Holding

A statement recorded under Section 108 of the Customs Act is admissible in evidence; the warning mandated by Section 164 of the CrPC is not required, but the statement must satisfy the voluntariness test of Section 24 of the Evidence Act.

Summary

The Assistant Collector of Central Excise appealed after a Special Judge acquitted Duncan Agro Industries Ltd. and its directors of offences under the Central Excise Act and IPC 120‑B. The acquittal was challenged on the ground that confessional statements recorded by customs officers under Section 108 of the Customs Act were inadmissible because the officers had not administered the warning required by Section 164(2) of the CrPC. The Single Judge of the Andhra Pradesh High Court refused leave to appeal, following a Division Bench decision that such warning was mandatory. The Supreme Court held that Section 108 statements are admissible and that the procedural safeguards of Section 164 apply only to magistrates, not to gazetted customs officers. However, the statements must be examined for voluntariness under Section 24 of the Evidence Act. Consequently, the Court granted leave to appeal, set aside the High Court’s order, and directed the High Court to hear the appeal expeditiously.

Issues considered

Whether a statement recorded by a customs officer under Section 108 of the Customs Act is inadmissible unless the warning under Section 164(2) of the CrPC is administered.
Whether Section 164 of the CrPC applies to statements taken by customs officers.
Whether such statements are subject to the voluntariness test under Section 24 of the Evidence Act.
Whether leave to appeal should be granted in view of the erroneous interpretation of law by the High Court.

Legislation cited

Central Excises and Salt Act, 1944s. 9(1)
Code of Criminal Procedure, 1973s. 164
Customs Act, 1962s. 108
Indian Evidence Act, 1872s. 24, s. 25
Indian Penal Code, 1860s. 120-B

Subjects

Customs ActSection 108Section 164 CrPCadmissibility of statementsEvidence Act Section 24confessional statementsexcise duty evasionleave to appeal

Judgment

A THE ASSISTANT COLLECTOR OF CENTRAL EXCISE,
RAJAMUNDRY
v.
DUNCAN AGRO INDUSTRIES LTD. AND ORS.

AUGUST 7, 2000
B
[K.T. THOMAS AND R.P. SETHI, JJ.]

Customs Act, 1962 : Section 108.

Code of Criminal Procedure, 1973 : Section 164
c
Central Excises and Salt Act, 1944 : Section 9(1)

Evidence Act, 1872 : Sections 24 and 25.

Excise officer-Statements recorded by-Admissibility of
D
Cigarette companies-Directors-Prosecution under section 9( 1) of
Central Excise Act and Section 120-B Indian Penal Code-Statements of -
accused recorded by excise officer-Accused not administered warning as
required under section 164(2) Criminal Procedure Code-Held, such statements
are admissible in evidence-However court should examine whether inculpatory
E statements were voluntary or were vitiated on account of the provisions
contained in section 24 of the Evidence Act.

Certain cigarette companies and their Directors, respondents herein,
were prosecuted under section 9(1) of the Central Excises and Salt Act,
1944 and section 120-B of the Indian Penal Code, 1860. The case against
F
them was that pursuant to a criminal conspiracy hatched and perpetrated
by them a very huge amount of central excise duty was evaded fraudulently.
The Trial Judge acquitted all of them. Revenue preferred appeal and moved
for leave before the Andhra Pradesh High Court. Single Judge of the High
Court declined to grant leave to appeal. Relying on an earlier decision *
G rendered by a Division Bench, the Single Judge held that since the excise
officers who have recorded the confessional statements of the accused have
not administered the warning to the accused as required under section 164(2)
of the Code of Criminal Procedure, those statements were inadmissible
against the makers thereof or against the co-accused. Consequently all the
H confessional statements were excluded from consideration and the remaining
162
ASSISTANT COLLECTOR OF CENTRAL EXCISE v. DUNCAN AGRO INDUSTRIES LTD. 163
evidence was found to be insufficient to establish the guilt of the accused A
persons. Against the order of the Single Judge Revenue preferred appeals
before this Court.

