Shamshad Ali Khan vs The State

Sen, J.—These appeals are directed against an order of Sri H.N. Sen, Presidency Magistrate, Calcutta, convicting and sentencing the two Appellants Md. Salim and Shamshad Ali Khan u/s 46(a) of the Bengal Excise Act and sentencing each of them to suffer rigorous imprisonment for two months and to pay a fine of Rs, 1,000 in default to suffer rigorous imprisonment for three, months more; also convicting each of them u/s 46(a) of the Bengal Excise Act read with Section 109 of the Indian Penal Code and sentencing each of them to suffer rigorous imprisonment for two months more; and also convicting each of them u/s 120B of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act and sentencing each of them to suffer rigorous imprisonment for two months thereunder. There was an order that the substantive sentences of imprisonment would run concurrently.

The prosecution case was briefly as follows:

Spirituous medicines like spirit chloroform and tincture cardamom compound are manufactured by firms like the Bengal Chemical and Pharmaceutical Works and Smith Stanistreet and Company, Ltd. in bonded laboratory in charge of an excise officer who assesses the quantity of the spirit or alcohol in the spirituous medicines when they are issued and charges excise duty thereon. That system was described in the case by several witnesses like P.W. 10 Panchanan Eakshit and P.W. 15 Kanai Lal Pramanik. Prosecution witness 10; Panchanan Rakshit, a retired excise inspector, was posted as excj�e inspector in charge of the bonded laboratory the Bengal Chemical and Pharmaceutical Works, Ltd., in 1950. He stated that if spirituous medicine manufactured by the firm was to go out of the bonded laboratory it must go out under a pass issued by an excise inspector and on payment of the excise duty. If it was issued for consumption in West Bengal the duty payable was Rs. 40 per L.P. gallon. If, however, spirituous medicine was issued for export to Bihar, the duty payable was only Rs. 5 per L.P. gallon. This made a considerable difference in the retail price of the spirituous medicine in West Bengal and Bihar. According to P.W. 12 Pannalal Chatterjee, an assistant attached to the bonded laboratory of Smith Stanistreet, the price of spirit chloroform during 1949-50 was Rs. 13-8 per lb. for Bengal and only Rs. 3-12 per lb. for Bihar and the price of tincture cardamom compound or tincture cardco was Rs. 7-12 per lb. for Bengal and Rs. 3-6 per lb. for Bihar. This was because the West Bengal Government and the Bihar Government imposed widely different rates of excise duty on Indian-made spirit used for the manufacture of these spirituous medicines, and in view of the proviso to Rule 27 framed u/s 29 of the Bengal Excise Act when the spirituous medicines made in Bengal was exported to Bihar the excise duty was payable only at the Bihar rate. The prosecution case briefly is that the two Appellants Md. Salim and Shamshad Ali Khan took advantage of this wide difference in the price per lb. of spirit chloroform and tincture cardco, and they placed orders with the Bengal Chemical and Pharmaceutical Works, Ltd. and Smith Stanistreet for large quantities of spirit chloroform and tincture cardco for export to Bihar, the name of the consignee being given as Calcutta Medical Stores, Rainjanpur, Monghyr. The required quantity of spirituous medicines ordered for was booked accordingly by Smith Stanistreet or by the Bengal Chemical to Calcutta Medical Stores, Ramjanpur, Monghyr, the railway station for Ramjanpur being Purabsarai. At the Calcutta end Md. Salim used to place orders with the above manufacturers and used to pay the bills which included the Bihar rate or the lower rate of exercise duty. At the other end the accused Shamshad Ali Khan used to receive the consignments and after a day or two he used to rebook the same to M:d. Salim under the name of Z. Ansari and Md. Salim used to take delivery of the railway parcel in Calcutta and then used to distribute the mfedicines in the black market in Calcutta at a large profit. Prosecution witness 16 Bimal Chandra Choudhury, sub-inspector of excise, who was in charge of the bonded laboratory of the Bengal Chemical for sometime, received information in the beginning of November, 1950, that large quantities of spirit chloroform and tincture cardco were being despatched to Calcutta Medical Stores Ramjanpur, Monghyr. He then examined the books of the Bengal Chemical and Smith