AUGUST 16, 2004

By Vijay K Kumar

I asked this question to some of my colleagues and friends from the legal fraternity. Some said, 'Commissioner' and some said 'AC' and a few credited the Inspector with this power/duty. Judicial opinion is equally divided.

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. As is well known, the conviction of an offender under the Customs and Central Excise laws are the exclusive purview of the courts. 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

a) upon receiving a complaint of facts which constitute such offence;

b) upon a police report;

c) upon information received from any person other than a police officer;

d) 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.

So the big question is who is to file a complaint in a court for an offence under the Customs or Central Excise laws?

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

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

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.

The customs Act also has a provision regarding cognizance of offences in Section 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 later day judgement, the Hon'ble High Court of Madras in Asstt. Collector of C.Ex., Madras v Doulatmal Chondia -2001(130) ELT 41(Mad), 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 was 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.

The Madras High Court had again an occasion to consider this very issue recently in The Asst. Commissioner of Central Excise v M/s. Beauty Dyers ( 2004-TIOL-17-HC-MAD-CX ). The trial court had held that the prosecution had to prove that the Assistant Commissioner was authorised to file the complaint and it referred to Section 37A. Of course, Section 37A deals with power to delegate. But one can delegate only the power one has. When nobody has the power to file a complaint how can it be delegated?

The high court observed:

We may straight away point out that the findings on the maintainability of the complaint is perverse and non-sustainable. Section 37-A of the Act deals only with the general delegation of powers. Section 37-A has nothing to do with the filing of the complaints. Rule 207 stipulates that the complaint should not be filed by an officer inferior in rank to Inspector. If that condition is complied with, the complaint will be competent. In this case, the complaint is filed by the Assistant Collector which is in proper compliance with Rule 207. No further proceedings / specific authorization, authorizing Assistant Collector to file a complaint is essential.

The court relied on the 1995 judgement of the Karnataka High Court. But obviously the latter day judgement and that too of the same court - Asstt. Collector of C.Ex., Madras v Doulatmal Chondia - 2001(130) ELT 41(Mad) was not brought to the notice of honourable judge. In that case the same very court had upheld the acquittal of the accused even though all the charges were proved but because the complaint filed by the Assistant Collector was held to be not competent. In the present case, surprisingly, the other charges were not proved but the Assistant Collector's competence to file the complaint was upheld.

But all this, when there was a ray of hope in the form of Rule 207.

Interestingly, now there is 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.

So the question still remains un-answered. Who has the authority to file the complaint? And of the two judgements of the Madras High Court, which one would prevail? Isn't the second one per incuriam as the first one was not brought to the notice of the Court now? And what would happen after the demise of Rule 207?

(See 2004-TIOL-17-HC-MAD-CX)

( The author is working with the Central Excise Department and can be reached at vijaywrite@rediffmail.com )