Bhavin Impex Pvt. Ltd. v. State of Gujarat

[Order (Oral)]. - The key question that arises for consideration in this writ petition is as to whether the authorities under the Central Excise Act, 1944 (hereinafter referred to as ‘the Act’) have the power to arrest a person under Section 13 of the Act without a warrant and without filing an FIR or lodging a complaint before a Court of competent jurisdiction.

2. The petitioner-M/s. Bhavin Impex Private Limited, a 100% EOU (Export Oriented Unit) is engaged in the manufacture of brass sanitary fittings, brass bolts, nuts, screws etc. classifiable under various chapters of the Central Excise Tariff Act, 1985, out of imported raw materials viz. mix brass scrap/mix brass scrap with iron attachment and other impurities etc. procured free of import duty under the relevant notifications under the Customs Act read with the provisions of the Foreign Trade Policy and as per the procedures laid down under the Scheme for Export Oriented Units. Pursuant to the intelligence received by the Central Excise Department that the petitioner was indulging in diversion of brass scrap imported duty-free under the 100% Export Oriented Unit (EOU) Scheme in the local market without payment of appropriate duty, a team of officers visited the unit at Jamnagar and carried out search on 14th February, 2008. During the search operation, the officers recovered certain record and private chits indicating diversion of duty-free imported goods in the local market without invoice and without payment of duty. The officers, in presence of independent panchas, seized the record by drawing a regular panchnama dated 14th February, 2008. Upon scrutiny of the record, it was revealed that the petitioner had shown the recovery of attachment of impurities in imported scrap at a higher ratio. According to the Central Excise authorities, the petitioner was showing higher generation ratio of impurities so as to manipulate the actual content of brass scrap in the records to camouflage it as impurities. In fact, the imported duty-free brass scrap was diverted and sold in the local market without proper invoice and without payment of duty. However, in order to regularise the quantity of scrap purchased and sold, generation of impurities and their subsequent DTA sale were shown at a very low rate so as to divert the imported brass scrap in the guise of impurities. It appeared that the petitioner had shown fictitious sale of impurities at lower rate so as to disguise the quantity of brass scrap actually generated. Therefore, brass scrap of higher value had been removed clandestinely without invoice and without payment of duty with an intention to earn undue benefit out of the EOU Scheme. During the course of search on 14th February, 2008, the statement of one Kishore Karshandas Bhagat, Accounts Assistant of the petitioner was recorded under the provisions of Section 14 of the Act wherein he admitted that the private chits found during the course of the search are the details of the brass scrap sold clandestinely by the petitioner in the local market without invoice and without payment of duty. Various other admissions were also made by the said Mr. Bhagat. On 14th February, 2008, the statement of Mr. Sanjay Natwarlal Sayani, who was a Director of the petitioner Company at the relevant time, was also recorded under Section 14 of the Act. Mr. Sanjay Sayani had also admitted recovery of private chits from the possession of Mr. Bhagat and had also admitted that the said private chits were miscellaneous internal chits of M/s. Bhavin Impex Private Limited, Jamnagar. It appears that on account of fatigue, Mr. Sanjay Sayani had requested for another date for further queries and was accordingly summoned to appear before the Investigating Officer on 21st February, 2008. However, he did not appear on that date citing reason of illness. Thereafter, a fresh summons was issued on 28th February, 2008 pursuant to which Mr. Sanjay Sayani appeared before the Investigating Officer Shri K.K. Sheth, Superintendent (Preventive) on 28th February, 2008. On that day, a statement of Mr. Sanjay Sayani was recorded in his own hand wherein various admissions were made. Thereafter, on the same date, Mr. Sanjay Sayani lodged an FIR against four officers including Joint Commissioner of Customs and Central Excise before the Police Commissioner, Rajkot and various other authorities. On 1st March, 2008, Mr. Sanjay Sayani filed a criminal complaint before the Chief Judicial Magistrate, Rajkot against all officials of Customs and Central Excise being Criminal Case No. 32 of 2008. On 4th March, 2008, a Civil Suit came to be filed by the petitioner for defamation and personal physical harassment against the officials of the Customs and Central Excise Department.

3. Subsequently, a search warrant came to be issued against the petitioner by the Assistant Commissioner (AE), Central Excise Headquarter, Rajkot authorising Mr. D.S. Meena, Inspector to carry out a search. A team of officers carried out the search in presence of two independent panch witnesses under a regular panchnama dated 06th March, 2008. The petitioner Mukesh Natwarlal Sayani was present at the factory premises. The officers seized the CPU of two computers available in the factory premises under the belief that the same contained details of accounts transactions of the petitioners. It appears that advocate of the petitioner was also present at the relevant time and upon completion of panchnama, though requested, both Mr. Mukeshbhai Sayani and advocate Veljibhai Karsanbhai Vaghela refused to sign the panchnama or even receive a copy thereof.

4. A summons was issued to Mukeshbhai Sayani on 6th March, 2008 to remain present before the Investigating Officer on 7th March, 2008 in reply to which Mr. Mukesh Sayani sent a letter dated 7th March, 2008 stating that he was present in the factory premises for the whole day on 06th March, 2008 and had answered the queries raised by the officers at the relevant time and has nothing more to say and as such, does not want to appear before the Investigating Officer.

5. It appears that on account of refusal to issue procurement certificate for imports, the petitioner filed a writ petition before this Court on 2nd March, 2008 being Special Civil Application No. 4517 of 2008. It appears that an application for anticipatory bail also came to be filed by Mr. Sanjay Sayani, Ex-Director of the petitioner Company which was permitted to be withdrawn by order dated 30th September, 2008. On 27th March, 2009, Mr. Mukesh Sayani and his wife Jyotiben Sayani came to be appointed as Directors of the petitioner Company and on 30th March, 2009, Mr. Sanjay Sayani and Ms. Mira S. Sayani resigned from the Company. It appears that in the proceeding of Special Civil Application No. 4517 of 2008, a statement had been made at the bar that Mr. Mukesh Sayani would respond to the summons issued by the respondents on the date stipulated. However, despite numerous summons being issued, none of the petitioners therein nor Mr. Mukesh Sayani appeared before the respondent authorities pursuant to the summons. The Division Bench, therefore, vide order dated 4th May, 2009 dismissed the petition and vacated the interim relief granted in favour of the petitioner. While dismissing the writ petition, the Division Bench observed as follows :-

“When inquiry is to be made in respect of a suspected evasion of duty, which is ordinarily done in a clandestine manner, it would raise many questions which can be answered only upon the person concerned being questioned. This would not only help the investigation/inquiry being conducted in right direction but would also help the party concerned to explain & put forth their case/version. Stand of petitioners of not appearing before respondent authorities would only cause hindrance in a lawful process. Be that as it may; the fact remains that the petitioners have not cooperated in investigation despite directions of this Court, and the stand is that although the petitioners may not cooperate in investigation/inquiry, and both the petitioners may not obey direction of the Court, still the Court may entertain this petition. Such a stand cannot be accepted. Extraordinary jurisdiction under Article 226 of the Constitution of India can be invoked to support & supplement the due process of law or to protect constitutional right of a law abiding citizen, and not to support a citizen’s attempt to obstruct the due process of law even by disobeying the direction of this Court. Such powers can not be invoked to circumvent the process of law. The petition, therefore, must fail. The petition stands dismissed. Notice discharged. Interim reliefs stand vacated.”

6. In view of the breach of the directions issued by the Division Bench vide order dated 4th April, 2008 in Special Civil Application No. 4517 of 2008 and order dated 25th September, 2008 passed in Civil Application No. 5050 of 2008, the Department filed an application for contempt against the Ex-Director of the Company Mr. Sanjay Sayani being Miscellaneous Civil Application No. 2721 of 2008 wherein notice was issued against the opponent therein. Thereafter, the petitioner has moved the present writ petition seeking the following substantive reliefs :-

“(A) Hon’ble Court be pleased to issue a Writ of Mandamus or any other appropriate Writ, Order or Direction in the nature of Mandamus declaring that criminal prosecution cannot be initiated or continued till the final adjudication by Customs & Central Excise department and till the petitioner is not proved as Customs & Excise Duty evader and till the petitioner cannot be said to have committed an offence.

2. Be pleased to issue a Order or Direction declaring the action of issuance of arrest memorandum by officers of Customs & Central Excise Department against the petitioner Company, its Directors, Ex-Directors or employees, before completing adjudication proceedings of Customs & Central Excise Department and without following due process of law, as premature, illegal, arbitrary and further be pleased to quash and set aside arrest memorandum against the petitioner, its Directors, Ex-Directors or employees.”