Stanistreet and found that for over two years between November, 1948 and November, 1950, a large quantity of these two spirituous medicines had been ordered by Md. Salim on behalf of the Calcutta Medical Stores, Ramjanpur, Monghyr, and had been despatched to them. He traced nearly 50 orders for quantities varying from 50 lbs. to over 100 lbs. at a time. From all the passes issued, he found that the duties had been charged at the rate of Rs. 5 per lb. gallon. Sub-inspector Bimal Choudhury decided investigate whether the large despatches of spirituous medicines to the Calcutta Medical Stores, Monghyr, were bona fide exports for Bihar. He obtained an order from the Collector of Calcutta and then ascertained when the next consignments of spirit chloroform or tincture cardco were to be despatched to the Calcutta Medical Store, Monghyr, by the Bengal Chemical and by Smith Stanistreet. He found out that about November, 8 or 10, 1950, one box containing 50 lb. bottles of spirit chloroform had been despatched by Smith Stanistreet to the Calcutta Medical Stores, Ramjanpur, and that about the same time 30 lb. bottles of spirit chloroform had been issued by the Bengal Chemical and also despatched to the Calcutta Medical Stores, Ramjanpur. Along with another excise sub-inspector, namely, P.W. 6 Syamadas Banerjee, he went to Purabsarai which is about 4 miles from Jamalpur, contacted the station master Nani Gopal Biswas and received certain information. Then he found two boxes, one sent by the Bengal Chemical and the other sent by Smith Stanistreet addressed to self. He and Syamadas Banerjee kept a watch for the person who would come to take delivery of the boxes which contained bottles of spirit chloroform. On November 18, 1950'', accused Shamshad Ali Khan came to take delivery of the boxes. He presented the railway receipt and signed in the Parcel Delivery Book and took delivery of the two boxes and took them to his house at Sonaikatha which is at some distance from the railway station. Syamadas Banerjee and Bimal Choudhury followed him and then kept watching for the re-booking till November 20, 1950. Bimal Choudhury then left for Calcutta leaving Syamadas Banerjee on the spot. Syamadas Banerjee found that re-booking was done by Shamshad Ali Khan on November 21, 1950 and that Shamshad Ali re-booked the same two packing boxes received from the Bengal Chemical and Smith Stanistreet to Z. Ansari in Calcutta. He took the railway receipt number from the station master and sent the information to Bimal Choudhury. Bimal Choudhury informed his superior officers and arranged to detain the man who would come to take delivery of the two boxes containing the spirituous medicines at Calcutta. On November 27, 1950. at about 4 p.m. the accused Md. Salim came to take delivery of the boxes from the Burra Bazar Booking and Parcels Office. He produced the railway receipt and signed the Parcel Delivery Book as Z. Ansari and then took delivery of the two boxes containing the spirituous medicines. Thereupon Md. Salim was detained by the Excise sub-inspector and the Superintendent of Excise was sent for. On his arrival the two boxes of the spirituous medicines were taken charge of by the excise officers, and opened, and found to contain the medicines described. Regular investigation was then taken up and ultimately charge sheet was submitted against the two accused Md. Salim and Shamshad Ali Khan for conspiracy to import and transport spirituous medicines unlawfully and without payment of the prescribed exercise duty. The charge of conspiracy namely that u/s 120B of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act related to the period from November, 1948 to December, 1950. The specific charge u/s 46(a) of the Bengal Excise Act was made in respect of the 80 bottles of spirit chloroform contained in the two boxes which were seized at Burra Bazar Booking Office on November 27, 1950 and of which the despatch to Bihar and re-despatch to Calcutta had been shadowed by the excise sub-inspector. The charge u/s 109 of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act also related to the specific consignment of 80 lbs. of spirit chloroform of which the movement had been shadowed by the Excise sub-inspectors, the charge being that the two accused aided and abetted each other in the commission of the offence set out in charge No. 2, i.e., the specific offence u/s 40(a) of the Bengal Excise Act relating to the 80 lbs. of spirit chloroform.

