2015 (10) TMI 2671 - HC - Central Excise

Delegation of powers - powers delegated to the Collector of Central Excise - offences punishable under Section 9 of the Central Excise Salt Act 1944 - omission of Rule 56 A - the allegations against the accused were that in pursuance to the permission granted on 07/07/1983, the credit of ₹ 1,17,35,014/- was permissible, but instead, by making a dishonest and deliberate double entries of credit of the said amount, impermissible credit in the sum of ₹ 1,17,35,014/- was taken and thus an offence under the afore stated provisions were committed - effect of omission of Rule 56A on pending a complaint before the trial Court. Whether the prosecution can subsist after omission of Rule 56A without a saving clause? - whether Sections and 3 and 38A of the Act or Section 6 of the General Clauses Act would be able to save the situation? Held that - While addressing the issue arising under Section 38 A of the Act, it was observed that Section 38 A operates in respect of amendment, repeal, supersession or rescinding of any rule, notification or order, but not in the eventuality of an omission. It was explained that omission and repeal are different things and omission does not amount to repeal. The Court also referred the dictionary meaning of rescind and amend and observed that the same are not synonymous with the word omit . It was thus held that Section 38A of the Act would not save any obligation, liability etc. acquired, accrued or incurred under any rule, order or notification which has been omitted. Similar fact situation is prevalent in the present case and therefore on omission of the rule in absence of savings, the proceedings under Section 138 A of the Act in question would not be saved. Similar is the fact situation in the present case. As indicated earlier, the relevant notification in this case also does not make any provision akin to Section 6 of the General Clauses Act. It also does not make any provision continuing the liabilities incurred under Rule 56 A. Immediately on omission of Rule 56A during the pendency of the complaint, it is deemed to have disappeared from the statute book and therefore it can no more be relied upon. Consequently, no prosecution initiated during the subsistence of Rule 56 A can continue after its omission and therefore penal consequences flowing therefrom would cease. It therefore can be said that the act or omission on the part of the petitioner was not punishable on and after the date of omission of Rule 56 A and in view of above discussion, the introduction of Section 38 A with specified savings would not come to the aid of the prosecution as the act which was not punishable on omission cannot be punishable by virtue of explanation to Section 38 A. The trial Court failed to address the legal proposition in its true perspective. It is settled legal position that though at the time of considering the application for discharge, the Court is not obliged to appreciate the evidence, but certainly it is required to see the evidence with an object to find out as to whether the material justifies framing the charge and whether the charge, if framed on the basis of existing material, would be ground less or not? The endavour of the Court would be to examine the material available and find out whether the material is good for trial. The charge would be certainly ground less if it is framed in ignorance of settled proposition of law on a given subject. This Court has reason to interfere with the impugned order in exercise of powers conferred under Section 397 of the Cr.PC and thus the impugned order deserves to be quashed and set aside and the application for discharge deserves to be accepted - application allowed.

Summary

Issues Involved:
1. Omission of Rule 56A without a saving clause.
2. Admissibility of confessional statements.
3. Effect of omission of Rule 56A on pending prosecutions.
4. Applicability of Sections 3 and 38A of the Central Excise Act and Section 6 of the General Clauses Act.
5. Scope of discharge and applicability of precedents.

Detailed Analysis:

1. Omission of Rule 56A Without a Saving Clause:
The primary issue was whether the prosecution could continue after the omission of Rule 56A without a saving clause. The court noted that Rule 56A was omitted on 20/05/1994 without any provision saving ongoing prosecutions. The notification omitting Rule 56A did not include a saving clause, which was crucial for determining the continuation of the prosecution.

2. Admissibility of Confessional Statements:
The court considered whether statements recorded under Section 14 of the Central Excise Act before the lodging of the complaint could be admitted. The trial court had deferred this question to the final decision stage, but the High Court emphasized that the admissibility of such statements should be evaluated in light of settled legal principles, particularly regarding Section 30 of the Evidence Act.

3. Effect of Omission of Rule 56A on Pending Prosecutions:
The court examined whether the omission of Rule 56A without a saving clause affected the pending prosecution. It referenced precedents like M/s. Rayala Corporation (P) Ltd. v. Director of Enforcement and Kolhapur Canesugar Works Ltd. v. Union of India, which established that in the absence of a saving clause, pending proceedings lapse upon the omission of the rule. The court concluded that the prosecution could not continue after the omission of Rule 56A.

4. Applicability of Sections 3 and 38A of the Central Excise Act and Section 6 of the General Clauses Act:
The court analyzed whether Sections 3 and 38A of the Central Excise Act or Section 6 of the General Clauses Act could save the prosecution. It noted that Section 3 is a charging section applicable to the levy and collection of duties, while Rule 56A dealt with credit for duty-paid goods. Section 38A, inserted by the Finance Act, 2001, did not apply to omissions but only to amendments, repeals, supersessions, or rescissions. Thus, Section 38A could not save the prosecution. Similarly, Section 6 of the General Clauses Act did not apply to the omission of rules, only to the repeal of enactments.

5. Scope of Discharge and Applicability of Precedents:
The court reviewed the scope of discharge as indicated in precedents like Sanghi Brothers (Indore) Pvt. Ltd. v. Sanjay Choudhary and Rumi Dhar v. State of West Bengal. It emphasized that while considering an application for discharge, the court must evaluate whether the material justifies framing the charge. The trial court's failure to appreciate the legal implications of the omission of Rule 56A and its decision to continue the prosecution was found to be legally flawed.

Conclusion:
The court quashed the trial court's order and accepted the application for discharge, stating that the prosecution could not continue after the omission of Rule 56A without a saving clause. The petitioner was ordered to be discharged of the charges leveled against him.