© Inquiry and investigation — Summons not vitiated by
non-mention of nature of investigation therein (since that may alert the persons
concerned to manipulate their records or abscond), nor does non-striking of the
words ‘and/or’ in the summons show lack of application of mind on the part of
the issuing officer, since preliminary inquiry is usually both for purposes of
submission of specified documents and recording of statement of the person
summoned — Authority not required to come to a finding regarding nexus of the
said documents or involvement of any particular person just at the commencement
of inquiry — [TTV Dinakaran v. Enforcement Officer, Enforcement Directorate,
(1995) 80 ELT 745 (Mad.)]
(d) In the absence of any material indicating arbitrary or
capricious exercise of power by authority, it is not within power of Judicial
review to comment on summons issued on the presumption that summons have been
issued for some ulterior purpose —[Annapurna Impex Pvt. Ltd. V. UOI,
(2006) 198 ELT 25 (P& H)]
(e) Writ jurisdiction — Alternative remedy of appeal is not
applicable to the summons issued u/s.14 of the Central Excise Act, 1944 as they
do not fall in the category of ‘order’ or ‘decision’ — S. 35 of the Central
Excise Act and Article 226 of the Constitution of India — [Hindustan Safety
Glass Works Ltd. V. AC, (1985) 21 ELT 38 (All.)]
3. Summons for documents :
(a) Summons for producing documents should specify which
documents are required. Authority issuing summons should apply their mind with
regard to necessity to obtain and examine documents mentioned in the order. —
[In Barium Chemicals v. AJ Rana — AIR 1972 SC 591, summons was set aside,
on ground of vagueness.]
(b) A person is bound to produce all useful and relevant
documents asked. [In UOI v. Telco, (1997) 96 ELT 209 (SC), it has been
held that the Assistant Commissioner is entitled to call for and examine
whatever documents he considers relevant. [e.g., records of sale prices
at the regional sales offices while determining factory gate prices].
4. Recording of statements during summons proceedings :
a) Statements can be recorded during enquiry in pursuance of summons. It should be recorded be-fore Gazetted Officer. [Superintendent is the lowest rank of Gazetted Officer in Excise Department. Inspector is not a Gazetted Officer]. Such statements can be used against a person during any legal proceedings.
b) Statements should be in writing and signed by the maker as it safeguards interests of the maker as well as the Department, and eliminates the possibsity of making a complaint subsequently that the statement was not correctly recorded by the authorities. [CO Sampath Kumar v. Enforcement Officer, 96 ELT 511 (SC)]
c) CEO cannot compel a person to give incriminating statement without reasonable, fair and just procedure. Statement should be voluntary and not under threat.
In C. Sampath Kumar v. Enforcement Officer, (1998) ELT 511 (SC), it was held that administration of caution to the person summoned that not making – a truthful statement would be an offence cannot by any stretch of imagination be construed as use c pressure to extract the statement. Such a caution has-statutory backing and is in fact in the interest of the person making the statement.
In K. L. Pavunny v. ACCE, (1997) 90 ELT241 (SC) (SC 3-Member Bench), where the accused was informed that law requires him to tell the truth and if he does not tell the truth, he may be prosecuted u/s.193 of IPC for giving false evidence, it was held that the threat comes from the statute and not from the officer.
d) S. 14(2) of CEA specifically provides that all persons summoned shall be bound to state the truth upon any subject respecting which they are examined and to produce such documents and other things as may be required.
e) U/s.164(2) of the Criminal Procedure Code, a caution has to be given to the person making a statement that he is not bound to make the confession and that, if he does so, it may be used as evidence against him. However, S. 164 applies to judicial confession before a Magistrate and is not applicable’ to statements before Central Excise Officer as it is not a ‘confession’. [In ACCE v. Duncan Agro Industries Ltd., (2000) 120 ELT 280 (SC), it was held that S. 164 of the Criminal Procedure Code is not applicable to statement recorded by CEO.]
f) A person whose statement is recorded during the enquiry has no right to have a copy of his statement on the spot. As per the department instructions also, these need not be given on the spot.