The accused both pleaded not guilty to the charges as framed and the main defence urged was a defence on various points of law. Thus it was urged before the learned Magistrate that Rule 27, which is a notification issued u/s 27 of the Bengal Excise Act imposing excise duty and fixing rates thereof, on various excisable articles, has no application to finished medicinal preparations like spirit chloroform and tincture cardco but applies only to the spirit intended for use in such preparations, that is, it applies to the raw spirit before the same has been compounded into finished medicinal preparations and that accordingly the accused were not liable to pay any duty for transporting and importing the bottles of spirit chloroform and tincture cardco from Bihar to Bengal. It was also urged that Rule 27 was ultra vires in so far as it applied to finished medicinal preparations. It was also urged that sanction of the State Government u/s 92 of the Bengal Excise Act and Section 196A of the Code of Criminal Procedure in respect of the charge of conspiracy was insufficient, as excise duty on medicinal preparation is now a Central subject under the Constitution of India. It was again urged that excise duties were payable by the manufacturers and not by a party who had taken delivery of the medicinal preparations from the manufacturer, and that if extra excise duty was payable for re-import of the bottles of spirit chloroform and tincture cardco to Bengal, the same ought to have been recovered from the Bengal Chemical and Smith Stan street. It was again trigged that the offence was not established because there was nothing to show that the duty was not intended to be paid after taking delivery in Calcutta or that the duty was not paid in Bihar. This argument was based on Section 28 of the Bengal Excise Act which provides that excise duty may be levied on an excisable article imported, by payment upon or before importation in West Bengal or in the province or territory from which the article is brought. It was finally urged that the spirit chloroform and the tincture cardco were meant for bona fide private consumption and therefore no duty was chargeable in view of the exemption u/s 19(2)(b) of the Bengal Excise Act.

The learned Magistrate considered all these points of law and he negative the contention of the accused on each of the points. He found that it had been sufficiently established that the two accused had in conspiracy with each other evaded the payment of the higher Bengal excise duty on the spirituous medicines concerned, namely, spirit chloroform and tincture cardco, and that they had for two years carried on such traffic by placing orders with Smith Stanistreet or the Bengal Chemical in Calcutta directing them to send the goods to a certain address in Bihar and then without unpacking the boxes in which the goods were despatched by re-booking them to Md. Salim in the name of Z. Ansari to Bengal. The learned Magistrate accordingly convicted and sentenced the accused as described above.

Criminal Appeal No. 275 has been preferred by Md. Salim and Criminal Appeal No. 274 by Shamshad Ali Khan. On behalf of Md. Salim the fact that he used to place the orders for spirit chloroform or tincture cardco with the Bengal Chemical and Smith Stanistreet in Calcutta directing the goods to be despatched to the Calcutta Medical Stores, Monghyr, and that the fact that he used to receive the re-booked goods in Calcutta, have not been denied; and on his behalf Mr. Roy has merely urged some of the points of law urged in the court below. Thus he has urged that the State Government has now no power to impose and realise export duty on medicinal preparations containing alcohol and so the prosecution of the Appellant under the Bengal Excise Act is incompetent, and that the sanction granted by the State Government for such prosecution is also incompetent. He has also urged that the excise duty is payable by the manufacturer and not by the purchaser of the finished medicinal products and that in any case, therefore, the Appellant is not liable. He has also urged that Rule 27 framed u/s 27 of the Bengal Excise Act has no application to a finished medicinal preparation in the hand of the purchaser. On behalf of Shamshad Ali Khan Mr. Ajit Kumar Dutt has urged that in respect of the charge of conspiracy there is not sufficient evidence to hold that Shamshad Ali Khan had any connection with the transactions extending over two years by way of export and re-import of the spirituous medicines into Bengal and that the prosecution succeeded in proving only that he was concerned in receiving and re-booking from Bihar the two consignments containing 50 bottles and 30, bottles respectively for which the specific charges u/s 46(a) of the ''Bengal Excise Act and Section 109 of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act were framed, and that apart from the question of law the Appellant Shamshad Ali Khan could not be found guilty of the charge u/s 120B of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act. Mr. Dutt has also adopted the points of law urged by Mr. Roy and he has urged some additional points of law, namely, that the prosecution is barred by limitation, that Section 9(1)(c) and Section 10(a) of the Bengal Excise Act are no longer applicable to medicinal preparations containing alcohol and that as regards Section 29(A) on which the prosecution has relied it cannot help the prosecution because no rule has been framed u/s 29(A). He has also urged in respect of the specific charges that no opportunity was given to the accused to pay the duty, because Md. Salim was arrested as soon as the two boxes were taken delivery of by him at Burra Bazar Booking and Parcels Office and that he might have paid the excise duty after he had taken delivery. He has also urged that the prosecution did not adduce evidence to show that no duty on the goods had been paid in Bihar. He has also urged that there was not sufficient evidence to show that the spirituous medicines concerned were compounded with Indian-made spirit and that if they were compounded with foreign spirit, Section 9(2) would apply and no excise duty would be payable because no excise duty is payable on foreign spirit on which customs duty has been charged.

