PUBLIC PROSECUTOR A P Vs. ADABALA JAGANNADHAM

JUDGEMENT

(1.) The several respondents in these Criminal Appeals were convicted under section 9 (6) of the Central Excise Act by the learned and Additional Judicial First Class Magistrate of Kovvur and sentenced to suffer simple imprisonment for a period of two months each and further to pay a fine of Rs. 200 each. On appeals preferred by them, all of them were acquitted by the learned Additional Sessions Judge of West Godavary on the ground that the prosecutions were barred by Limitation having been instituted more than six months the period prescribed by section 40 (2) of the Central Excise Act. The State has preferred these appeals against the orders of acquittal.

(2.) Section 3 of the Central Excise Act empowers the levy and collection, in the prescribed manner, of duties of excise on all excisable goods other than salt at the rate mentioned in the First Schedule. Entry No. 4 of the First Schedule specifies the rate of duty on categories of unmanufactured and manufactured tobacco. Section 37 of the Act empowers the Central Government to make rules to carry into effect the purposes of the Act. Section 38 provides for the publication of all rules made under the Act in the official gazette and states that on such publication such rules shall have effect as if enacted in the Act. The Central Excise Rules of 1944, were duly made and published. Rules 19, 24, 25 and 29 prescribe when and how duty on unmanufactured goods is payable. The scheme of the rules is this : Duty becomes payable on unmanufactured goods when they are cured and are ready for sale or manufacture. The curer may sell the unmanufactured goods to a licensed wholesale dealer after paying duty or without paying duty. The licensed wholesale dealer, in turn, may sell the unmanufactured goods to another licensed wholesale dealer. If duty has already been paid by the curer, there is no question of paying duty again. If duty has not been paid by the curer, the first wholesale dealer may pay the duty and sell goods or he may sell the goods without paying the duty in which case the liability to pay duty will be passed on to the second wholesale dealer. This process may be repeated until the last wholesale dealer sells to the manufacturer or exports the unmanufactured goods, when the last wholesale dealer has to pay the duty. To prevent avoidance of duty rule 32 prohibits the transport of unmanufactured tobacco without a valid permit signed by an officer or a certificate in the proper form signed by the curer or the wholesale dealer to whose premises it is to be transported. Duty paid tobacco is however allowed to be transported from the premises of a wholesale dealer to the premises of another wholesale dealer under cover of a sale-note issued by the consignor. Rule 32 (2) makes punishable the making of false entries in a sale-note or a certificate and the transporting of tobacco without a valid permit certificate or sale-note. Section 9 (b) of the Central Excise Act prescribes that whoever evades the payment of any duty payable under the Act shall be punishable with imprisonment which may extend to six months or with fine upto Rs. 2,000 or with both. The gravaman of the charge against all the respondents, who are licensed wholesale dealers, was that they avoided payment of duty by transporting non-duty paid tobacco as if it was duty paid tobacco under cover of false sale-notes.

(3.) Now, section 40 (2) of the Central Excise Act, says :