2012 (3) TMI 452 - HC - Customs

Legal analysis: Ephedrine export violation, admissible statement, bail denial under NDPS Act

The court found that Ephedrine Hydrochloride is a controlled substance under the NDPS Act, and the petitioner violated regulations on its export. The ... Power to control and regulate controlled substances - Controlled substance - Export prohibition of controlled substances - Admissibility of statement recorded under Section 108 of the Customs Act - Bail barred by Section 37(1)(b) of the NDPS ActControlled substance - Export prohibition of controlled substances - Power to control and regulate controlled substances - Ephedrine Hydrochloride is a controlled substance and the Central Government's order under Section 9A prohibits export without compliance with regulatory requirements. - HELD THAT: - The Court found that Ephedrine Hydrochloride was declared a controlled substance by Notification No. SO1296(E) dated 28.12.1999 issued under clause (vii-a) (re-lettered as (vii-d)) of Section 2. Section 9A confers a general power on the Central Government to regulate or prohibit controlled substances; subsection (2) lists examples (such as inter-State export) without excluding export out of India, and therefore the Central Government's order issued under Section 9A (1993 Order) lawfully governs export. The 1993 Order requires maintenance of accounts (clause (3)), compliance with transport regulations (clause (4)) and labelling and documentary requirements for consignments for export (clause (6)). On the facts, the petitioner violated these requirements in relation to the seized consignment, and hence export of Ephedrine Hydrochloride without following the prescribed requirements was impermissible under the impugned order. [Paras 8, 9, 10, 11, 14]Ephedrine Hydrochloride is a controlled substance and the order under Section 9A prohibits its export except in compliance with the prescribed requirements; the petitioner violated those requirements.Admissibility of statement recorded under Section 108 of the Customs Act - The statement made by the petitioner under Section 108 of the Customs Act is usable in NDPS proceedings provided it is voluntary and not obtained by inducement, coercion, threat or promise. - HELD THAT: - The Court rejected the submission that statements under Section 108 could not be used in NDPS proceedings. It relied on authorities holding that the evidentiary value of statements recorded by customs or enforcement officers turns on voluntariness; such statements must be scrutinised for inducement, coercion, threat or promise. Mere retraction does not automatically render a statement involuntary; the maker alleging compulsion must establish it. On the facts the petitioner's statements were not retracted and were corroborated by other witnesses, making the question one for trial rather than a bar to using the statements in prosecution. [Paras 12, 13]The petitioner's statements under Section 108 Customs Act are admissible in the NDPS prosecution unless shown to be involuntary; on the material before the Court they cannot be excluded as a matter of law.Bail barred by Section 37(1)(b) of the NDPS Act - The petitioner is not entitled to bail because the offence under Section 25A attracts the prohibition on bail contained in Section 37(1)(b) of the NDPS Act. - HELD THAT: - Section 25A offences are punishable with rigorous imprisonment of up to ten years and fall within the scope of Section 37(1)(b), which restricts grant of bail notwithstanding the Code of Criminal Procedure. The Court concluded that, having regard to the nature of the offence, the statutory bar and the factual matrix (including the alleged concealment and recovery and non-compliance with the regulatory order), it could not be satisfied that there were reasonable grounds to believe the petitioner was not guilty or would not commit further offences if released. Consequently, discretionary bail could not be granted. [Paras 15, 16]Grant of bail is barred by Section 37(1)(b) of the NDPS Act; the petition for bail is dismissed.Final Conclusion: The High Court held that Ephedrine Hydrochloride is a controlled substance whose export is regulated and, in the present case, was exported in violation of the Central Government's order; the petitioner's statements under Section 108 Customs Act are admissible unless proved involuntary; and bail is barred under Section 37(1)(b) of the NDPS Act, accordingly the bail petition is dismissed. Issues Involved:1. Whether the export of Ephedrine Hydrochloride is controlled under the NDPS Act.2. Admissibility of the petitioner's statement recorded u/s 108 of the Customs Act in NDPS proceedings.3. Applicability of Section 37(1)(b) of the NDPS Act in granting bail.Summary:Issue 1: Export of Ephedrine HydrochlorideEphedrine Hydrochloride is a controlled substance as per Notification No. SO1296(E) dated 28.12.1999 issued by the Central Government u/s 2(vii-d) of the NDPS Act. The petitioner violated the 1993 Order issued u/s 9A of the NDPS Act, which regulates the export of controlled substances. The court clarified that Section 9(A)(1) empowers the Central Government to regulate or prohibit the production, manufacture, supply, and distribution of controlled substances, including their export out of India. The petitioner failed to comply with clauses (3), (4), and (6) of the 1993 Order, which mandates maintaining records, reporting losses, and labeling consignments for export.Issue 2: Admissibility of Statement u/s 108 of the Customs ActThe petitioner's statement recorded u/s 108 of the Customs Act is admissible in NDPS proceedings. The court rejected the petitioner's contention that such statements could not be used against him, citing precedents like K.T.M.S. Mohd. and Noor Aga, which emphasize the voluntary nature of statements made under the Customs Act. The court noted that the petitioner's statement was not retracted and thus holds evidentiary value. The case of Ajay Aggarwal, where bail was granted, was distinguished based on its unique facts, including no recovery from the accused and allegations of coercion.Issue 3: Applicability of Section 37(1)(b) of the NDPS ActThe court held that the petitioner is not entitled to bail under Section 37(1)(b) of the NDPS Act, which imposes stringent conditions for granting bail in NDPS cases. The court must be satisfied that there are reasonable grounds to believe the petitioner is not guilty and is unlikely to commit any offense while on bail. Given the facts, including the petitioner's involvement in another similar case, the court could not record such satisfaction. Therefore, the petition for bail was dismissed.