It will be convenient to dispose of the question of fact first. As regards the two specific consignments for which the specific charges u/s 46(a) of the Bengal Excise Act, and u/s 46(a) of the Bengal Excise Act read with Section 109 of the Indian Penal Code were framed, the prosecution case has been proved by sufficient and uncontroverted evidence. There is the evidence of the two excise sub-inspectors, namely, P.W. 16 Bimal Choudhury and P.W. 6 Shyamdas Banerjee about the shadowing of the transport and re-booking of the two consignments of spirit chloform in November, 1950. There is evidence of P.W. 2 Anil Sekhar Banerjee, an assistant of Smith Stanistreet and P.W. 3 Bibhuti Bhusan Bose, an assistant of the Bengal Chemical, that Md. Salim placed orders for these bottles of spirit chloroform in November or end of October. The corresponding orders under the signature of Md. Salim were also proved, the order on Smith Stanistreet being Ex. 5(2), dated November 18, 1950 and the order on the Bengal Chemical being Ex. 10(17), dated September 30, 1950. Md. Salim when examined u/s 342 of the Code of Criminal Procedure admitted the signatures on the orders which were produced by the assistants of Smith Stanistreet and the Bengal Chemical respectively. That he was arrested on November 27, 1960 when taking delivery of the two parcels was sufficiently proved by the two sub-inspectors and the identity of the two parcels was also proved by the packing slips contained therein and identified by the assistants of the Packings Department of the Bengal Chemical and Smith Stanistreet who were also examined as witnesses, being P.W. 5 Santosh Kumar Bose and P.W. 4 Bidhu Bhusan Ghosal respectively. As to the connection of Shamshad Ali Khan with that transaction there was the evidence of the two sub-inspectors P.W. 6 Syamadas Banerjee and P.W. 16 Bimal Chandra Choudhury that it was Shamshad Ali Khan who took delivery of the boxes containing the bottles of spirit chloroform at Purabsarai on production of railway receipt and the evidence of P.W. 6 that Shamshad Ali Khan re-booked them under the name of Z. Ansari on November 21, 1950. There is also the evidence of the station master of Purabsarai, namely P.W. 7 Nani Gopal Biswas on the point. In fact the connection of Shamshad Ali Khan with the two consignments for which the specific charges were framed was not seriously challenged by Mr. Dutt appearing for Shamshad Ali Khan. He, however, challenged the connection of Shamshad Ali Khan with the other transactions spread over two years for which the charge of conspiracy was framed. These movements of the medicines to Purabsarai were not shadowed and naturally there was not such complete evidence in that case as in the case of the transaction just discussed. But there is sufficient evidence from which the connections of Shamshad Ali Khan with all the transactions spread over two years can reasonably be inferred. Thus there is the evidence of P.W. 2 Anil Sekhar Banerjee, an employee of Smith Stanistreet that Md. Salim during the two years placed 20 or 30 orders for large amounts of spirit chloroform or tincture cardco or both. He proved 29 orders, exs. 5, 5(1) to 5(28), signed by Md. Salim. P.W. 3 Bibhuti Bhusan Bose, an employee of the Bengal Chemical, similarly said that Md. Salim used to place orders and he proved 22 written orders spread over two years, exs. 10, 10(1) to 10(21). There were entries is the Delivery Books, proved by the station master of Purabsarai, P.W. 7 Nani Gopal Biswas, regarding the taking of delivery of goods at Purabsarai and the evidence of the assistant parcels clerk of Burra Bazar Booking and Parcels Office P.W. 8 Umapada Mukherjee regarding the delivery of the parcels at Burra Bazar Booking Office. Prosecution witness 8 said that at Burra Bazar Booking Office Md. Salim under the name of Z. Ansari used to take delivery of parcels; P.W. 7 Nani Gopal Biswas said that at Purabsarai it was the accused Shamshad Ali Khan who used to take delivery of the parcels. The evidence of P.W. 7 in this connection is as follows:

Parcels said to contain medicines were sent there by Bengal Chemical and Smith Stanistreet. We made entries in the Delivery Book regarding details of the consignment on reference to the Parcel Way Bill. Accused S. Khan (identifies) used to take delivery of the consignments,-he used to sign the Delivery Book in my presence on taking delivery-it is he who used to produce the R.R. (railway receipt) signed by him as S.A. Khan. One or two days after taking delivery, he used to book consignments which appeared to be similar to the consignments received from Bengal Chemical and Smith Stanistreet-this accused S. Khan used to produce the forwarding notes, mentioning Z. Ansari as consignor and ''self as consignee.