Subsequently, by way of an amendment the following relief was also prayed for :

“(BB) Hon’ble Court be pleased to declare that authorities working under Central Excise Act, 1944 cannot over ride the provisions of the Code of Criminal Procedure as regards the arrest or filing of the complaint before competent Court of law and be further pleased to hold that authorities have no power under the Excise Act to arrest under Section 13 of the Act, without filing of FIR and without obtaining orders from the competent Court as laid down by Division Bench of Allahabad High Court in the case of Kum. Rajni and Others v. Union of India and Others reported in 2003 Cri. L.J. 2062.”

The petitioner has subsequently also filed an additional affidavit dated 30th June, 2009 whereby certain additional documents have been placed on record, mainly to justify the reason for his not remaining present in response to the summons issued by the respondent authorities.

7. In response to the petition, the respondent No. 2 has filed an affidavit-in-reply dated 6th July, 2009, denying the averments made and the contentions raised in the petition. It is averred that the material collected during the course of the ongoing investigation clearly indicates that there is clandestine removal of goods worth Rs. 2.91 crores involving central excise duty of a sum of Rs. 67,00,000/- approximately and that the petitioner, its directors and ex-directors are deliberately not cooperating with the investigation and creating obstructions to sabotage the investigation. It is inter alia stated in the said affidavit that no arrest memorandum has been issued by the Central Excise Department till the date of filing the affidavit, hence the petition is pre-mature. It is also stated that the petitioner has suppressed the fact that they have committed willful breach of the direction issued by a Division Bench of this Court by order dated 4th April, 2008 passed in Special Civil Application No. 4517 of 2008. It is emphasized that the petitioner has not cooperated in the investigation pursuant to the search carried out on its premises. It is submitted that the petitioner being a 100% EOU is obliged to fulfil all conditions imposed for importing duty free goods. In the event of non-observance of conditions of exemption of duty and such conditions imposed by law, such unit is liable for payment of duty, penalty etc. under the provisions of the Customs Act, 1962 and/or Central Excise Act, 1944. It is submitted that the petitioner has left no stone unturned to stall the ongoing investigation by the Central Excise & Customs Officers against the petitioner to unearth duty evasion by the petitioner.

8. The petitioner has filed an affidavit-in-rejoinder dated 14th July, 2009 denying the averments made in the affidavit-in-reply of the respondent No. 2. It is inter alia stated in the said rejoinder that no proceeding under Section 9 and 9AA has been initiated by the respondent excise department. It is contended that without initiation of any proceedings and without adjudication of proceedings and without following due procedure of law, the officers of the excise department with a view to achieve ulterior motive and with a view to pressurize for withdrawal of proceedings initiated by the company, the officers of the excise department are likely to exercise powers under Section 13 of the Central Excise Act illegally and without authority of law.

9. The respondent No. 2 has filed an affidavit-in-sur-rejoinder dated 16th July, 2009, dealing with the contents of the affidavit in rejoinder. It is admitted that no show-cause notice has been issued to the petitioner in furtherance of the search carried out at its factory premises on 14-2-2008. It is averred that no show-cause notice could be issued because of the non-cooperation of the director and ex-director of the petitioner company, who have not responded to the summons issued by the department and have obstructed further investigation by not cooperating with the investigating officers to conclude the investigation. It is stated that during the course of the search, the investigating officers have seized incriminating documents and material from the factory premises of the petitioner and it is necessary to record the statements of the present and ex-directors of the petitioner company to seek their explanation in respect of such incriminating material and therefore, summons have been issued under Section 14 of the Central Excise Act for recording statements and production of documents by persons connected with the affairs and functioning of the petitioner company for the relevant period, however, they are not cooperating with the investigation. It is also stated that till date no recovery proceedings have been initiated against the petitioner for recovery of the evaded duty consequent to the search on 14-2-2008 at the petitioner’s factory premises for the sole reason of non-cooperation on the part of the petitioner.

10. Mr. Y.N. Oza, learned senior advocate with Mr. R.K. Savjani, learned advocate for the petitioner has submitted that Section 13 of the Act which provides for the power to arrest has not been enacted to give overriding powers to the authorities akin to admissibility of statements in evidence. It is submitted that before resorting to the power of arrest under Section 13 of the Act, the entire process laid down under the Code of Criminal Procedure has to be followed. According to the learned counsel, a complaint under Section 190 of the Code is required to be laid before the concerned Magistrate and it is only upon issuance of an arrest warrant that arrest can be made. Referring to the provisions of Section 19 of the Act, which provides for ‘Disposal of persons arrested’ and Section 21 which provides for ‘Inquiry how to be made by the Central Excise officers against arrested persons forwarded to them under Section 19’, it is submitted that for the purpose of arresting a person under the Central Excise Act, the entire procedure as envisaged under the Code is required to be followed. It is contended that it is only with a view to achieve the object under Section 21 that powers under Section 13 of the Act have been given. It is submitted that proceedings under Section 14, whereby the Central Excise Officers are empowered to summon persons to give evidence and produce documents in inquiries under the Act are in the nature of inquiry and cannot be said to be an investigation. Therefore, no person other than a police officer has power to investigate under the Act and no other person under the Excise Act can act as a police officer. Attention is invited to the provisions of Section 9 of the Act which makes provision for ‘Offences and penalties’. Referring to the provisions of Section 9(A) of the Act which provides that notwithstanding anything contained in the Code of Criminal Procedure, 1898, the offence under Section 9 shall be deemed to be non-cognizable within the meaning of that Code, as well as to the provisions of Section 2(1) of the Code, which defines ‘non-cognizable offence’ to mean an offence in which a police officer has no authority to arrest without a warrant, it is submitted that in view of the fact that the offence under Section 9 is a non-cognizable offence, no arrest can be made by a Central Excise Officer except by following the procedure applicable to cases involving non-cognizable offences under the Code of Criminal Procedure. Hence, the Central Excise Officer in exercise of powers under Section 13 of the Act cannot arrest a person without a warrant. In support of his submissions, the learned counsel has placed strong reliance upon a decision of the Allahabad High Court in Kum. Rajni and Others v. Union of India and Others [2003 Criminal Law Journal 2062] wherein it has been held that Section 14 itself mentions that it is in the nature of inquiry and moreover no other person than the police officer under the Code of Criminal Procedure has power to investigate under the Act and no other person under the Excise Act can act as police officer. It has been held that the authorities working under a Special Act such as Central Excise Act, 1944 cannot override the provisions of the Code of Criminal Procedure as regards the arrest or filing of the complaint. For the convenience of the Court, they may enquire into the facts and determine the prima facie case against the accused, may file complaint before the Magistrate and it will be for the Magistrate to issue the process after looking into the gravity of the complaint. Secondly, the arrest of a person under this Act has to be made only when there is a prima facie case against him and that too by the due process of law. It is further held that the authorities under the Central Excise Act have no power under the Act to arrest anybody except in the cases as prescribed under Section 13 of the said Act, as enumerated in sub-clause (2) of Section 13 of the said Act. On completion of the enquiry, they have also power to file a complaint and pray before the Court for action in accordance with law. In fact the relief prayed for vide paragraph 10(BB) is based on the said decision. Reliance is placed upon a decision of the Apex Court in State of Punjab v. Ajaib Singh [AIR 1953 SC 10] for the proposition in case of a non-cognizable offence, arrest can be made only under a warrant of arrest.

11. Another legal contention raised on behalf of the petitioner is that criminal prosecution cannot be initiated or continued till the final adjudication by the Customs and Central Excise Department and till the petitioner is not proved to be an evader of customs and central excise duty and till the petitioner can be said to have committed an offence under the provisions of the Act. It is submitted that pursuant to the search carried out on the premises of the petitioner, no show-cause notice had been issued and no proceedings have been initiated in respect thereof; that in absence of an adjudication to the effect that the petitioner had evaded payment of duty or has diverted goods in the open market, it cannot be said that the petitioner has committed any offence and as such, the prosecution cannot be launched against the petitioner till there is a final adjudication by the Department. In support of his submission, the learned counsel has placed reliance upon a decision of the Andhra Pradesh High Court in Assistant Collector of Central Excise, Rajahmundry Division v. Duncan Agro Industries Limited, Calcutta and Others, 1992 Criminal Law Journal 231 = (A.P.), wherein it had been held that since adjudication proceedings had been pending before the Central Excise authorities, at that stage, it cannot be held that the accused had evaded payment of tax. Hence, prosecution on that charge was premature. Reliance is also placed upon a decision of a learned Single Judge of this Court in Lakme Limited v. State Of Gujarat, (Guj.), wherein the Court had held that when the Collector has not finally decided the matter, the continuation of criminal prosecution will result into feeling of the petitioner that the petitioner is made victim of palpable injustice. The continuation of criminal prosecution will cause misery and harassment to the petitioner. Till the Collector, Central Excise decides the adjudication finally, the petitioner cannot be said to have committed an offence and it is in the interest of justice to stay the proceedings of the original Criminal Case pending before the Chief Judicial Magistrate, till the case is pending before the Collector, Central Excise. It is submitted that in view of the aforesaid binding precedent, the prosecution against the petitioner is required to be stayed till final adjudication by the Central Excise authorities.

