Offence under Customs and Central Excise

Who is competent to file complaint?

by

 

VIJAY. K. KUMAR

     MA,B.Ed,BL,MBA

 

SUPERINTENDENT OF CENTRAL EXCISE; HYDERABAD

 

 

 

Section 9 of the Central Excise Act and Section 135 of the Customs Act provide for various punishments of imprisonment for offences under the respective Acts. These are in addition to the confiscation and penalty that can be imposed through departmental adjudication proceedings. It is now well settled law that for the same act or omission, one can be penalised through departmental adjudication and also through prosecution in courts of law. While departmental proceedings are rather well known, there are certain dark areas in relation to prosecution.

 

Words like offence, arrest, prosecution, trial, warrant, complaint etc are dreaded and avoided.

As is well known, the conviction of an offender under the Customs and Central Excise laws are the exclusive purview of the courts. There are now special courts to try economic offences. But the whole story of trial starts with a court taking cognizance of an offence. As per Section 190 of the Cr.P.C, a court can take cognizance of an offence

1. upon receiving a complaint of facts which constitute such offence
   
2. upon a police report
   
3. upon information received from any person other than a police officer
   
4. upon its own knowledge.
   

 

Ch. XIX of the Cr. P.C deals with trial of warrant cases. Warrant case is defined in the code as " a case relating to an offence punishable with death, imprisonment for life or imprisonment for a term exceeding two years" [sec. 2(x)]. As the punishment for offence under our Acts extends to seven years, our cases are warrant cases. Chapter XIX has two parts, A and B. 'A' deals with cases instituted on a Police report and 'B' deals with cases instituted otherwise than on police report. Police report means, a report forwarded by a police officer to a Magistrate under sub section (2) of section 173[sec. 2(r)] 173(2) deals with the form and content of the police report. While the term 'police officer' has not been defined in the code or any other Act, it has been emphatically held in several judicial pronouncements that a Customs officer (also CE officer) is not a police officer. So our cases fall under category 'B' i.e. cases instituted otherwise than on police report.

 

The big question mark raised in this article is who is to file a complaint in a court for an offence under the Customs or Central Excise law?

 

Neither the Customs Act nor the Central Excise Act specifies the authority who is competent or who is required to file the complaint. We can find this provision in other laws. For example section 32 of the Drugs and Cosmetic Act 1940 stipulates

" COGNIZANCE OF OFFENCES.

(1) No prosecution under this Chapter shall be instituted except by an Inspector or by the person aggrieved or by a recognised consumer association whether such person is a member of that association or not"

Or as per Section 621 of COMPANIES ACT 1956

" 621 OFFENCES AGAINST ACT TO BE COGNIZABLE ONLY ON COMPLAINT BY REGISTRAR, SHAREHOLDER OR GOVERNMENT.

1. No Court shall take cognizance of any offence against this Act (other than an offence with respect to which proceedings are
   instituted under section 545),
   which is alleged to have been committed by any company or any
   officer thereof,
   except on the complaint in writing of the Registrar, or of a shareholder of the company, or of a person authorised by the Central Government in that behalf:
   

 

 

 

Even the FERA 1973 had a similar provision

 

Section 61:Cognizance Of Offences.

(1) xxxxxxxxxxxxxx

(2) No court shall take cognizance -

xxxxxxxxxx

(ii) of any offence punishable under section 56 or section 57, except upon a complaint in writing made by -

(a) the Director of Enforcement; or

(b) any officer authorised in writing in this behalf by the Director of Enforcement or the Central Government; or

(c) any officer of the Reserve Bank authorized by the Reserve Bank by a general or special order:

xxxxxxxxxxxxxx

Section 6 of the Imports and Exports (Control) Act, 1947, reads as

"6.Cognizance of offences. - No Court shall take cognizance of any offence punishable under Section 5 except upon a complaint in writing made by an officer authorised in this behalf by the Central Government by general or special order, and no Court inferior to that of a Presidency Magistrate or a Magistrate of the First Class shall try any such offence."

Section 36A (d) of the NDPS Act, 1985, says,

" a special court may, upon a perusal of police report of the facts constituting an offence under this Act or upon a complaint made by an officer of the Central Government or a State Government authorised in this behalf, take cognisance of that offence without the accused being committed to it for trial."

Even the old Customs Act had a similar provision for this.

Section 187A of the Sea Customs Act read,

"Cognizance of offences: No Court shall take cognizance of any offence relating to smuggling of goods punishable under Item 81 of the Schedule to Section 167, except upon complaint in writing, made by the Chief Customs Officer or any other officer of Customs not lower in rank than an Assistant Collector of Customs authorised in this behalf by the Chief Customs Officer."

What then is TAKING COGNIZANCE?