Allowing the appeals, this Court

HELD : 1. A statement recorded by customs officers under section B
108 of the Cus. ns Act is admissible in evidence. The court has to test whether
the inculpating portions were made voluntarily or whether it is vitiated on
account of any of the premises envisaged in section 24 of the Evidence Act.
Such an exercise can be made only after the appeal is regularised by granting
'leave to appeal. Since leave was declined on a wrong interpretation of law,
the impugned order calls for interference. Consequently, leave applied for c
will stand granted. Resultantly, the appeal filed in the High Court will stand
regularised. The High Court should dispose of the appeal as expeditiously
as possible in accordance with law. [169-G-H; 170-A-B]

2. Section 164 of the Code of Criminal Procedure empowers a judicial
D
Magistrate to record any confession or statement made to him during the
course of an investigation. The power conferred by said provision could be
exercised only by a judicial Magistrate. Even a police officer on whom power
of a Magistrate has been conferred is forbidden from recording a confession.
Sub-sections (2) and (4) deal with procedure which such Magistrate has to
follow while recording inculpatory statements made by persons.[167·G·Hl E
3. Section 108 of the Customs Act does not contemplate any Magisterial
intervention. The power under the said section is intended to be exercised
by a gazetted officer of the Customs Department. Sub-section (3) enjoins on
the person summoned by the officer to state the truth upon any subject
respecting which he is examined. He is not excused from speaking the truth F
on the premise that such statement could be used against him. The said
requirement is included in the provision for the purpose of enabling the
gazetted officer to elicit the truth from the person interrogated. There is no
involvement of the Magistrate at that stage. The entire idea behind the
provisions is that the gazetted officer questioning the person must gather all G
the truth concerning the episode. If the statement so extracted is untrue its
utility for the officer gets lost. [168-A·C]

4. A confession made to a police officer can be recorded by him without
any of the constraints incorporated under section 164 of the Code. But the
safety of the confessor who makes such confession to the police officer is H
164 SUPREME COURT REPORTS [2000) SUPP. 2 S.C.R.
A that the same is forbidden from use in evidence. The ban contained in section
25 of the Evidence Act is an absolute ban. But there is no ban in regard to
the confession made to any person other than a police officer, except when
such confession was made while he is in police custody. The inculpatory
statement made by any person under section 108 is to non-police personnel
and hence it has no tinge of inadmissibility in evidence if it was made when
B
the person concerned was not then in police custody. Nonetheless the caution
contained in law is that such a statement should be scrutinised by the court
in the same manner as confession made by an accused person to any non-
police personnel. The court has to be satisfied in such cases, that anr
inculpatory statement made by an accused person to a gazetted officer must
c also pass the tests prescribed in section 24 of the Evidence Act. If such a
statement is impaired by any of the vitiating premises enumerated in section
24 that statement becomes useless in any criminal proceeding. [168-D-F]

N.S.R. Krishna Prasad v. Collector of Customs, (1992) 57 ELT 568 AP,
D disapproved.

Haroon Haji Abdulla v. State of Maharashtra, AIR (1968) SC 832 =
[1968] 2 SCR 641; Ramesh Chandra Mehta v. State of West Bengal, AIR
=
(1970) SC 940 [1969] 2 SCR 461; Percy Rustomji Basta v. The State of
Maharashtra, AIR (1971) SC 1087 = [1971] 1 SCC 847; Harbans Singh
E Sardar Lenasingh and Anr. v. The State of Maharashtra, AIR (1972) SC 1224;
Veera Ibrahim v. The State of Maharashtra, AIR (1976) SC 1167 = [1976]
3 SCR 672 and Poolpandi Etc. Etc. v. Superintendent, Central Excise and
Ors., AIR (1992) SC 1795 = [1992] 3 SCC 259; relied on.

F CRIMINAL APPELLATE JURISDICTION : Criminal Appeal Nos.
628-629 of 2000.

From the Judgment and Order dated 18.9.91 of the Andhra Pradesh High
Court in Crl.A. No. 161/91 and Cr!. M.P. No. 399 of 1991.