12. The petition is strongly resisted by Ms. Amee Yajnik, learned Standing Counsel for the respondent No. 2-Customs and Central Excise Department. At the outset, it is contended that the petition is premature inasmuch as no arrest memo has been issued by the Central Excise Department on the date of filing of the petition or even on the date of filing of the affidavit dated 6th July, 2009 filed on behalf of the respondent No. 2. Next, it is submitted that the petition is not maintainable inasmuch as the petitioner is seeking a blanket order not to arrest the Directors. Next, it is contended that the petition is barred by the principle of res judicata in view of the fact that on an earlier occasion a petition wherein similar reliefs had been prayed for has been dismissed. It is submitted that the petitioner has been resorting to instituting various litigations before different forums more or less with a view to avoid having to appear before the respondent authorities in connection with the investigation being carried out pursuant to the search made on the premises of the petitioner. It is submitted that the petitioner has suppressed various material facts like the filing of the contempt petition against Mr. Sanjay Sayani for non-compliance with the direction issued by the Division Bench in Special Civil Application No. 4517 of 2008. Reliance is placed upon a decision of the Apex Court in Udyami Evam Khadi Gramodyog Welfare Sanstha and Another v. State of Uttar Pradesh and Others, (2008) 1 SCC 560, for the proposition that a writ remedy is an equitable one. A person approaching a superior court must come with a pair of clean hands. It not only should not suppress any material fact but also should not take recourse to legal proceedings over and over again which amounts to abuse of the process of law.

13. It is submitted that the Department had carried out the search in an authorised and legal manner in accordance with the procedure prescribed in law. The Investigating Officer has seized incriminating documents and material from the factory premises of the petitioner and it is necessary to record the statement of the present and Ex-Directors of the petitioner Company to seek their explanation in connection with such incriminating material. Hence, summons under Section 14 of the Act have been issued for recording statement and production of documents to persons connected with the affairs and functioning of the petitioner Company for the relevant period. However, with a view to achieve the ulterior motive of discontinuing the investigation, the petitioner and others are not cooperating with the investigation and are taking all legal recourse to jeopardise the moral of the officers and the Department by resorting to filing various complaints before various authorities including this Court and subordinate courts. It is submitted that till date, it has not been possible to initiate recovery proceedings against the petitioner for recovery of the evaded duty consequent to the search carried out on 14th February, 2008 at the petitioner’s factory premises for the sole reason of non-cooperation on the part of the petitioner.

14. Dealing with the contention that no arrest can be made under Section 13 of the Act, without issuance of an arrest warrant and order without registering an FIR or lodging of a complaint, it is submitted that the Central Excise Officers, subject to fulfillment of inbuilt requirement of Section 13 of the Act, are competent to exercise power in accordance with law as arrest is not a punitive action but is an integral part of and in aid of investigation being carried out by the competent officers under the Act. Reliance is placed upon a decision of the Division Bench of the Punjab & Haryana High Court in Sunil Gupta v. Union of India [ (P&H)] wherein the Court was dealing with the issue as to whether a Central Excise Officer is debarred from arresting a person without a warrant despite the fact that he has reasons to believe that the person is liable to be punished under the Central Excise Act, 1944. The Court, after extensively considering the provision of Sections 9(A), 13, 14 and 18 of the Act, held that an officer of the Department of Central Excise who has been duly authorised by the Central Government is not debarred from arresting a person without a warrant when he has reason to believe that the person is liable to be punished under the Central Excise Act, 1944. The Court held that on a harmonious construction, the power under Section 13 is not curtailed by Section 18. In fact, Section 18 is merely procedural. Thus, the competent officer is not required to obtain a warrant before he is able to arrest a person in exercise of powers under Section 13 of the Act. It is accordingly submitted that the issue in question stands decided by the said decision of the Punjab & Haryana High Court and that it is permissible for the authorities under the Central Excise Act to arrest a person under Section 13 of the Act without issuance of a warrant. Attention is invited to a decision of the Supreme Court in Directorate of Enforcement v. Deepak Mahajan and Another [(1994) 2 GLH 603 = (S.C.)] wherein the issue before the Apex Court was whether a Magistrate before whom a person arrested under sub-section (1) of Section 35 of the Foreign Exchange Regulation Act, 1973 which is in pari materia with sub-section (1) of Section 104 of the Customs Act, 1962 is produced under sub-section (2) of Section 35 of the FERA has jurisdiction to authorise detention of that person under Section 167 of the Code of Criminal Procedure. The Apex Court while dealing with the said issue has considered the scheme of both the FERA and Customs Act as both are more or less the same and has discussed the various provisions of the Customs Act in detail. Relating to the principles initiated by the Apex Court in the said decision, it is submitted that the issue involved in the present petition stands squarely covered by the said decision. It is accordingly submitted that the petition being devoid of any merit or substance deserves to be dismissed.

15. In rejoinder, Mr. Y.N. Oza, learned senior advocate appearing on behalf of the petitioner has submitted that the decision of the Punjab & Haryana High Court in Sunil Gupta (supra) does not lay down the correct proposition of law inasmuch as the Court has read something more than envisaged under the provisions of the Central Excise Act. Inviting attention to the order passed by the Division Bench in Special Civil Application No. 4517 of 2008, it is submitted that the relief claimed in the said petition is different from the relief claimed in the present petition and as such, the principles of res judicata would not be applicable to the present case. It is submitted that the short question which arises for consideration before this Court is whether arrest would come before lodging the complaint or vice-versa. It is contended that the whole purpose of Section 13 of the Act is to make statements admissible in evidence and that the law laid down by the Allahabad High Court in Kum. Rajni (supra) is the correct proposition of law and is required to be followed.

16. In the background of the facts and contentions noted hereinabove, two issues mainly arise for determination. Firstly, whether arrest can be made under Section 13 of the Central Excise Act, 1944 without issuance of warrant and whether lodgment of an FIR or a complaint is necessary as a pre­condition for exercise of powers of arrest under Section 13 of the Act and secondly, whether criminal prosecution cannot be initiated or continued till the final adjudication by the Customs and Excise Department.

17. For the purpose of deciding the aforesaid issues, it would be necessary to examine the scheme of the Central Excise Act in the context of the relevant provisions. The Preamble to the Central Excise Act, 1944 says; “Whereas it is expedient to consolidate and amend the law relating to central duties of excise on goods manufactured or produced in certain parts of India”. Practically, all the provisions are enacted to achieve this object. Thus, the main purpose of the Act is to levy and collect central excise duties and Central Excise Officers have been appointed therein for this main purpose. In order that they may carry out their duties in this behalf, powers have been conferred on them to see that the duty is not evaded and persons guilty of evasion of duty are brought to book. Section 9 of the Act provides for offences and penalties and the list of offences are enumerated therein which include contravention of any of the provisions of Section 8 or of a rule made under clause (iii) or clause (xxvii) of sub-section (2) of Section 37; evasion of payment of any duty payable under the Act; removal of excisable goods in contravention of any of the provisions of the Act or any rule made thereunder; acquiring possession of or in any way dealing with any excisable goods which are liable for confiscation under the Act or any rule made therein; contravention of any of the provisions of the Act or any of the rules in relation to credit of any duty allowed to be utilised towards payment of excise duty on final products; failure to supply any information which he is required by the rules made under the Act to supply; attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) and (b) of the section. Section 13 of the Act, which provides for ‘Power to arrest’ lays down that any Central Excise Officer not below the rank of Inspector of Central Excise may, with the prior approval of the Commissioner of Central Excise, arrest any person whom he has reason to believe to be liable to punishment under the Act or the rules made thereunder. Section 14 which provides for “Power to summon persons to give evidence and produce documents in inquiries under the Act” reads as under :

“14. Power to summon persons to give evidence and produce documents in inquiries under this Act. - (1) Any Central Excise Officer duly empowered by the Central Government in this behalf shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making for any of the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned.

(2) All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required :

Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions of attendance under this section.

(3) Every such inquiry as aforesaid shall be deemed to be a ‘judicial proceeding’ within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860 (45 of 1860).”

Section 15 of the Act which provides for ‘Officers required to assist Central Excise Officers’ lays down that all officers of Police and Customs and all officers of the Government engaged in the collection of land revenue, and all village officers are hereby empowered and required to assist the Central Excise Officers in the execution of the Act. Section 18 which provides for ‘Searches and arrests how to be made’ lays down that all searches made under the Act or any rules made thereunder and all arrests made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 relating respectively to searches and arrests made under that Code. Section 19 lays down that every person arrested under the Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send person so arrested to a Magistrate or, if there is no such Central Excise Officer within a reasonable distance to the officer in charge of the nearest police station. Section 20 which provides for the ‘Procedure to be followed by officer-in-charge of police station’ lays down that the officer-in-charge of a police station to whom a person is forwarded under section 19 shall either admit him to bail to appear before the Magistrate having jurisdiction, or in default forward him in custody to such Magistrate. Section 21 of the Act which provides for ‘Inquiry how to be made by Central Excise Officers against arrested persons forwarded to them under section 19’ reads thus :

“21. Inquiry how to be made by Central Excise Officers against arrested persons forwarded to them under Section 19. - (1) When any person is forwarded under Section 19 to a Central Excise Officer empowered to send persons so arrested to a Magistrate, the Central Excise Officer shall proceed to inquire into the charge against him.

