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TMI Blog2009 (8) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... arette Limited and M/s. GTC Industries on the allegation that Kanpur Cigarette Ltd. had manufactured cigarettes during the period February 1985 to June 1986 exclusively for and on behalf of M/s. GTC Industries with GTC brand names. It was alleged that the cigarettes were owned/purchased by GTC and were marketed by GTC through their trade channel. It was further alleged that the noticees had availed exempted rates of duty under Notification No. 211/83 based on the declaration of sale price on the cigarette packets. It was further alleged that the noticees had manufactured deceptively similar versions of certain regular brands showing lower sales price with intent to evade duty whereas GTC had all along envisaged that they would be sold at the price similar to the regular brands. It was alleged that the cigarettes so manufactured were sold through the marketing chain at the higher price and the difference between the two prices was received by GTC as flow back through various accounts. Consequently, it was alleged, the noticees had jointly contravened the provisions of Rule 52 and 52A of the Excise Rules by making false declaration with intent to evade payment of appropriate duty and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that in case those witnesses are not allowed to be cross-examined, their statements be not relied upon. According to the petitioners, no orders were passed on this request/ application. 5. At this juncture WP (C) No. 1895/1992 was filed on 20.5.1992 alleging violation of principles of natural justice. Prayer made in that writ petition was for grant of cross-examination or, in the alternative, to eschew these statements from consideration. Four other writ petitions were filed in respect of other show-cause notices issued in the same manner. 6. Notices were issued in these writ petitions and interim orders were passed to the effect that final orders passed by the respondent No.1 would be placed in a sealed cover. During the pendency of these petitions, the respondent No.1/Collector confirmed the demands in all show-cause notices vide orders dated 10.7.1992. These orders were produced before the Court in a sealed cover. After hearing the parties on the said application, this Court vide orders dated 5.8.1992 vacated the stay and directed the Collector to serve the orders upon the petitioners. At the same time, liberty was given to the petitioners to file appeal if felt aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l No. 5134-35/97 before the Hon‟ble Supreme Court against the said order. The Hon‟ble Supreme Court dismissed the Appeal bearing No. 5134-35/97 vide order dated 12.9.97 for want of pre-deposit (copies enclosed). 1897/1992 The CEGAT after considering the application under Section 35F of the Central Excise Act, 1944 seeking waiver of the pre-deposit of the Duty and penalty demanded, dismissed the same and directed the petitioner and the job workers to deposit the same. Since the petitioner did not comply with the said order, the Appeals filed by them were dismissed for non-compliance of the above order on 15.7.1994 and 7.2.1996 (copies enclosed) 1898/1992 The CEGAT confirmed the demand against the Petitioner vide order dated 4.7.1997. The Petitioner thereafter filed Civil Appeal No. 5134-35/97 before the Hon‟ble Supreme Court against the said order. The Hon‟ble Supreme Court dismissed the Appeal bearing No. 5134-35/97 vide order dated 12.9.97 for want of pre-deposit. 9. The Supreme Court, while remitting the case back to this Court, took note of the fact that though constitutionality of Section 9-D of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing before a Court, as they apply in relation to a proceeding before a Court." 12. Bare reading of the above section manifests that under certain circumstances, as stipulated therein, statement made and signed by those persons before any Central Excise Officer of a gazetted rank during the course of inquiry or proceedings under this Act can be treated as relevant and taken into consideration if under the given circumstances such a person cannot be produced for cross-examination. Thus, this provision makes such statements relevant for the purposes of proving the truth of the facts which it contains, in any prosecution for an offence under the Act in certain situations. Sub-section (2) extends the provision of sub-section (1) to any proceedings under the Act other than a proceeding before the Court. In this manner, Section 9-D can be utilized in adjudication proceedings before the Collector as well. In the present case, provisions of Section 9-D of the Act were invoked by the Collector holding that it was not possible to procure the attendance of some of the witnesses without undue delay or expense. Whether such a finding was otherwise justified or not can be taken up in the appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lice custody. Nonetheless the caution contained in law is that such a statement should be scrutinized 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. xx xx xx 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." 15. He also extensively read out the portions of the recent judgment reported in Vinod Solanki (supra), wherein the Supreme Court again reiterated the above principles. It was held in that case that violation of the provisions of Foreign Exchange Regulation Act, 1973 attracted penalty and the proceedings under the Act are quasi-criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid general rule. For this reason, conferring of such a power upon the court was not questioned, as the learned senior counsel submitted that in proceedings before the court, the court would be guided by the provisions contained in Sections 32 and 33 of the Indian Evidence Act. Insofar as sub-section (2) of Section 9-D is concerned, the argument to the validity of such provision proceeds on the premise that Section 9-D(2) read with Section 9-D(1) confers uncontrolled, unguided, unfettered and sweeping powers/discretion upon any Central Excise officer conducting "any proceeding" under the Act to unilaterally decide, inter alia, about any of the following factors :- (a) Whether the witness is dead. (b) Whether he cannot be found. (c) Whether he is incapable of giving evidence. (d) Whether he is kept out of the way by the adverse party. (e) Whether his presence cannot be obtained without an amount of delay or expense which the officer considers unreasonable. 