In the case under FERA viz. K. T. Advani v. State, (1987) 30 ELT 390 (Del.), it was held that the person has no right to get copies of his statement at the stage of investigation. However, he can keep a note statement that he makes.
However, he is entitled to get a copy of statement at the time of issue of show-cause notice, or otherwise in cases where the statement is proposed to be used against such person.
If the statements are used and orders are passed, without giving notice to the concerned parties, the same vitiates the proceedings, and cannot be used against the person concerned. [Charan Metal Corporation v. CCE, (1998) 98 ELT 588 (All.)]
In a Customs case, authorities had relied upon the statement made by the appellant at the time of ‘.earch and seizure in order to reject his case, but his request for copy of the statement and inspection of records was not granted. It was held that Customs authorities were not justified to rely upon certain alleged discrepancies in that statement to reject the appellant’s contention. [Ambal Lal v. UOI, (1983) 13 ELT 1321 (sq]
g) In Poolpandi v. Superintendent, C Ex, 60 ELT 24 (sq (SC 3-Member Bench) it has been held that person being interrogated is not an accused, nor can he plead that there is a possibility of his being made an accused in future. Hence, he has no right to ask for lawyer’s presence during the enquiry / questionitg.
However, the interrogating officer may permit presence of authorised person.
h) As per S. 14(3) of CEA, proceedings after the summons are ‘judicial proceedings’ within the meaning of S. 193 and S. 228 of the Indian Penal Code. As per S. 193 of IPC, giving false evidence is punishable with imprisonment up to seven years 1ind fine. U / s.228 of IPC, intentional insult or causing interruption to any public servant while such servant is at any stage of judicial proceedings shall be punishable with imprisonment up to six months or with fine up to Rs.l,000or both.
i) Even if duty liability is admitted by officers while making a statement, it does not mean a company cannot challenge duty liability. There cannot be estoppel in matters of taxation. [Dodsal P. Ltd. v. CCE, (2006) 193 ELT 518 (CESTAT) – Mumbai]
5. Confessions made in statements, retractions and related matters:
a) When a confession made in a statement is retracted, the burden is on the person making the statement to prove that confession was made under threat and only if the said person is able to prove that it was not voluntary, then the onus shifts on the Revenue to prove that it was voluntary. [ACC v. Govindasamy Ragupathy, (1998) 98 ELT 50 (Mad.)]
b) Burden is on the person making the statement to prove that the statement was obtained by threat, duress, or promise like any other person. [BFlagwan Singh v. State of Punjab, AIR 1952 SC 214.]
c) Any retracted confessional statement is inadmissible in evidence u/ s.24 of the Indian Evidence Act. The relevant text of Section is reproduced hereafter for ready reference:
“24 Confession caused by inducement, threat or promise, when irrelevant in criminal proceeding. A confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the Court to have been caused by any inducement, threat or promise, having reference to the charge against the accused person, proceeding from a person in authority and sufficient, in the opinion of the Court, to give the accused person grounds, which would appear to him reasonable for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceeding against him.”
d) The Supreme Court has laid down certain general rules about the nature of corroboration needed before accomplice evidence may be accepted. In this regard, reference can be made to Rameshwar v. State of Rajasthan, 1952 SCR 377.
e) It is well-settled law that confessional statement, when retracted at the first available opportunity, leads to the conclusion that it was not true and voluntary. [Shantilal Soni v. CC&CE, (1995) 78 ELT 151 (Delhi – Tribunal)]
f) When a confessional statement was retracted within seven days and the same was the sole basis of the Department’s case, the statement could not be called as having voluntary nature. [Bhagwandas Harjpal v. CC, (1995) 78 ELT 80 (Cal. Trib.)].
g) The fact that retraction was addressed to the same officer who recorded the statement, is no ground to reject the retraction. [Prempreet Textile Industries Ltd. v. CCE, (2001) 47 RLT 746 (T)]
h) The confessional statement retracted the next day cannot be the positive evidence in favour of the Department. [Rahat Hussain v. CC, Prev, (2001) 46 RLT 466 (T)]
i) Retracted confessional statement is not to be relied upon without independent and full corroboration. [State of Maharashtra v. Sayed Mohamed Mashim At Musavi, (1991) 51 ELT 41 (Born.)]