The relevant entries in the Delivery Book being exs. 15, 16, 17 and 18 series were proved by this witness. The accused Shamshad Ali Khan when questioned about the signatures in these Delivery Books did not commit himself, saying only that he could not say anything. But apart from the evidence of the station master, there is the evidence of P.W. 9 Sital Prasad Sarkar, handwriting expert, who compared the specimen writings of Shamshad Ali Khan with the disputed writings on the forwarding notes, Ex. 21 series, which were presented to the station master at Purabsarai by Shamshad Ali Khan when re-booking the boxes as Z. Ansari. The handwriting expert stated that the writings in the forwarding notes, exs. 21 series, were definitely in the handwriting of Shamshad Ali Khan whose specimen writings, exs. 3, 3(1) and 4, were given to the handwriting expert. Apart from the evidence of the station master and the handwriting expert there are also the letters, exs. 51 to 62, some written by Shamshad Ali Khan to Md. Salim and some by Md. Salim to Shamshad Ali Khan, which were seized in the respective houses of the two accused on search by the excise officers. These letters clearly show the connection of Shamshad Ali Khan with the transactions and they also reveal that the babus and the coolies at Purabsarai used to be paid tips or bakshish because naturally their suspicions were aroused by such constant re-bookings of medicinal parcels received from Calcutta. In the circumstances I must clearly hold on the facts that the connection of Shamshad Ali Khan with the conspiracy was established beyond reasonable doubt.

Next, it is necessary to discuss the questions of law raised by Mr. Roy and Mr. Dutt. The first argument is that the State Government has now no power to impose or realise excise duty on medicinal preparations containing alcohol and that, therefore, the present prosecution under the Bengal Excise Act is incompetent. This argument is based on the fact that while under the Government of India Act the Provincial Government had the power to impose excise duty on medicinal preparations containing alcohol, vide Entry 40 of List II, Seventh Schedule of the Government of India Act, 1935, under the Constitution of India it is the Central Government which has the power to impose excise duty on medicinal preparations containing alcohol, vide Entry 51 of List II of the Seventh Schedule of the Constitution which specifically excludes medicinal preparations containing alcohol from the said List and Item No. 84 of List I of the Seventh Schedule showing that the Central Government has the power to impose duty on excise on medicinal and toilet preparations containing alcohol. It is true that after the Constitution has come into force no fresh excise duty can be imposed on medicinal preparations containing alcohol by a State Government and this must be done by the Central Government, but as regards the excise duty, if any imposed before the Constitution came into force by the Provincial Government on such medicines, such duty is saved by Article 277 of the Constitution which provides that-

Any taxes, duties, cases or fees which, immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State * * * may, not withstanding that those taxes, duties, cases or fees are mentioned in the Union List, continue to be levied * * * until provision to the contrary is made by Parliament by law.

This provision is also repeated in Section 29(A) of the Bengal Excise Act as amended by the West Bengal Adaptation of Existing Laws Order- By this Adaptation Order Clause (c), namely, "any medicinal or toilet preparation containing alcohol" has been omitted from the definition of ''''excisable "article" as contained in Section 2(7) of the Bengal Excise Act, but in Section 29(A) Clause (c) to Sub-section (2) has been added-"(c) any duty on "medicinal or toilet preparations containing alcohol"-and Section 29(A) provides that until provision to the contrary is made by Parliament the State Government may continue to levy any duty mentioned in this section which it was levying immediately before the Constitution came into force. It is admitted that up to this time, the Central Government has made no law regarding the imposition of excise duty on medicinal preparations containing alcohol. Accordingly if any duty on medicinal preparations was lawfully livable by the West Bengal Government before the Constitution came into force, it will continue to be livable and any evasion of such duty will be punishable under the provisions of the Bengal Excise Act. Accordingly the first point urged by Mr. Roy must fail. Since prosecution under the Bengal Excise Act is competent, sanction by the State Governor under the provisions of Section 92 of the Bengal Excise Act and Section 196(A) of the Code of Criminal Procedure in respect of the charge of conspiracy must be held to be competent.