(2) For this purpose the Central Excise Officer may exercise the same powers and shall be subject to the same provisions as the officer-in-charge of a police station may exercise and is subject to under the Code of Criminal Procedure, 1898 (5 of 1898) 1, when investigating a cognizable case :

Provided that -

(a) if the Central Excise Officer is of opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person, he shall either admit him to bail to appear before a Magistrate having jurisdiction in the case, or forward him in custody to such Magistrate;

(b) if it appears to the Central Excise Officer that there is not sufficient evidence or reasonable ground of suspicion against the accused person, he shall release the accused person on his executing a bond, with or without sureties as the Central Excise Officer may direct, to appear, if and when so required, before the Magistrate having jurisdiction, and shall make a full report of all the particulars of the case to his official superior.”

These sections clearly show that the powers of arrest and search conferred on Central Excise Officers are really in support of their main function of levy and collection of duty on exported goods.

18. Similarly, under the Customs Act also, the powers of Customs Officers are for the purpose of checking the smuggling of goods and the due realization of customs duty to determine the action to be taken in the interests of the revenue of the country by way of confiscation of goods on which no duty has been paid and by imposing penalties and fine. The powers of Customs Officers are really not for the purpose of effective prevention and detection of crime in order to maintain law and order which the police officers enjoy. Since the provisions of the Customs Act are similar to the provisions of the Central Excise Act and various decisions of the Supreme Court touching the issue in question are rendered in the context of the provisions of the Customs Act, it would be germane to refer to the provisions of section 104 of the Customs Act in the context of the relevant provisions of the Central Excise Act.

Section 104 of the Customs Act reads as under :

“104. Power to arrest. - (1) If an officer of customs empowered in this behalf by general or special order of the Commissioner of Customs has reason to believe that any person in India or within the Indian customs waters has been guilty of an offence punishable under Section 135, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

(2) Every person arrested under sub-section (1) shall, without unnecessary delay, be taken to a magistrate.

(3) Where an officer of customs has arrested any person under sub-section (1), he shall, for purpose of releasing such person on bail or otherwise, have the same powers and be subject to the same provisions as the officer-in-charge of a police station has and is subject to under the Code of Criminal Procedure, 1898 (5 of 1898).

(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1898, an offence under this Act, shall not be cognizable.”

On a conjoint reading of Section 104 of the Customs Act and the provisions of the Central Excise Act/referred to hereinabove, it is apparent that sub-section (1) of Section 104 is similarly worded to Section 13 of the Central Excise Act, except that the same does not provide for informing the person arrested of the grounds for such arrest. (Insofar as the Central Excise Act is concerned, this is taken care of by Section 50 of the Code of Criminal Procedure which is applicable to arrests made under the Act in view of the provisions of Section 18 thereof.) The provisions of sub-section (2) of Section 104 are similar to Section 19 of the Central Excise Act. Sub-section (3) of Section 104 is similar to sub-sections (1) and (2) of Section 21 of the Central Excise Act. Sub-section (4) of Section 104 is similarly worded to sub-section (1) of Section 9A of the Central Excise Act.

19. The law laid down by the Supreme Court interpreting the above referred provisions of law may now be examined.

20. In State Of Punjab v. Barkat Ram , (1962) 3 SCR 338 the Supreme Court while considering the question whether a Customs Officer, either under the Land Customs Act, 1924 or under the Sea Customs Act, 1878 is a police officer within the meaning of that expression in Section 25 of the Evidence Act, held that the powers of Customs Officers are really not for the purpose of effective prevention and detection of crime in order to maintain law and order which the police officers enjoy. Their powers are for the purpose of checking the smuggling of goods and the due realisation of customs duties and to determine the action to be taken in the interests of the revenues of the country by way of confiscation of goods on which no duty had been paid and by imposing penalties and fines.

21. In Badaku Joti Svant v. State Of Mysore, AIR 1966 SC 1746 = 1978 (2) E.L.T. (J323) (S.C.) the Supreme Court after considering the provisions of Sections 9, 13, 18 and 19 of the Central Excise Act held that the sections clearly show that the main purpose of the Act is to levy and collect excise duties and Central Excise Officers have been appointed thereunder for this main purpose. In order that they may carry out their duties in this behalf, powers have been conferred on them to see that duty is not evaded and persons guilty of evasion of duty are brought to book. Section 9 of the Act provides for punishment which may extend to imprisonment upto 6 months or to fine upto Rs. 2000 or both where a person (a) contravenes any of the provisions of a notification issued under Section 6 or of Section 8, or of a rule made under clause (iii) of sub-section (2) of Section 37; (b) evades the payment of any duty payable under the Act; (c) fails to supply any information which he is required by rules made under the Act to supply or supplies false information; and (d) attempts to commit or abets the commission of any of the offences mentioned in clauses (a) and (b) above. Under Section 13 of the Act, any Central Excise Officer duly empowered by the Central Government in this behalf may arrest any person whom he has reason to believe to be liable to punishment under the Act. Section 18 lays down that all searches made under the Act or any rules made thereunder and all arrests made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 relating respectively to searches and arrests made under that Code. Section 19 lays down that every person arrested under the Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer in charge of the nearest police station. These sections clearly show that the powers of arrest and search conferred on Central Excise Officers are really in support of their main function of levy and collection of duty on excisable goods.

While considering the provisions of Section 21 of the Central Excise Act, the Supreme Court held thus :

“It is urged that under sub-section (2) of Section 21 a Central Excise Officer under the Act has all the powers of an officer incharge of a police station under Chapter XIV of the Code of Criminal Procedure and therefore he must be deemed to be a police officer within the meaning of those words in Section 25 of the Evidence Act. It is true that sub-section (2) confers on the Central Excise Officer under the Act the same powers as an officer incharge of a police station has when investigating a cognizable case; but this power is conferred for the purpose of sub-section (1) which gives power to a Central Excise Officer to whom any arrested person is forwarded to inquire into the charge against him. Thus under Section 21 it is the duty of the Central Excise Officer to whom an arrested person is forwarded to inquire into the charge made against such person. Further under proviso (a) to sub-section (2) of Section 21 if the Central Excise Officer is of opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person, he shall either admit him to bail to appear before a Magistrate having jurisdiction in the case, or forward him in custody to such Magistrate. It does not however appear that a Central Excise Officer under the Act has power to submit a charge-sheet under Section 173 of the Code of Criminal Procedure. Under Section 190 of the Code of Criminal Procedure a Magistrate can take cognizance of any offence either (a) upon receiving a complaint of facts which constitute such offence, or (b) upon a report in writing of such facts made by any police officer, or (c) upon information received from any person other than a police officer, or upon his own knowledge or suspicion, that such offence has been committed. A police officer for purposes of clause (b) above can in our opinion only be a police officer properly so-called as the scheme of the Code of Criminal Procedure shows and it seems therefore that a Central Excise Officer will have to make a complaint under clause (a) above if he wants the Magistrate to take cognizance of an offence, for example, under Section 9 of the Act. Thus though under sub-section (2) of Section 21 the Central Excise Officer under the Act has the powers of an officer incharge of a police station when investigating a cognizable case, that is for the purpose of his inquiry under sub-section (1) of Section 21. Section 21 is in terms different from Section 78 (3) of the Bihar and Orissa Excise Act, 1915 which came to be considered in Raja Ram Jaiswal case 4 and which provided in terms that “for the purposes of Section 156 of the Code of Criminal Procedure, 1898, the area to which an excise officer empowered under Section 77, sub-section (2), is appointed shall be deemed to be a police-station, and such officer shall be deemed to be the officer incharge of such station”. It cannot therefore be said that the provision in Section 21 is on par with the provision in Section 78 (3) of the Bihar and Orissa Excise Act. All that Section 21 provides is that for the purpose of his enquiry, a Central Excise Officer shall have the powers of an officer incharge of a police station when investigating a cognizable case. But even so it appears that these powers do not include the power to submit a charge-sheet under Section 173 of the Code of Criminal Procedure for unlike the Bihar and Orissa Excise Act, The Central Excise Officer is not deemed to be an officer incharge of a police station.