j) Confession is not important if retracted immediately. Retraction affects voluntary nature and truthfulness of confession and is to be considered while deciding a case. [Kali Charan Basant Lal v. CCE, (1989) 41 ELT 162 (Del. – Trib.)]
k) Written statement retraction communicated after five days was held as not very late. [Premier Soaps Detergents v. CCE, (1989) 40 ELT 197 (Del. – Trib.)]
l) When the statements (which are subsequently retracted) are inconsistent with the documentary evidence, the documentary evidence is to be preferred. [Philip Fernandez v. CC, (2002) 146 ELT 180 (Mum. – Trib.)]
m) In Sevantilat Karsondas Modi v. State of Maharashtra, (1999) 109 ELT 41 (SC), the confession consisted of a plea as the result of an assault on him by the Customs Officers, which had been denied by the officers; but because of the circumstances under which the confession was taken, it was held that the confession was hit by S. 24 of the Evidence Act and it was unsafe to treat the confession as voluntary and trustworthy.
6. Precautions required while making a statement:
Statements made before the CEO, in pursuance of summons proceedings, can be used as evidence in subsequent proceedings. Such statements could be valid even if retracted subsequently.
Hence, proper precautions should be taken by person making a statement, as to factual accuracy of information provided and correct legal position on questions asked, which have direct bearing on tax and related liabilities. It would be advisable to seek advice from consultants prior to making such statements by tactfully seeking sufficient time after ascertaining major issues involved in the matter on which specific statement is being sought.
7. Board instructions on issue of summons:
Based on practical experience, it is found that sumomons proceedings are often used as a means by the CEOs to cause undue harassment to the assessees. In this regard, the Ministry of Finance has issued important instructions (F No. 137/39 /2007-CX-4 dated 26-2-2007). Relevant text of the instructions is reproduced hereafter for ready reference:
1. It has come to the notice of the Board that on many occasions, merely for obtaining information or documents pertaining to Service Tax cases/matters, officers of field formations or intelligence agencies resort to issuance of sum-mons (U/s.14 of the Central Excise Act, as is made applicable in Service Tax cases u/s.83 of the Finance Act, 1994) to either Service Tax payers or to persons who are not registered with the Department. From the nature of information/ documents called for, it is clear that many times such information/ documents can easily be obtained by making a telephonic request or writing a simple letter to the person concerned. Instead, summons are issued in a routine manner, under the signature of super intendent or the senior intelligence officers (SIOs). The harsh and legal language of the summons not only causes unnecessary mental stress and embarrassment and instills fear ift the minds of the receiver, but may also become a source of harassment or even unethical practices. The Board has taken a serious note of this practice.
2. The undersigned is, therefore, directed to communicate the following directions of the Board for compliance, :
a) For calling for information/documents, normally the mode of communication should be either in the form of a telephone call or by way of sending a simple letter;
b) Issuance of summons should be resorted to, only when the above-mentioned modes of communications are found to be ineffective or are likely to jeopardise Revenue interest or when it is essential to ensure personal presence of the person concerned to tender evidence or record statement in connection with a Service Tax evasion case;
c) In cases mentioned under (b) above, the summons should be issued after obtaining prior written permission from an officer not below the rank of Deputy Commissioner with reasons for issuance of summons to be recorded in writing;
d) In case, for unavoidable operational reasons it is not possible to obtain such prior written permission, oral! telephonic permission from such officer must be obtained and the same should be reduced to writing and intimated to the officer according such permission at the earliest opportunity;
e) In all cases, where summons are issued, the officer who summons must submit a report on proceeding that took place during the presence of the taxpayer/person summoned, and the officer authorising issuance of summons must satisfy himself that no harassment has been caused during the visit of the person summoned to the office.
The above are self-explanatory.
