Excise statements and confessions need strict admissibility safeguards; unauthorised storage alone did not prove duty evasion.

Statements recorded by excise officers from living witnesses were not substantive evidence because the statutory conditions for admissibility were not met, and confessional statements recorded without warning, voluntariness, and procedural safeguards were inadmissible against the maker and co-accused. The prosecution also failed to prove clandestine manufacture and removal of cigarettes, as suspicion and incomplete records were insufficient to establish duty evasion. Keeping cigarettes in an unauthorised godown did not by itself amount to evasion or an attempt to evade duty absent proof of removal at the point when duty became payable, and the conspiracy allegation failed for want of independent evidence.

---

---

Issues: (i) Whether statements recorded by Central Excise Officers from living witnesses could be treated as substantive evidence in view of the statutory scheme governing relevancy of such statements. (ii) Whether confessional statements recorded by Central Excise Officers from persons later arraigned as accused were admissible despite absence of the caution and safeguards associated with confessions under criminal procedure. (iii) Whether the prosecution established clandestine manufacture and removal of cigarettes so as to prove evasion of excise duty on the second and third charges. (iv) Whether keeping cigarettes in an unauthorised godown constituted evasion of duty or even an attempt to evade duty, and whether the conspiracy charge survived independently.

Issue (i): Whether statements recorded by Central Excise Officers from living witnesses could be treated as substantive evidence in view of the statutory scheme governing relevancy of such statements.

Analysis: Statements made before excise officers during enquiry are not automatically substantive evidence in a criminal prosecution. Their relevancy depends on the statutory conditions governing admission of such statements, including the situation where the maker is unavailable or where the court considers their admission necessary in the interests of justice. Where the makers are alive and available for examination, the earlier statements cannot be received as substantive proof merely because they were recorded during departmental enquiry.

Conclusion: The statements of living witnesses were rightly held inadmissible as substantive evidence.

Issue (ii): Whether confessional statements recorded by Central Excise Officers from persons later arraigned as accused were admissible despite absence of the caution and safeguards associated with confessions under criminal procedure.

Analysis: A confession recorded by an authority not empowered to follow the protective procedure for recording confessions must satisfy the basic safeguards of voluntariness and warning to the maker that the statement may be used against him. Mere statutory insistence that the maker tell the truth does not dispense with the requirement that the person be informed that he is not bound to confess and that the statement may be used in evidence. Where such warning is not administered, the statement fails the mandatory test of admissibility. A retracted statement recorded without those safeguards cannot be used against the maker or co-accused.

Conclusion: The confessional statements were inadmissible in evidence.

Issue (iii): Whether the prosecution established clandestine manufacture and removal of cigarettes so as to prove evasion of excise duty on the second and third charges.

Analysis: The prosecution bore the burden of proving that unaccounted tobacco was actually used for manufacture of unaccounted cigarettes and that goods were removed without payment of duty. Mere suspicion, partial reconciliation material, or incomplete production records were insufficient, particularly when the factory remained under excise supervision and the supporting documents necessary to verify the alleged excess production were not proved satisfactorily. On the third charge, the dispute about deductibility of post-manufacturing expenses depended on pending adjudication of the duty liability. Until final assessment of the duty position, it could not confidently be held that the accused had evaded payment of duty.

Conclusion: The prosecution failed to establish the second charge, and the third charge was premature.

Issue (iv): Whether keeping cigarettes in an unauthorised godown constituted evasion of duty or even an attempt to evade duty, and whether the conspiracy charge survived independently.

Analysis: Duty becomes exigible when excisable goods are removed from the factory gate or from the approved storage contemplated by the rules. Mere storage in an unauthorised godown, without proof of removal at the stage when duty becomes payable, does not itself amount to evasion. At the highest, such conduct may indicate a regulatory infraction or preparation, but not the completed offence or an attempt to evade duty. The conspiracy charge also failed because, once the excise statements were excluded, there was no satisfactory independent evidence of an agreement to evade duty.

Conclusion: The fourth charge and the conspiracy charge were not proved.

Final Conclusion: The acquittal stood undisturbed, leave to appeal was refused, and the challenge to the acquittal did not succeed.

Ratio Decidendi: Statements recorded by excise officers from available witnesses are not substantive evidence without satisfying the statutory conditions for admissibility, and confessional statements recorded by such officers are inadmissible unless the maker is warned and the confession is shown to be voluntary in accordance with mandatory criminal procedural safeguards.

---