10. It has been urged before us that if we consider Section 21 in the setting of Section 14 of the Act, it would become clear that the enquiry contemplated under Section 21(1) is in substance different from investigation pure and simple into an offence under the Code of Criminal Procedure. It is not necessary to decide whether the enquiry under Section 14 must also include enquiry mentioned in Section 21 of the Act. Apart from this argument we are of the opinion that mere conferment of powers of investigation into criminal offences under Section 9 of the Act does not make the Central Excise Officer a police officer even in the broader view mentioned above. Otherwise any person entrusted with investigation under Section 202 of the Code of Criminal Procedure would become a police officer.”

22. In Ramesh Chandra Mehta v. State of West Bengal, AIR 1970 SC 940 = (S.C.) the Supreme Court was of the view that the admissibility of statements recorded by a Customs Officer under Section 171-A of the Sea Customs Act, 1878 would depend upon the determination of the question whether the statements when made were inadmissible under Section 25 of the Evidence Act, and Article 20(3) of the Constitution. The Court held thus :

“5. Section 25 of the Indian Evidence Act, 1872, enacts that ‘No confession made to a police officer shall be proved as against a person accused of any offence’. The broad ground for declaring confessions made to a police officer inadmissible is to avoid the danger of admitting false confessional statements obtained by coercion, torture or ill-treatment. But a Customs Officer is not a member of the police force. He is not entrusted with the duty to maintain law and order. He is entrusted with powers which specifically relate to the collection of customs duties and prevention of smuggling. There is no warrant for the contention raised by counsel for Mehta that a Customs Officer is invested in the enquiry under the Sea Customs Act with all the powers which a police officer in charge of a police station has under the Code of Criminal Procedure. Under the Sea Customs Act, a Customs Officer is authorised to collect customs duty to prevent smuggling and for that purpose he is invested with the power to search any person on reasonable suspicion (Section 169); to screen or X-ray the body of a person for detecting secreted goods (Section 170-A); to arrest a person against whom a reasonable suspicion exists that he has been guilty of an offence under the Act (Section 173); to obtain a search warrant from a Magistrate to search any place within the local limits of the jurisdiction of such Magistrate (Section 172); to collect information by summoning persons to give evidence and produce documents (Section 171-A); and to adjudge confiscation under Section 182. He may exercise these powers for preventing smuggling of goods dutiable or prohibited and for adjudging confiscation of those goods. For collecting evidence the Customs Officer is entitled to serve a summons to produce a document or other thing or to give evidence, and the person so summoned is bound to attend either in person or by an authorized agent, as such officer may direct, and the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes a statement and to produce such documents and other things as may be required. The power to arrest, the power to detain, the power to search or obtain a search warrant and the power to collect evidence are vested in the Customs Officer for enforcing compliance with the provisions of the Sea Customs Act. For purpose of Sections 193 and 228 of the Indian Penal Code the enquiry made by a Customs Officer is a judicial proceeding. An order made by him is appealable to the Chief Customs Authority under Section 188 and against that order revisional jurisdiction may be exercised by the Chief Customs Authority and also by the Central Government at the instance of any person aggrieved by any decision or order passed under the Act. The Customs Officer does not exercise, when enquiring into a suspected infringement of the Sea Customs Act, powers of investigation which a police officer may in investigating the commission of an offence. He is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudicating forfeiture and penalty. He has no power to investigate an offence triable by a Magistrate, nor has he the power to submit a report under Section 173 of the Code of Criminal Procedure. He can only make a complaint in writing before a competent Magistrate.”

The Supreme Court found no substance in the contention that a person against whom an enquiry is made by the Customs Officer under the Sea Customs Act is a person accused of an offence and on that account he cannot be compelled to be made a witness against himself, and the evidence if any collected by examining him under Section 171-A of the Sea Customs Act is inadmissible. The Court held thus :

“11. xxxxxxx By Article 20(3) of the Constitution a person who is accused of any offence may not be compelled to be a witness against himself. The guarantee is, it is true, not restricted to statements made in the witness box. This Court in State Of Bombay . v. Kathi Kalu Oghad observed at p. 37 :

‘To be a witness’ means imparting knowledge in respect of relevant facts by an oral statement or a statement in writing, made or given in Court or otherwise.

‘To be a witness’ in its ordinary grammatical sense means giving oral testimony in Court. Case law has gone beyond this strict literal interpretation of the expression which may now bear a wider meaning, namely, bearing testimony in Court or out of Court by a person accused of an offence, orally or in writing.”

But in order that the guarantee against testimonial compulsion incorporated in Article 20(3) may be claimed by a person it has to be established that when he made the statement sought to be tendered in evidence against him, he was a person accused of an offence. Under Section 171-A of the Sea Customs Act, a Customs Officer has power in an enquiry in connection with the smuggling of goods to summon any person whose attendance he considers necessary, to give evidence or to produce a document or any other thing, and by clause (3) the person so summoned is bound to state the truth upon any subject respecting which he is examined or makes statements and to produce such documents and other things as may be required. The expression any person includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling is not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Sea Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of infringing the provision of the Sea Customs Act with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of customs: when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Sea Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate. In Maqbool Hussain v. State Of Bombay the Court held that a person against whom an order for confiscation of goods had been made in proceedings taken by Customs Officer under Section 167 of the Sea Customs Act and was subsequently prosecuted before a Magistrate for offences under the Foreign Exchange Regulation Act, 1947, could not plead the protection of Article 20(2), since he was not ‘prosecuted’ before the Customs Authorities, and the order for confiscation was not a ‘punishment’ inflicted by a court or judicial tribunal within the meaning of Article 20(2) of the Constitution and the prosecution was not barred.”

(Emphasis supplied)

The Court observed that in two earlier cases in M.P. Sharma case [1978 (2) E.L.T. J287 (S.C.)] and Raja Narayanlal Bansilal case the Supreme Court in describing a person accused used the expression ‘against whom a formal accusation had been made’, and in Kathi Kalu Oghad case the Court used the expression ‘the person accused must have stood in the character of an accused person’. The Supreme Court held that the Court in Kathi Kalu Oghad case has not set out a different test for determining the stage when a person may be said to be accused of an offence and that in Kathi Kalu Oghad case the Court merely set out the principles in the light of the effect of a formal accusation on a person viz. that he stands in the character of an accused person at the time when he makes the statement. The Court was of the view that normally a person stands in the character of an accused when a first information report is lodged against him in respect of an offence before an officer competent to investigate it, or when a complaint is made relating to the commission of an offence before a Magistrate competent to try or send to another Magistrate for trial the offence, where a Customs Officer arrests a person and informs that person of the grounds of his arrest, (which he is bound to do under Article 22(1) of the Constitution) for the purposes of holding an enquiry into the infringement of the provisions of the Sea Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. In the case of an offence by infringement of the Sea Customs Act and punishable at the trial before a Magistrate there is an accusation when a complaint is lodged by an officer competent in that behalf before the Magistrate.                     (Emphasis supplied)

The Court also held :

“26. xxxxxx Section 104(1) only prescribes the conditions in which the power of arrest may be exercised. The officer must have reason to believe that a person has been guilty of an offence punishable under Section 135, otherwise he cannot arrest such person. But by informing such person of the grounds of his arrest the Customs Officer does not formally accuse him with the commission of an offence. Arrest and detention are only for the purpose of holding effectively an inquiry under Sections 107 and 108 of the Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalties. At that stage there is no question of the offender against the Customs Act being charged before a Magistrate. Ordinarily after adjudging penalty and confiscation of goods or without doing so, if the Customs Officer forms an opinion that the offender should be prosecuted he may prefer a complaint in the manner provided under Section 137 with the sanction of the Collector of Customs and until a complaint is so filed the person against whom an inquiry is commenced under the Customs Act does not stand in the character of a person accused of an offence under Section 135.

27. Section 167 of the Sea Customs Act, 1878, contained a large number of clauses which described different kinds of infractions and different penalties or punishments liable to be imposed in respect of those infractions. Under the Customs Act of 1962 the Customs Officer is authorised to confiscate goods improperly imported into India and to impose penalties in cases contemplated by Sections 112 and 113. But on that account the basic scheme of the Sea Customs Act, 1878, is not altered. The Customs Officer even under the Act of 1962 continues to remain a revenue officer primarily concerned with the detection of smuggling and enforcement and levy of proper duties and prevention of entry into India of dutiable goods without payment of duty and of goods of which the entry is prohibited. He does not on that account become either a police officer, nor does the information conveyed by him, when the person guilty of an infraction of the law is arrested, amount to making of an accusation of an offence against the person so guilty of infraction. Even under the Act of 1962 formal accusation can only be deemed to be made when a complaint is made before a Magistrate competent to try the person guilty of the infraction under Sections 132, 133, 134 and 135 of the Act. Any statement made under Sections 107 and 108 of the Customs Act by a person against whom an enquiry is made by a Customs Officer is not a statement made by a person accused of an offence.”