G U.R. Lalit, A. Subba Rao, Ms. Rekha Pandey, K.K. Dhawan, P.
Parmeswaran, C.S. Srinivasa Rao, U.A. Rana, R.V. Gagrat, Amit Desai, Rajesh
Nair, Ms. Gauri Rasgotra, Suman J. Khaitan and Ranjan Mukherjee for the
appearing parties.

The Judgment of the Court was delivered by
H
ASSISTANT COLLECTOR OF CENTRAL EXCISE'· DUNCAN AGRO INDUSTRIES LTD. [THOMAS, l.) 165
THOMAS, J. Leave granted. A
Is it necessary to comply with the precautions envisaged in Section 164
of the Code of Criminal Procedure (for short 'the Code') when Customs
Officers recorded statement under Section 108 of the Customs Act? A Division
Bench of the Andhra Pradesh High Court held that it is necessary if the
statements were to be used against the maker thereof and that view was B
followed by a Single Judge of the same High Court in the present case which
resulted in refusal of leave to appeal when an order of acquittal was challenged
in the High Court. This appeal, by special leave, is against the said order of
refusal passed by the Single Judge.

Certain companies which engaged in manufacturing cigarettes, along c
with some of their Directors were prosecuted before the Court of a Special
Judge (Economic Offences) at Hyderabad for offences under different clauses
of Section 9( 1) of the Central Excise Act and under Section 120B of the Indian
Penal Code. The trial judge after holding inquiry framed charges against the
respondents for the aforesaid offences and proceeded with the trial but in the D
end he acquitted all of them. The gist of the allegations against them is that
the respondent company, which engaged in the manufacture of cigarettes
during the period between 1.9.1981and30.11.1985, removed large quantities
of cigarettes from their factories at Biccavolu without accounting them and
without paying excise duty. The further allegation is that large quantities of
cigarettes were concealed in their godowns without accounting them and in E
the above process a very huge amount of central excise duty was evaded
fraudulently. Such acts were done by the respondent pursuant to the criminal
conspiracy hatched and perpetrated by them.

The Special Judge, after a detailed trial, found the respondent not guilty
and acquitted him. The appellant filed an appeal before the High Court of
F
Andhra Pradesh and moved for leave to appeal. Learned Single Judge who
heard the petition for leave felt that he is bound by the earlier decision rendered
by a Division Bench of the same High Court in N.S.R. Krishna Prasad v.
ro/lector of Customs, [ 1992] 57 ELT 568 AP. According to the said decision,
any inculpatory statement recorded by the authorities under Section 108 of the G
Cu~t:)!TlS Act without following and complying with the constraints prescribed
in Section 164 of the Code would be inadmissible evidence in a trial against
the maker of that statement. What the learned Single Judge has stated on that
score is the following:

"Since the Excise Officers who have recorded the statements from the H
166 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.

A accused in this case have not administered the warning to the accused
as required under section 164 sub- section (2) of the Code of Criminal
Procedure, non-compliance of the mandatory provision contained in
Section 164 sub-section (2) of the Code of Criminal Procedure
renders the statements inadmissible in evidence as held by the
Division Bench. Therefore, those statement;s are inadmissible against
B
the makers thereof or against the co-accused."

The Division Bench of the High Court in N.S.R. Krishna Prasad's case
(supra), whose decision the learned Single Judge followed, has held thus:

"It, therefore, follows that unless the empowered authority under
c Section 108 of the Customs Act administers the caution or the
warning embodied under Section 164(2) Cr.P.C. before recording a
statement of confessional nature, from the person summoned, the
statement so recorded will be inadmissible in evidence for any
purpose."
D On the above premise learned Single Judge excluded all the confessional
statements from consideration. The remaining evidence was found to be
insufficient to establish the guilt of the respondent. Learned Single Judge
declined to grant leave to appeal by observing: "As the prosecution has failed
to make out a case to grant leave to file appeal against the order of acquittal
E passed by the trial court, the petition for leave to file the appeal is dismissed
and consequently the appeal is also dismissed." If the view adopted by the
learned Single Judge regarding the application of Section 164 of the Code to
Section 108 of the Customs Act is erroneous, the High Court should have
granted leave to appeal.