In the case of Devarapalli Lakshminarayana Reddy & Others v. Narayana Reddy & Others (AIR 1976 SC 1672), the Supreme Court has held as follows:

"The expression 'taking cognizance of an offence' by the Magistrate has not been defined in the Code. The ways in which such cognizance can be taken are set out in clauses (a), (b) and (c) of Section 190(1). Whether the Magistrate has or has not taken cognizance of the offence will depend on the circumstances of the particular case including the mode in which the case is sought to be instituted, and the nature of the preliminary action, if any, taken by the Magistrate. Broadly speaking, when on receiving a complaint, the Magistrate applies his mind for the purposes of proceeding under Section 200 and the succeeding sections in Chapter XV of the Code of 1973, he is said to have taken cognizance of the offence within the meaning of Section 190(1)(a)"

The customs Act also has a provision regarding cognizance of offences in Section 137

137 COGNIZANCE OF OFFENCES.

 

(1) No court shall take cognizance of any offence under section 132, section 133, section 134 or section 135, except with the previous sanction of the Commissioner of Customs.

But it is not clear as to who would file the complaint after the Commissioner has given his sanction.

In CUSTOMS FOR PREVENTION (I), CALCUTTA v REMO MORGANI - 1983 (12) E.L.T. 790 (Cal.), it was pointed out that "The Customs Act is, however, silent as to who should file complaint and does not specify or authorise any .particular official for the purpose of filing complaint."

xxx .

If there had been a specific provision in the Act to the effect that any officer of the Customs may file a complaint representing the Union of India, then the Assistant Collector of Customs could represent the Union of India by virtue of the said provision

xxxxxx

it is preposterous to suggest that an officer merely because he is an officer of the Customs Department, can represent the Union of India without any authority in that behalf."

 

In the Central Excise Act, even this provision of sanction by the Commissioner is absent. Though there are departmental instructions on getting the sanction of the Chief Commissioner to prosecute, the law is silent on who should file the complaint. However in the old Central Excise Rules 1944, Rule 207 referred to charge

207 CHARGE BY WHOM TO BE PREFERRED.

A charge of an offence under section 9 of the Act shall not be made except by an officer not inferior in rank to an Inspector.

In TONESTA ELECTRONICS v ASSTT. COLLECTOR OF C. EXCISE, BANGALORE -1995 (75) E.L.T. 456 (Kar.), it was held that

"As there is no statutory requirement of a sanction of any prescribed authority for prosecuting a person for an offence under the Act, the validity or otherwise of the sanction order which is passed in pursuance of administrative instructions would not arise for consideration. Even if that order can be said to be bad, the proceedings cannot be quashed on that ground. The Act does not stipulate that the complaint for an offence under the Act should be filed only by the Collector. All that Rule 207 stipulates is that the complaint should not be filed by an officer inferior in rank to an Inspector. If that condition is complied with the complaint will be competent. As in this case the complaint is filed by the Assistant Collector there is compliance with Rule 207 and the proceedings cannot be quashed, even if there is some defect in an order passed by the Collector authorising the Assistant Collector to file the complaint as that order is superfluous."

But in a recently reported judgement, Asstt.Collector of C.Ex., Madras v Doulatmal Chondia - 2001(130) ELT 41(Mad), the Hon'ble High Court of Madras dismissed a departmental appeal where the trial court had held that the Assistant collector was not competent to file a complaint. Incidentally in that case, the trial court had to consider five issues namely,

1. Whether the accused was liable to pay excise duty of xxxxx and evaded payment and thus contravened Section 9(1)(b) punishable under Section 9(1)(b)(ii)?
   
2. Whether the accused was bound to take excise licence and failed to take the same and contravened Section 6 punishable under Section 9?
   
3. Whether the accused produced forged gate passes to TNEB, …. and contravened Section 468 IPC?
   
4. Whether the accused used as genuine forged gate passes knowing them to be forged and thus contravened Section 471 of the IPC? and
   
5. whether the complaint submitted by the Assistant Collector of Central Excise competent?
   

Interestingly in this case, the trial court concluded the first four points in favour of the prosecution, but deciding the last point in the negative ordered the acquittal of the accused! That is an accused who was found to have evaded excise duty and so liable for punishment; an accused who was required to take a licence, but did not and so was liable for conviction; an accused who produced forged gate passes and an accused who used forged gate passes as genuine, an accused who could have gone to jail on every charge was acquitted because the Assistant Collector was not competent to file the complaint!

Naturally aggrieved and perhaps aghast, the revenue went in appeal to the High Court and the Honourable high Court held " Since no strong reasons have been brought forth contra to the decision arrived at by the court below so far as the competence of the Assistant Collector, Customs to file the complaint and to maintain the same before the trial court, there becomes no necessity to have a change of opinion on that point." And the revenue appeal was dismissed.

Interestingly the new rules have no corresponding provision for the earlier rule 207. So even assuming there was provision in the old rules, it is totally absent in the new rules.

It is perhaps a little too late in the day to think of basic questions like "Who should file the complaint?" after so many years of prosecution and conviction(s), but the issue is so vital that it cries for clarification.

 

The author can be reached at vijayoffice2001@yahoo.com

 

 

 

 

EXCISE LAW TIMES –01.12. 2001– A104