23. In Illias v. Collector Of Customs, Madras., (1969) 2 SCR 613 = (S.C.) the Supreme Court summarized the comparison made between the duties and powers of police officers and customs officers made in Barkat Ram case as follows :

(1) The police is the instrument for the prevention and detection of crime which can be said to be the main object of having the police. The powers of customs officers are really not for such purpose and are meant for checking the smuggling of goods and due realization of customs duties and for determining the action to be taken in the interest of the revenue country by way of confiscation of goods on which no duty had been paid and by imposing penalties and fines.

(2) The customs staff has merely to make a report in relation to offences which are to be dealt with by a Magistrate. The customs officer, therefore, is not primarily concerned with the detection and punishment of crime but he is merely interested in the detection and prevention of smuggling of goods and safeguarding the recovery of customs duties.

(3) The powers of search etc. conferred on the customs officers are of a limited character and have a limited object of safeguarding the revenues of the State and the statute itself refers to police officers in contradiction to customs officers;

(4) If a customs officer takes evidence under Section 171-A and there is an admission of guilt, it will be too much to say that that statement is a confession to a police officer as a police officer never acts judicially and no proceeding before him is deemed to be a judicial proceeding for the purpose of Sections 193 and 228 of the Indian Penal Code or for any other purpose.

24. A Division Bench of this Court in N.H. Dave, Inspector of Customs v. Mohmed Akhtar, (Guj.) while dealing with the question as regards the manner in which a person arrested under the provisions of section 104 of the Customs Act is required to be dealt with by the Magistrate before whom he is taken in obedience to the mandate contained in Section 104(2) adverted to the following propositions which emerge from the provisions of the Act and the Code, namely :-

(1) That an offence under Section 135 of the Customs Act is a non-cognizable offence, that is to say it is an offence which cannot be investigated by the police;

(2) The Code of Criminal Procedure is applicable mutatis mutandis to proceedings in relation to offences other than an offence under Indian Penal Code to the extent specified in sub-section (2) of Section 4 of the Code and that the Code would be applicable to this extent even in respect of an offence under Section 135 of the Customs Act. The Court referred to the provision contained in Part II of the First Schedule to the Code and more particularly to the first and second entries therein. The Court found that by virtue of the first entry in respect of offences against other laws, that is to say, laws other than Indian Penal Code, an offence punishable with imprisonment for a period of three years and upwards but not exceeding seven years is also classified as non-bailable. So also by virtue of entry No. 2 an offence punishable with imprisonment for a period of three years and upwards but not exceeding seven years is also classified as non-bailable. An offence under Section 135 of the Customs Act is in any event punishable with imprisonment of three years and upwards but not exceeding three years. Regardless of the value of goods in any event the offence is punishable with imprisonment for three years. Such being the position the offence is non-bailable.

The Court held that sub-section (2) of Section 4 provides that all offences under any law other than the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions (that is to say provisions of the Code of Criminal Procedure), subject to two limitations. In case there is some enactment regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences the provisions contained in the said enactment would prevail against the corresponding provisions of the Code. In the matter of the provisions of the Code of Criminal Procedure as to bails and bonds embodied in Chapter XXXIII of the Code, the provisions would be attracted even in regard to offences under the Customs Act by virtue of sub-section (2) of Section 4 of the Code. The Court was of the view that a person arrested under Section 104(1) of the Customs Act would certainly fall within the orbit of the expression ‘suspected of the commission of any non-bailable offence’. The Court held that a person arrested by a customs officer under Section 104 would be a person suspected of the commission of such an offence inasmuch as the arrest itself is made when the officer of customs has reason to believe that such a person has been guilty of an offence punishable under Section 135. Thus, Section 437(1) in terms is applicable when any person arrested under Section 104 by an officer of customs is brought before the Magistrate.

25. In Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440 = (S.C.) the Supreme Court was inter alia dealing with the issue as to whether the registration of a case and the entries in the diary relating to that case as prescribed by the Court are sine qua non for a Magistrate taking into custody of a person when that person appears or surrenders or is brought before the Magistrate and whether that person should have assimilated the characteristic of ‘an accused of an offence’ at that stage itself within the meaning of sub-section (1) of Section 167 or sub-section (1) of Section 437 of the Code.

The Court after considering its decision in Gurbaksh Singh Sibbia v. State of Punjab, (1980) 2 SCC 565, wherein it was held that “The filing of a first information report is not a condition precedent to the exercise of the powers under Section 438 of the Code. The imminence of a likely arrest founded on a reasonable belief can be shown to exist even if an FIR is not yet filed” held that the dictum laid down in that case indicates that the registration of a case and the entries of the case diary are not necessary for entertaining an application for grant of anticipatory bail, but the mere imminence of a likely arrest on a reasonable belief on an accusation of having committed a non-bailable offence will be sufficient to invoke that provision. In the backdrop of the above referred decision, the Court held that a Magistrate can himself arrest or order any person to arrest any offender if that offender has committed an offence in his presence and within his local jurisdiction or on his appearance or surrender or is produced before him and take that person (offender) into his custody subject to the bail provisions. If a case is registered against an offender arrested by the Magistrate and a follow-up investigation is initiated or if an investigation has emanated qua the accusations levelled against the person appearing or surrendering or being brought before the Magistrate, the Magistrate can in exercise of the powers conferred on him under Section 167(2) keep that offender or person under judicial custody in case the Magistrate is not inclined to admit that offender or person to bail. The Court held that the above deliberation leads to a derivation that to invoke Section 167 (1), it is not an indispensable pre-requisite condition that in all circumstances, the arrest should have been effected only by a police officer and none else and that there must necessarily be records of entries of a case diary. Therefore, it necessarily follows that a mere production of an arrestee before a competent Magistrate by an authorised officer or an officer empowered to arrest (notwithstanding the fact that he is not a police officer in its stricto sensu) on a reasonable belief that the arrestee ‘has been guilty of an offence punishable’ under the provisions of the special Act is sufficient for the Magistrate to take that person into his custody on his being satisfied that the three preliminary conditions, namely (1) the arresting officer is legally competent to make the arrest; (2) that the particulars of the offence or the accusation for which the person is arrested or other grounds for such arrest do exist and are well-founded and; (3) that the provisions of the Special Act in regard to the arrest of the person and the production of the arrestee serve the purpose of Section 167(1) of the Code. The Court also held that Section 35 of FERA and Section 104 of the Customs Act which confer power on the prescribed officer to effect the arrest deploy only the word ‘person’ and not ‘accused’ or ‘accused person’ or ‘accused of any offence’. In fact, the word ‘accused’ appears only in the penal provisions of the Special Acts namely, sub-section (4) of Section 56 of FERA and sub-section (3) of Section 135 of the Customs Act while explaining as to what would be the special and adequate reasons for awarding the sentence of imprisonment for a sub-minimum period, though sub-sections (1) to (3) of Section 56 of FERA and sub-sections (1) and (2) of Section 135 of the Customs Act use the expression ‘person’ who becomes punishable of conviction under the penal provisions by the Court trying the offence. The Court referred to the decisions of the Madras High Court in Re Kora Ayyappa, (1910) 11 Cri. L.J. 251. the decision of an eight-Judge Bench of the Supreme Court in M.P. Sharma v. Satish Chandra, District Magistrate, Delhi, AIR 1954 S.C. 300 = 1978 (2) E.L.T. (J 287) (S.C.), a decision of a Constitutional Bench of the Supreme Court in Raja Narayanlal Bansilal v. Maneck Phiroz Mistry, AIR 1961 SC 29 as well as decision of an eleven-Judge Bench of the Supreme Court in State Of Bombay . v. Kathi Kalu Oghad , AIR 51961 S.C. 1808, and held that the essence of the said decisions is that to bring a person within the meaning of ‘accused of any offence’, that person must assimilate the character of an ‘accused person’ in the sense that he must be accused of any offence. The Court thought it apposite to note that clauses (1) to (3) of Article 22 which speak of a ‘person arrested’ use only the word ‘person’. Article 22(2) states that ‘every person who is arrested and detained in custody...’. A similar expression is used in Section 167(1) of the Code reading, ‘Whenever any person is arrested and detained in custody,....’. Thus, while referring to a person arrested and detained neither Article 22 nor Section 167 employs the expression ‘accused of any offence’.

Discussing the powers of an authorised officer of Enforcement or Customs, the Court held thus :-

“113. Though an authorised officer of Enforcement or Customs is not undertaking an investigation as contemplated under Chapter XII of the Code, yet those officers are enjoying some analogous powers such as arrest, seizures, interrogation etc. Besides, a statutory duty is enjoined on them to inform the arrestee of the grounds for such arrest as contemplated under Article 22(1) of the Constitution and Section 50 of the Code. Therefore, they have necessarily to make records of their statutory functions showing the name of the informant, as well as the name of the person who violated any other provision of the Code and who has been guilty of an offence punishable under the Act, nature of information received by them, time of the arrest, seizure of the contraband if any and the statements recorded during the course of the detection

114. Apart from those two special Acts under consideration, there are various Central Acts containing provisions of prevention of offences enumerated therein and also for enforcement of the said provisions. Certain provisions of the Central Acts which we would like to give below by way of illustration in a tabular form showing the powers vested and the duties cast on the officers concerned will show that those officers enjoy certain powers during the course of any investigation or inquiry or proceeding under the special Acts concerned though not in strict sense of an investigation under Chapter XII of the Code as undertaken by police officers including the filing of a police report under Section 173(2) of the Code.