F Incidentally, we may point out that the Union of India had challenged
the decision in N.S.R. Krishna Prasad (supra) before this Court. A two Judge
Bench of this Court has set aside die said decision on the premise that the
challenge made before the High Court in that case was not sustainable in a writ
petition. However, this Court did not express any opinion on the merits of the
case and the question of law was left open. So in this appeal by special leave,
G we are only disposed to consider the sustainability of the legal position
adumbrated by the Division Bench in N.S.R. Krishna Prasad regarding.

Section 108 of the Customs Act reads thus:

"108. Power to summon persons to give evidence and produce
H documents.- (I) Any gazetted officer of custom shall have power to
l
ASSISTANT COLLECTOR OF CENTRAL EXCISE>- DUNCAN AGRO INDUSTRIES LTD. (THOMAS, I.( 167
summon any person whose attendance he considers necessary either A
to give evidence or to produce a document or any other thing in any
inquiry which such officer is making in connection with the smuggling
of any goods.

(2) A summons to produce documents or other things may be for the
production of certain specified documents or things or for the B
production of all documents or things of a certain description in the
possession or under control of the person summoned.

(3) 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, C
respecting which they are examined or make statements and produce
such documents and other things as may be required:

Provided that the exemption under Section 132 of the Code of Civil
procedure, 1908(5 of 1908), shall be applicable to any requisition for
attendance under this section. D

(4) Every such inquiry aforesaid shall be deemed to be a judicial
proceeding within the meaning of section 193 and section 228 of the
Indian Penal Code (45 of 1860)."

It must be remembered that Section 171A of the Sea Customs Act, 1878 E
(which enactment has been repealed by the Sea Customs Act) corresponds to
Section 108 of the Customs Act. In this context we may point out that Section
14 of the Central Excise Act is practically the same as Section 108 of the
Customs Act. So the decision rendered by this Court under the other
corresponding provisions will be of much advantage to discern how the scope
F
of the provisions has been understood by this Court earlier.

Section 164 of the Code deals with "recording of confession and
statements''. The provision empowers a j4dicial magistrate to record any
confession or statements made to him during the course of an investigation
··under this Chapter or under any other law for the time being in force or at G
any time afterwards before the commencement of the inquiry or trial." It must
be pointed out that the power conferred by the said provision could be
exercised only by a judicial magistrate. Even a police officer on whom power
of a magistrate has been conferred is forbidden from recording a confession.
Sub-sections (2) and (4) deal with procedure which such magistrate has to
follow while recording inculpatory statements made by persons. H
168 SUPREME COURT REPORTS (2000] SUPP. 2 S.C.R.
A Section 108 of the Customs Act does not contemplate any magisterial
intervention. The power under the said Section is intended to be exercised by
a gazetted officer of the Customs Department. Sub-section (3) enjoins on the
person summoned by the officer to state the truth upon any subject respecting
which he is examined. He is not excused from speaking the truth on the
premise that such statement could be used against him. The said requirement
B
is included in the provision for the purpose of enabling the gazetted officer
to elicit the truth from the person interrogated. There is no involvement of the
magistrate at that stage. The entire idea behind the provision is that the gazetted
officer questioning the person must gather all the truth concerning the episode.
If the statement so extracted is untrue its utility for the officer gets lost.
c
In this context we brar in mind that a confession made to a police officer
can be recorded by him without any of the constraints incorporated under
Section 164 of the Code. But the safety of the confessor who makes such
confession to the police officer is that the same is forbidden from use in
evidence. The ban contained in Section 25 of the Evidence Act is an absolute
D ban. But it must be re'!Ilembered that there is no ban in regard to the confession
made to any person other than a police officer, except when such confession
was made while he is in police custody. The inculpatory statement made by
any person under Section 108 is to non-police personnel and hence it has no
tinge of inadmissibility in evidence if it was made when the person concerned
E was not then in police custody. Nonetheless the caution contained in law is that
such a statement should be scrutinised by the court in the same manner as
confession made by an accused person to any non-police personnel. The court
has to be satisfied in such cases, that any inculpatory statement made by an
accused person to a gazetted officer must also pass the tests prescribed in
Section 24 of the Evidence Act. If such a statement is impaired by any of the
F
vitiating premises enumerated in Section 24 that statement becomes useless in
any criminal proceedings.

