1985 (8) TMI 79 - HC - Central Excise

Issues Involved:
1. Whether the accused evaded payment of excise duty under Section 9(1)(b) of the Central Excises and Salt Act, 1944.
2. The legality of the search and seizure conducted by the excise authorities.
3. The sufficiency and reliability of the evidence presented by the prosecution.
4. The applicability of Section 9(bb) of the Act to the alleged offenses.
5. The interpretation of the provisions of the Act and Rules regarding the accrual of duty liability.

Issue-Wise Detailed Analysis:

1. Whether the accused evaded payment of excise duty under Section 9(1)(b) of the Central Excises and Salt Act, 1944:
The accused, Manager and Proprietor of M/s. Mayurbhanj Match Manufacturing Company, were charged with evading excise duty. The prosecution alleged discrepancies between the statutory register (R.G. 1) and private account books, showing evasion of duty amounting to Rs. 13,824.50. The High Court found that the liability to pay excise duty accrues upon the manufacture of goods, not upon assessment or demand. The evidence, including the private account books (Exts. 6, 7, and 8) and the testimony of P.W. 1 and P.W. 2, established that the accused had indeed evaded the payment of duty.

2. The legality of the search and seizure conducted by the excise authorities:
The search and seizure conducted by the excise authorities on 4-8-1973 and 5-8-1973 were challenged. The Sessions Judge initially found the search and seizure to be legal but questioned the possession of the documents. The High Court, however, confirmed the legality of the search and seizure, citing the proper receipt (Ext. 1) and seizure list (Ext. 2) signed by the accused, which indicated that the documents were indeed seized from their possession.

3. The sufficiency and reliability of the evidence presented by the prosecution:
The prosecution presented several documents and witness testimonies to support their case. The High Court found the evidence, particularly the private account books and the testimony of P.W. 1 and P.W. 2, to be reliable and credible. The discrepancies between the statutory register and the private account books were significant and indicated evasion of duty. The High Court held that the prosecution had proven the charge beyond a reasonable doubt.

4. The applicability of Section 9(bb) of the Act to the alleged offenses:
During the trial, it was contended that Section 9(bb) of the Act, inserted by Amending Act 36 of 1973, could not be applied retroactively to offenses committed before its enactment. The Public Prosecutor conceded this point, and the charge under Section 9(1)(bb) was dropped. The High Court affirmed that the accused could not be held liable under Section 9(bb) for the period prior to its enactment.

5. The interpretation of the provisions of the Act and Rules regarding the accrual of duty liability:
The High Court emphasized that excise duty is levied on the manufacture or production of goods, as per Section 3 of the Act. The taxable event is the completion of manufacture, and the duty liability accrues at that point. The Court referred to the Supreme Court's interpretation in Shinde Brothers v. Deputy Commr., Raichur, to support this view. The High Court concluded that the Sessions Judge's interpretation, which required assessment and demand for duty liability, was erroneous.

Conclusion:
The High Court set aside the acquittal by the Sessions Judge and convicted the accused under Section 9(1)(b) of the Act. The sentence of a fine of Rs. 1,500/- each, in default to undergo rigorous imprisonment for four months, was affirmed. The Criminal Appeal was allowed, and the judgment of acquittal was overturned.

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