115. The above table manifestly imparts that all the powers vested on various authorities as given in the table are equipollent as being enjoyed by a police officer under the Code and exercised during investigation under Chapter XII because the investigation is nothing but an observation or inquiry into the allegations, circumstances or relationships in order to obtain factual information and make certain whether or not a violation of any law has been committed.

116. It should not be lost sight of the fact that a police officer making an investigation of an offence representing the State files a report under Section 173 of the Code and becomes the complainant whereas the prosecuting agency under the special Acts files a complaint as a complainant i.e. under Section 61(ii) in the case of FERA and under Section 137 of the Customs Act. To say differently, the police officer after consummation of the investigation files a report under Section 173 of the Code upon which the Magistrate may take cognizance of any offence disclosed in the report under Section 190(1)(b) of the Code whereas the empowered or authorised officer of the special Acts has to file only a complaint of facts constituting any offence under the provisions of the Act on the receipt of which the Magistrate may take cognizance of the said offence under Section 190(1)(a) of the Code. After taking cognizance of the offence either upon a police report or upon receiving a complaint of facts, the Magistrate has to proceed with the case as per the procedure prescribed under the Code or under the special procedure, if any, prescribed under the special Acts. Therefore, the word ‘investigation’ cannot be limited only to police investigation but on the other hand, the said word is with wider connotation and flexible so as to include the investigation carried on by any agency whether he be a police officer or empowered or authorised officer or a person not being a police officer under the direction of a Magistrate to make an investigation vested with the power of investigation.”

26. From the decisions referred to hereinabove, the following principles emerge :-

(i)      The main purpose of the provisions of Sections 9, 13, 18 and 19 of the Central Excise Act is to levy and collect excise duties and Central Excise Officers have been appointed thereunder for this main purpose. In order that they may carry out their duties in this behalf, powers have been conferred on them to see that duty is not evaded and persons guilty of evasion of duty are brought to book.

(ii)    Mere conferment of powers of investigation into criminal offences under Section 9 of the Act does not make the Central Excise Officer a police officer.

(iii)   A Customs Officer is not a member of the police force. He is not entrusted with the duty of maintaining law and order. He is entrusted with powers that specifically relate to the collection of customs duty and prevention of smuggling. The power to arrest, the power to detain, the power to search or obtain a search warrant and the power to collect evidence are vested in the Customs Officer for enforcing compliance of the provisions of the Sea Customs Act. The Customs Officer does not exercise, when enquiring into a suspected infringement of the Sea Customs Act, powers of investigation which a police officer may in investigating the commission of an offence. He is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudicating forfeiture and penalty. He has no power to investigate an offence triable by a Magistrate, nor has he the power to submit a report under Section 173 of the Code of Criminal Procedure. He can only make a complaint in writing before the competent Magistrate.

(iv)   The expression ‘any person’ includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling goods not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20(3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of infringing the provision of the Customs Act with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of customs : when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate.

(v)     Where a Customs Officer arrests a person and informs that person of the grounds of his arrest (which he is bound to do under Article 22(1) of the Constitution) for the purposes of holding an enquiry into the infringement of the provisions of the Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. In case of an offence by infringement of the Customs Act and punishable at the trial before a Magistrate there is an accusation when a complaint is lodged by an officer competent in that behalf before the Magistrate.

(vi)   Arrest and detention are only for the purpose of holding effectively an inquiry under Sections 107 and 108 of the Customs Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalty. At that stage there is no question of the offender against the Customs Act being charged before a Magistrate. Ordinarily, after adjudging penalty and confiscation of goods or without doing so, if the Customs Officer forms an opinion that the offender should be prosecuted, he may prefer a complaint in the manner provided under Section 137 with the sanction of the Collector of Customs and until a complaint is so filed, the person against whom an inquiry is commenced under the Customs Act does not stand in the character of a person accused of an offence under Section 135.

(vii)  The Customs Officer is a revenue officer primarily concerned with the detection of smuggling and enforcement and levy of proper duties and prevention of entry into India of dutiable goods without payment of duty and of goods of which the entry is prohibited.

(viii) A person arrested under Section 104(1) of the Customs Act would fall within the ambit of the expression ‘suspected of the commission of any non- bailable offence’. A person arrested by a Customs Officer under Section 104 would be a person suspected of the commission of such an offence inasmuch as the arrest itself is made when the officer of customs has reason to believe that such person has been guilty of an offence punishable under Section 135 of the Customs Act.

(ix)   The police is the instrument for the prevention and detection of crime which can be said to be the main object of having the police. The powers of the customs officers are really not for such purpose and are meant for checking the smuggling of goods and due realization of customs duties and determining the action to be taken in the interest of the revenue of the country by way of confiscation of goods of which no duty has been paid and by imposing penalties and fine.

27. Since the provisions of the Central Excise Act are more or less in pari materia to the above referred provisions of the Customs Act, the said principles would also be squarely applicable to the provisions of the Central Excise Act.

28. From the language employed in Section 13 of the Central Excise Act, it is apparent that the said provisions confer power on the Central Excise Officer to arrest any person subject to the following : (i) he should have reason to believe that such person is liable to punishment under the Act or the rules made thereunder; (ii) such powers can be exercised by a Central Excise Officer not below the rank of Inspector of Central Excise, and (iii) such arrest has to be made with the prior approval of the Commissioner of Central Excise. Thus the power to arrest is a substantive power conferred on the Central Excise Officer which he can exercise subject to fulfillment of the aforesaid three conditions. There is no other pre­condition for arrest of a person under Section 13 of the Act. Thus, the section itself does not say that arrest has to be made only in the manner provided under the Code for arrest in case of non-cognizable cases. When the Legislature in its wisdom has provided three conditions for exercise of powers under Section 13 of the Act, if it so intended it would have added a further condition that such arrest has to be made in the manner provided for arrest in case of non-cognizable cases. However, when the Legislature has not thought it fit to introduce such a condition, this Court finds no reason to read such condition in the said provision. From the discussion in the preceding paragraphs, it is apparent that when a Central Excise Officer arrests a person under the provisions of Section 13 of the Act, he does so for the purpose of enforcing the provisions of the Central Excise Act and not for the purpose of detecting the commission of an offence under the Act. The powers of arrest have in fact been vested in the Central Excise Officers only for the purposes of carrying out the purposes of the Act and not for the purpose of prosecuting any accused person of an offence under the Act as that is the duty of the police officer and not the Central Excise Officer.

29. Section 18 of the Act inter alia provides that all arrests made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 relating to arrests made under the Code. Section 13 confers a substantive power of arrest on a Central Excise Officer akin to the power conferred on the police under Sections 41 and 42 of the Code, on a private person under Section 43 and on a Magistrate under Section 44 of the Code. Whereas in view of the provisions of Section 18 of the Act, the procedure for making such arrest is governed by the provisions of the Code viz. the manner of making arrest is provided under Section 46 of the Code; the manner for searching of the place entered by the person sought to be arrested is provided under Section 47 of the Code; pursuit of offenders into other jurisdictions is laid down under Section 48; Section 49 provides that the person arrested shall not be subjected to more restraint than is necessary to prevent his escape; Section 50 provides for the person arrested to be informed of grounds of arrest and of right to bail; Section 50A imposes an obligation on the person making arrest to inform about the arrest, etc. to a nominated person and Section 51 makes provision for search of the arrested persons. Section 52 to 60 of the Code provide for further modalities and procedure in case of arrest of a person. However, the provisions of Section 41 to 60 of the Code only lay down the modalities and procedure for arrest of a person and do not detract from the substantive power of arrest conferred by the statute under Section 13 of the Act.

30. Examining the issue from another angle, as noted hereinabove the arrest under Section 13 of the Act is for investigation/enquiry to fulfill the objects of the Act and not for detection of a crime. If the interpretation canvassed by the learned counsel for the petitioner is accepted, it would render the provisions of Section 13 redundant inasmuch as if a person is to be arrested only after registration of a first information report or lodgment of a complaint, the question of arrest by the Central Excise authorities would not arise. Neither would the question of the Magistrate issuing a warrant arise prior to lodging a complaint. Besides, once an FIR is registered or a complaint is lodged, the person against whom an accusation is made would be ‘an accused’ or ‘a person accused of an offence’, whereas Section 13 contemplates arrest of a person and not ‘an accused’ or of ‘a person accused of an offence’. It is settled legal position that while interpreting a statutory provision, a construction which would in effect obliterate it from the statute-book, should be eschewed. If the construction of Section 13 as put forth on behalf of the petitioner were to be accepted, the same would render the entire provision redundant, otiose and nugatory, an outcome which the Parliament could surely not have intended.