As early as in 1968 this Court had considered the scope of the statement
made under Section 171 A of the Sea Customs Act in Haroon Haji Abdulla v.
G State of Maharashtra, AIR ( 1968) SC 832 = [ 1968] 2 SCR 641. Hidayatullah,
J. (as he then was) made the following observations:

"These statements are not confessions recorded by a Magistrate under
Section 164 of the Code of Criminal
I
Procedure but are statements made in
answer to a notice under Sec.171-A of the Sea Customs Act. As they are not
H made subject to the safeguards under which confessions are recorded by
ASSISTANT COLLECTOR OF CENTRAL EXCISE'· DUNCAN AGRO INDUSTRIES LTD. [THOMAS, J.] 169
Magistrates they must be specially scrutinised to finding out if they were made A
under threat or promise from some one in authority. if after such scrutiny they
are considered to be voluntary, they may be received against the maker and
in the same way as confessions are received, also against a co-accused jointly
tried with him."

In Ramesh Chandra Mehta v. State l>f West Bengal, AIR (1970) SC 940 B
= [ 1969] 2 SCR 461, it was held that "when an inquiry is being conducted
\ under Section 108 of the Customs Act, and a statement is given by a person

J against whom the inquiry is being held it is not a statement made by a person
accused of an offence and the person who gives the statement does not stand
in the character of an accused person." This was followed by this Court in C
Percy Rustomji Basta v. The Stale l>f Maharashtra, AIR (1971) SC 1087 =
(1971] 1 SCC 847. It was a case in which the appellant was convicted under
Section 135 of the Customs Act and 120-B of the IPC. The question which
this Court considered in that case was whether Section 24 of the Evidence Act
was a bar to the admissibility of a statement given by the accused of offences
under the Customs Act. This Court repelled the contention based on Section D
24 of the Evidence Act and the facts.

A three Judge Bench of this Court has again reiterated the same position
in Harbans Singh Sardar Lenasingh and Anr. v. The State l>f Maharashtra, AIR
(1972) SC 1224. It was again followed in Veera Ibrahim v. The State l>f
E
Maharashtra, AIR (1976) SC 1167 = (1976] 3 SCR 672. Another three Judge
Bench in Poolpandi etc. etc. v. Superintendent, Central Excise and Ors., AIR
(1992) SC 1795 = [1992] 3 SCC 259, took the same view.

It is unfortunate that the Division Bench of the Andhra Pradesh High
Court has not addressed itself of the above well settled legal position when F
learned Judges of the Bench (Ramanujula Naidu and Panduranga Rao, JJ) held
that the statement recorded under Section 108 of the Customs Act without
complying with Section 164 of the Code "will be inadmissible in evidence for
any purpose."

We hold that a statement recorded by customs officers under Section 108 G
of the Customs Act is admissible in evidence. The court has to test whether
the inculpating portions were made voluntarily or whether it is vitiated on
account of any of the premises envisaged in Section 24 of the Evidence Act.
Such an exercise can be made only after the appeal is regularised by granting
leave to appeal. Since leave was declined on a wrong interpretation of law we H
170 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A have to interfere with the impugned order.

We, therefore, allow these appeals and set aside the impugned order.
Leave applied for will stand granted. Resultantly, the appeal filed in the High
Court will stand regularised. Now the High Court is to dispose of the appeal
i1i dCcordance with law. As this is an old matter we direct the Registrar of the
B Hi);n Court of Andhra Pradesh to include the appeal in the hearing list, as
expeditiously as possible.

Parties are directed to appear before the High Court on 4-9-2000 and
no fresh notice need be issued for this purpose.

T.N.A. Appeals allowed.