- (1.) THIS is an appeal by the State against the acquittal of the accused of an offence punishable under section 9 (b) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act ). The accused was a warehouse licensee and carried on business in manufactured tobacco. P. W. 1 thiru Kolandai Inspector of Central Excise Preventive Unit, Madras and a team of Inspectors of the Central Excise conducted a special stock taking at the warehouse of the accused on 8-1-1973 in accordance with the orders of the collector of Central Excise, Madras and the Assistant Collector of Central excise, Salem. The stock taking went on for two days and at the end it was found that there was huge shortage in the stock. The shortage noticed was 28, 592 kgs. of tobacco which worked out to a total shortage of 81. 54% in individual lots. The shortage noticed in individual lots ranged between 57. 75% to 90. 94%. The excise duty payable on the shortage noticed was Rs. 86, 976. Since the shortage was far in excess of the percentage allowed by the Department for dryage, wastage etc. , the departmental officers were of opinion that the accused should have clandestinely removed the tobacco from the warehouse and thus evaded payment of excise duty. It was in such circumstances the complaint under section 9 (b) of the Act was filed against the accused.
(2.) THE defence of the accused was of a diverse nature. He did not accept the correctness of the weightage particulars and percentage of shortage given by the Officers. Nextly he contented that the penalty for any shortage of tobacco noticed in the warehouse could be collected from him through adjudication proceeding and without adjudication proceedings being finalised, the filing of the criminal Complaint was premature. Yet another contention of his was that he had given security for payment of excise duty and therefore any default committed by him could be made good by proceeding against security furnished by him. The learned Magistrate, accepted every one of the contentions raised by the accused and acquitted him. Apart from these points, the learned Magistrate also held that the complaint was filed beyond the period of limitation and on that score too it was unsustainable. Those findings are challenged in this appeal preferred by the State. Many of the findings of the learned Magistrate cannot really be sustained. But nevertheless I think the acquittal of the accused cannot be disturbed. Though the learned Magistrate has stated that it was not possible to accept the prosecution case solely on the testimony of P. W. 1 that the shortage of tobacco noticed was 28, 592 kgs. and that the excise duty payable thereon was Rs. 86, 976 I do not think that it is a correct view of the matter. P. W. 1 is a responsible officer of the department and it is rightly unlikely that he would have made any mistake in the process of stock taking or in assessing the shortage. There are, however, other weighty factors which will stand in the way of the prosecution case being accepted. Firstly it has to be noted that the stock taking was begun on 8-1-1973. Though it was completed on 9-1-1973 P. W. 1 should have had knowledge even on 8-1-1973 that the stock of tobacco in the warehouse was short of the quantities noted in the registers and accounts. As such he would have had knowledge even on that day of the irregularity or illegality committed by the accused. Such being the case the complaint against the accused should have been filed within a period of 6 months from 8-1-1973 since section 40 (2) of the Act enjoins that no suit, prosecution or other legal proceedings shall be instituted for anything done or ordered to be done under the Act after the expiration of six months from the accrual of the cause of action or from the date of the Act or order complained of. Admittedly the complaint in this case was filed only on 9-7-1973 which was one day beyond the period of 6 months. In Public Prosecutor, Madras v. R. Raju [1978 (2) E. L. T. (J 410) (S. C.) = 1972 Crlj 1699] the Supreme Court held that sub-sections (1) and (2) to Section 40 of the Act operate in different fields and sub-section (2) was not confined only to actions against the Government officers. The learned Judges held that application of sub-section (2) is to be unrestrictive and expressed their opinion in the following words : "section 40 (2) of the Act cannot be said to be confined in its operation only to Government servants. The sub-section is applicable to any person against whom suits or proceedings or prosecution shall lie for anything done or ordered to be done under the Act. " * In the light of this decision and having regard to the fact that the complaint against the accused was filed beyond the time-limit of six months, it follows that the complaint was filed out of time and consequently the accused cannot be convicted of such complaint. The other snag in the case is that under [rule] 223 (A)of the rules framed under the Act the warehouse keeper can be called upon by the Collector of Central Excise to account for any shortage of excisable goods and if the explanation offered by him was not acceptable he may be called upon to pay the full account of duty chargeable on the goods found deficient and also to pay penalty. Any action taken under [rule] 223 (a) of the rules framed under the Act will necessarily involve the Collector making an evaluation of the quantity of the loss sustained by the warehouse keeper on account of dryage, wastage etc. If the explanation is eventually accepted, then, it would follow that there had been no evasion of tax by the warehouse keeper and if there was no evasion of tax there could be no conviction under section 9 (b) of the Act. In this case admittedly the adjudication proceedings under [rule] 223 (a) were not over when the complaint was filed. The position was therefore nebulous or fluidal and in that stage it will not be possible for the criminal court to accept the case of the complainant and hold that the shortage of stock could be ascribed only due to clandestine removal and not due to natural or nonculpable causes.
(3.) IT is no doubt true that the prosecution will be caught between the horns of dilemma. If the complaint is to be sustained successfully it has to be necessarily filed within a period of six months from the date of accrual of the cause of action or the act or the order complained of. At the same time to expect that the complaint should be filed after the departmental proceedings under Rule 223 (A) are over would be asking the department to do the impossible. But the situation cannot be remedied as things now stand. IT is presumable to get over the prescription of limitation contained in section 40 (2) of the Act that the Parliament has now amended the sub-section to make it clear that the time-limit mentioned in the sub-section will be applicable only to proceedings other than suit taken against the central or State Government or an Officer of the Central Government for anything done under the Act. For the reasons already stated, the acquittal of the accused by the trail court is sustained. The appeal is therefore, dismissed. Before parting with the case I would like to say that mrs. Hamsala Rajendran, who was appointed amicus curiae has made a thorough study of the papers and presented the case of the accused in an excellent manner. ;