody.   The inculpatory  statement made by any person under Section  108 is  to  non-police  personnel and hence it has no  tinge  of inadmissibility  in evidence if it was made when the  person concerned  was not then in police custody.  Nonetheless  the caution  contained in law is that such a statement should be scrutinised  by  the court in the same manner as  confession made  by an accused person to any non-police personnel.  The court   has  to  be  satisfied  in  such  cases,  that   any inculpatory  statement  made  by  an  accused  person  to  a gazetted  officer  must  also pass the tests  prescribed  in Section  24  of  the Evidence Act.  If such a  statement  is impaired  by  any  of the vitiating premises  enumerated  in Section  24  that statement becomes useless in any  criminal proceedings.

     As  early  as  in 1968 this Court had  considered  the scope  of  the statement made under Section 171A of the  Sea Customs Act in Haroon Haji Abdulla vs.  State of Maharashtra {AIR 1968 SC 832 = 1968 (2) SCR 641}.  Hidayatullah, J.  (as he then was) made the following observations:

     These  statements  are not confessions recorded by  a Magistrate  under  Section  164  of  the  Code  of  Criminal Procedure  but  are  statements made in answer to  a  notice under  sec.171-A  of the Sea Customs Act.  As they  are  not made  subject to the safeguards under which confessions  are recorded  by Magistrates they must be specially  scrutinised to  finding  out if they were made under threat  or  promise from some one in authority.  If after such scrutiny they are considered to be voluntary, they may be received against the maker  and in the same way as confessions are received, also against a co-accused jointly tried with him.

     In Ramesh Chandra Mehta vs.  State of West Bengal {AIR 1970  SC  940 = 1969 (2) SCR 461} it was held that when  an inquiry  is being conducted under Section 108 of the Customs Act,  and a statement is given by a person against whom  the inquiry is being held it is not a statement made by a person accused of an offence and the person who gives the statement does  not stand in the character of an accused person. This was  followed by this Court in Percy Rustomji Basta vs.  The State  of Maharashtra {AIR 1971 SC 1087 = 1971 (1) SCC 847}. It  was  a case in which the appellant was  convicted  under Section  135  of the Customs Act and 120-B of the IPC.   The question  which  this  Court  considered in  that  case  was whether  Section  24  of the Evidence Act was a bar  to  the admissibility  of  a  statement  given  by  the  accused  of offences  under  the Customs Act.  This Court  repelled  the contention  based on Section 24 of the Evidence Act and  the facts.

     A three Judge Bench of this Court has again reiterated the same position in Harbans Singh Sardar Lenasingh and anr. vs.   The  State of Maharashtra (AIR 1972 SC 1224).  It  was again   followed  in  Veera  Ibrahim   vs.   The  State   of Maharashtra  {AIR 1976 SC 1167 = 1976(3) SCR 672}.   Another three   Judge   Bench   in   Poolpandi   etc.    etc.    vs. Superintendent, Central Excise and ors.  {AIR 1992 SC 1795 = 1992 (3) SCC 259} took the same view.

     It  is  unfortunate  that the Division  Bench  of  the Andhra  Pradesh  High Court has not addressed itself of  the above well settled legal position when learned Judges of the Bench  (Ramanujula  Naidu and Panduranga Rao, JJ) held  that

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the  statement recorded under Section 108 of the Customs Act without  complying  with  Section 164 of the Code  will  be inadmissible in evidence for any purpose.

     We  hold that a statement recorded by customs officers under  Section  108  of  the Customs Act  is  admissible  in evidence.   The  court has to test whether  the  inculpating portions  were made voluntarily or whether it is vitiated on account  of  any of the premises envisaged in Section 24  of the  Evidence Act.  Such an exercise can be made only  after the  appeal  is  regularised by granting  leave  to  appeal. Since leave was declined on a wrong interpretation of law we have to interfere with the impugned order.

     We,  therefore,  allow this appeal and set  aside  the impugned  order.   Leave  applied for  will  stand  granted. Resultantly,  the appeal filed in the High Court will  stand regularised.  Now the High Court is to dispose of the appeal in  accordance with law.  As this is an old matter we direct the  Registrar of the High Court of Karnataka to include the appeal in the hearing list, as expeditiously as possible.