31. The above discussion leads to the inevitable conclusion that under Section 13 of the Central Excise Act empowers the Central Excise Officers to arrest a person whom he has reason to believe to be liable to punishment under the Act without issuance of warrant and without registration of an FIR or a complaint before the Magistrate.

32. On behalf of the petitioner, great stress has been laid on the decision of the Allahabad High Court in Kum. Rajni and Others v. Union of India (supra), wherein the Court held that the powers and duties of an officer under the Central Excise Act are not parallel to the power of Station House Officer of the police station. The Court was of the view that Chapter XII of the Code of Criminal Procedure deals with the information to the police and their power to investigate, which does not contemplate the power of investigation to any other officer other than mentioned therein. The Court was also of the view that sub-clause (1) of Section 154 of the Code which deals with the investigation of a cognizable offence was not attracted in the said case under the Excise Act as the same has been made non-cognizable. The Court further held that sub-clause (1) of Section 155 of the Code deals with the information regarding non-” cognizable cases and investigation of such cases and under sub-section (2) of the said Section wherein it has been provided that investigation can be made only with the order of the Magistrate having power to try such cases or to commit such cases and under sub-clause (3) it has been provided that any police officer receiving such order may exercise the same power in respect of investigation (except the power to arrest without a warrant) by an officer in charge of a Police Station may exercise in a cognizable offence. The Court held that the case being a non-cognizable case, the Central Excise officers have no powers to that of an Officer Incharge of a Police Station. The Court held that the power of arrest has been enunciated in the Central Excise Act which has also been subjected to power of arrest as enunciated under the Code of Criminal Procedure. The Court held that Section 14 of the Central Excise Act itself mentions that it is in the nature of enquiry and no other person than the police officer under the Code of Criminal Procedure has power to investigate under the Act and no other person under the Excise Act can act as police officer. It was further held that the enquiry conducted by the Central Excise Officer under Section 14 cannot be termed as investigation trial and thus they do not have the powers which in charge officer of a police station or person deputed by the Court for the investigation has. That an officer in charge of a police station can only register an FIR otherwise it will be interference in law. The Court was of the view that the Central Excise Officers cannot register an information as FIR under Section 154(1) of the Code nor can they proceed either under Section 154 as an officer in charge of a police station for a non-cognizable offence. Consequently, they are also not entitled to exercise powers under Section 156 and 157 of the Code and, therefore, the Magistrate cannot take cognizance on their report as a police report. The Court held that the authorities working under a Special Act such as Central Excise Act, 1944 cannot override the provisions of the Code of Criminal Procedure as regards the arrest or filing of the complaint. Secondly, the arrest of a person under this Act has to be made only when there is a prima facie case against him and that too by the due process of law. The Court concluded that the authorities have no power under the Excise Act to arrest anybody except in the cases as prescribed under Section 13 of the said Act as enumerated under sub-clause (2) of Section 13 of the said Act. On completion of inquiry, they have also power to file complaint and pray before the Court for action in accordance with law.

33. The relief claimed vide paragraph 10(BB) of the petition is based upon the aforesaid decision. Placing reliance upon the said decision, it is contended that the authorities working under the Central Excise Act cannot override the provisions of the Code of Criminal Procedure as regards the arrest; that the authorities have no power under the Excise Act to arrest under Section 13(1) of the Act without filing an FIR and without obtaining orders from the competent Court.

34. In the context of the aforesaid decision, it is required to be noted that the same was rendered on 2-12-2002, whereas section 13 of the Act came to be substituted by Finance Act (32 of 2003), on 14-5-2003. Hence, the said decision was not rendered in the context of Section 13 as is applicable to the present case. Even otherwise, considering the law laid down in the said decision in the light of the principles enunciated by the Apex Court in the decisions referred to hereinabove, the view taken by the Court does not appear to be the correct view as the same is not in consonance with the law laid down in the above referred decisions. In the said case the Court has held that the authorities have no power to arrest except in the cases prescribed under Section 13(2). As noted hereinabove, Section 13 has subsequently been substituted, and as it stands today, there is no sub-section (2). In the circumstances, if the view taken by the Allahabad High Court were to be accepted, under Section 13 as it stands today the Central Excise Officers would not have any power to arrest anybody and consequently the said provision would become redundant.

35. On behalf of the respondent authorities, strong reliance is placed upon the decision of the Punjab & Haryana High Court In Sunil Gupta v. Union of India (supra) wherein the Court upon perusal of the provisions of Section 9(a), 13, 14 and 18 of the Central Excise Act observed thus :- xxxxx Section 9(A) introduces a fiction. As a result, the offences under Section 9 are deemed to be non-cognizable. Section 13 authorises ‘any Central Excise Officer duly empowered by the Central Government in this behalf’ to ‘arrest any person who may he has reason to believe to be liable to be punished under this Act’. This provision embodies a substantive power and authorises the competent officer to arrest a person if he has some reason to belief that the person is liable to be punished under the Act. “The Court was of the view that the proceedings conducted by an officer of the Central Excise are vitally different from the investigation by a police officer. The Court held : “On a combined reading of Sections 13 and 14, it is clear that an officer of Central Excise is not a mere police officer. He is different. He is even more. A substantive power to arrest has been conferred on him under Section 13. The proceedings conducted by him are judicial. The person who is interrogated is bound to state the truth”. Interpreting the provisions of Section 18 of the Act which require that arrest made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, the Court held thus :

“18. In our view, Section 13 embodies a substantive power. It confers the power to arrest. The procedural safeguards have been protected by Section 18. This provision merely regulates the exercise of power under Section 13. It only provides that the searches and arrests under the Central Excise Act ‘shall be carried out in accordance with the provisions of the Code of Criminal Procedure.....’ In other words, an officer of the Central Excise shall make the arrest in ‘the manner laid down in Section 46 of the Code of Criminal Procedure.....He ‘shall actually touch or confine the body of the person to be arrested.....’ In case of resistance, the officer of the Central Excise ‘may use all means necessary to effect the arrest. ‘The persons arrested ‘shall not be subjected to more restraint than is necessary to prevent his escape. Similarly, a search shall be carried out in accordance with the procedure laid down in Section 100. If the person of lady has to be searched, it shall be done ‘by another woman with strict regard to decency’. Two or more independent and respectable inhabitants of the locality shall be called upon to be present. The search shall be made in their presence and ‘a list of things seized in the course of such search.....shall be prepared.....’ In a nutshell, the procedural protection contained in the Code of Criminal Procedure has been guaranteed even in case of arrests and searches under the Central Excise Act, 1944. No more.”

The Court held that an officer of the Department of Central Excise who has been duly authorised by the Central Government is not debarred from arresting a person without a warrant when he has reason to believe that the person is liable to be punished under the Central Excise Act, 1944. The Court was of the view that the power under Section 13 is not curtailed by Section 18. In fact, Section 18 is merely procedural. Thus, the competent officer is not required to obtain a warrant before he is able to arrest a person in exercise of powers under Section 13.

36. This Court is in agreement with the view taken by the Punjab and Haryana High Court, viz. a Central Excise Officer, (satisfying the conditions laid down under Section 13) is not debarred from arresting a person without a warrant when he has reason to believe that the person is liable to punishment under the Act or the rules made thereunder. Section 13 is not curtailed by Section 18 and in fact Section 18 is merely procedural.

37. As regards the second issue raised by the petitioners, i.e. criminal prosecution cannot be initiated or continued till the final adjudication by the Customs and Excise Department, in the opinion of this Court, the said issue is a non-issue insofar as the present petition is concerned. From the facts emerging on record, till the hearing of the petition, neither had any criminal prosecution been initiated against the petitioners, (i.e., neither bad any F.I.R. nor any criminal complaint been lodged against the petitioners in connection with the subject matter of the petition) nor had any proceedings for adjudication been initiated against the petitioners in relation to the search in question. Till the hearing of the petition the Central Excise authorities were merely carrying out inquiry/investigation pursuant to the search carried out on the premises of the petitioner company for ascertaining as to whether there was any evasion of duty or contravention of the provisions of the Act. It is settled legal position that questions of law should be decided only if and when they arise properly on the pleadings of a given case and where it is found necessary to decide them for a proper decision of the case. In the circumstances, in absence of any factual foundation regarding initiation or continuation of prosecution during the pendency of adjudication proceedings, this Court is not inclined to decide the said legal issue in vacuum, as the facts do not indicate that any such issue has arisen as yet.

38. For the foregoing reasons, the petition fails and is accordingly dismissed.