17. His submission was that in Section 9-D there are no conditions or restrictions or guidelines for exercise of the powers and discretion conferred thereunder upon a Central Excise Officer. There are no guidelines at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eliminate the very existence of the factors mentioned in Section 9-D. According to him, however, the drastic nature of the powers and discretion conferred under Section 9-D does not even provide for any intimation or opportunity to the assessee. 19. He also submitted that the provisions of the Act itself, while conferring discretion and powers on the adjudicating authority, have simultaneously provided an important safeguard by mandating to record reasons and to take prior approval of either the Central Board of Excise and Customs or the Chief Commissioner of Central Excise. Recording of such reasons and requirement of prior approval is quite a normal methodology to provide safeguard against arbitrary exercise of such powers and discretion by the officer concerned. Such provisions are there in Sections 11DDA, 13, 14A, 33A etc. As against this, Section 9-D does not even require the recording of reasons or taking of any prior approval and this also clearly demonstrates the most arbitrary and sweeping nature of the powers and discretion conferred by Section 9-D upon the adjudicating officers. 20. Mr. Mohan Parasaran, learned Addl. Solicitor General who appeared on behalf of the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was capable of being misutilised, which could not be a ground to strike down the statutory provision. 22. We have given our due consideration to the submissions made by both the learned counsel. 23. At the outset, we have to keep in mind that while dealing with the constitutional validity of a provision, one cannot take into consideration the apprehensions expressed by the petitioners regarding the misuse of such a provision. Validity of a provision would be totally different from the valid exercise of powers conferred upon the authority under such a provision. If powers are not exercised properly and in a legal manner in a particular case, then that particular act of the quasi-judicial authority can be set at naught. This would not be a ground for declaring a provision of the Act itself as unconstitutional. 24. We may also point out at this stage itself that the power of the Parliament to make such a provision is not in question. It is also conceded by the learned senior counsel appearing for the petitioners in this case that such a provision could be incorporated in the statute, which is pari materia of Section 32 of the Evidence Act viz., to rely upon statements of certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise is not admissible, to ensure that there is no miscarriage of justice. Similarly, provisions under Section 9-D provide for relevancy of statements recorded under Section 14 of the Act, under certain circumstances, in criminal as well as quasi judicial proceedings, to meet the ends of justice. 27. We, thus, are intent to agree with the submission of the learned Addl. Solicitor General that if an Act of Parliament uses the same language which was used in a former Act of Parliament referring to the same subject, viz. relevancy of statement of fact by person who is dead or cannot be found under certain circumstances, passed with the same purpose and for the same object, the safe and well known rule of construction is to assume that the legislature, when using well-known words upon which there have been well known decisions, use those words in the sense which the decisions have attached to them. The provisions under Section 32 of the Evidence Act have not been found to be ultra vires of the Constitution. Therefore, the provisions under Section 9-D of the Act, which are pari materia with the provisions under Section 32 of the Evidence Act, cannot be held as ultra vires of the Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi-judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for forming the opinion. Only then, it would be possible for the affected party to challenge such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted. 30. Therefore, it cannot be said that the provision gives uncanalised or uncontrolled power upon the quasi judicial authority. Granting of opportunity and passing reasoned order are the conditions inbuilt in exercise of power by any quasi judicial authority and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is conferred by statutes on public functionaries, the same is subject to inherent limitation that it must be exercised in just, fair and reasonable manner, bona fide and in good faith; otherwise, it would be arbitrary. In such cases, test of reasonableness is more strict. Following observations therefrom are worth quoting :- "15. Every wide power, the exercise of which has far reaching repercussion, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefit and common good the responsibility is far graver. It demands purposeful approach. The exercise of discretion should be objective. Test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions which touch the common man have to be tested on the touchstone of fairness and justice. That which is not fair . and just is unreasonable. And what is unreasonable is arbitrary. An arbitrary action is ultra vires. It does not become bona fide and in good faith merely because no personal gain or benefit to the person exercising discretion should be established. An action is mala fide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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