The second point urged by Mr. Roy is that the excise duty is payable by the manufacturer and not by the purchaser of the finished medicinal products. In support of the proposition that excise duty is payable by the manufacturer Mr. Roy has referred to the ruling of the Privy Council in the case, The Governor-General in Council v. The Province of Madras (1945) 49 C.W.N. 381. In that case the Privy Council was concerned with the validity of the Madras General Sales Tax Act which was challenged by the Government of India in so far as it imposed a tax on first sales in Madras of goods manufactured or produced in India. The question arose in connection with tobacco and the contention of the Government of India was that duty on tobacco and other goods was in the Central Legislative List, while the contention of the Government of Madras was that tax on the sale of goods was in the Provincial Legislative List. It was urged on behalf of the Government of India that a tax on the manufacturer or producer of goods on the first sale thereof was a duty of excise and therefore the Madras Sales Tax Act was invalid in so far as it sought to impose a duty on the manufacturer of tobacco products for the first sale thereof. The Privy Council held, however, that the sales tax was a tax on sales, whereas the excise duty was a tax on the goods and that, therefore, the two taxes are distinct and the Madras Sales Tax Act was not invalid. In this connection the Privy Council made the following observations which are relied upon by the learned advocate for the Appellants:

The term "duty of excise" is a somewhat flexible one: it may, no doubt, cover a tax on first and perhaps on other sales: it may in a proper context have an even wider meaning. An exhaustive discussion of this subject, from which their Lordships have obtained valuable assistance, is to be found in the judgment of the Federal Court In re: the Central Provinces and Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 (XIV of 1938) (1939) F.C.R. 18: (1938) 43 C.W.N. (F.R.) 1. Consistently with this decision, their Lordships are of opinion that a duty of excise is primarily a duty levied upon a manufacturer or producer in respect of the commodity manufactured or produced. It is a tax upon goods, not upon sales or the proceeds of sale of goods.

The Privy Council thus laid down that excise duty is primarily a duty levied upon the manufacturer or producer in respect of the commodity manufactured or produced. But the Privy Council also observed that the term "duty, of excise" was flexible and might cover other taxes. The provisions of the Bengal Excise Act and the legislative power under which the Act was framed have to be examined in order to decide whether the excise duty is payable only by the manufacturer like the Bengal Chemical and Smith Stanistreet or whether the excise duty may also be charged from the purchaser of the finished medicinal products when such purchaser re-imports medicinal products to West Bengal. It is difficult to understand how the manufacturer like the Bengal Chemical or Smith Stanistreet can be liable for subsequent dealing with the medicinal products by the purchaser. According to the law in force the manufacturers, namely, the Bengal Chemical and Smith Stanistreet, pay duty when the goods are issued for export to Bihar at the Bihar rate; and after the goods have passed into the possession of the purchaser, if the purchaser re-imports the same to West Bengal, the purchaser will be liable, if any duty is payable on such re-import. The question is whether any such duty is payable. This question involves examination of several sections of the Bengal Excise Act and, the rules made thereunder, viz., Sections 9(1)(c), 10(a), 27 and Rule 27 made u/s 27 of the Bengal Excise Act. Section 9(1)(c) lays down that no intoxicant shall be imported unless the duty, if any, payable under Chapter V has been paid, or a bond has been executed for the payment thereof. Section 10(a) provides that no intoxicant shall be exported or transported unless the duty, if any, payable under Chapter V has been paid or a bond has been executed for the payment thereof. Chapter V begins with Section 27 which is the section under which the State Government has the power to impose duty on import, export, transport and manufacture of any excisable article. Rule 27 is the notification made u/s 27 of the Bengal Excise Act. Rule 27 provides that foreign liquor specified in column I of the schedule appended to the rule shall be charged with duty at the rate specified in column III of the schedule when such liquors are imported. exported, transported or manufactured under any license granted in respect thereof. We are concerned with part I of the schedule, items 1 and 1A. According to the prosecution case duty is payable when spirituous medicines like spirit chloroform and tincture card. Company are imported from Bihar to Bengal, under item 1A of part I of the schedule to Rule 27. Item 1 reads Indian-made spirit used for and contained in medicinal preparations (other than that named in Item 1A of this part) or for scientific and industrial purposes unless totally exempted in any case.

Item 1A reads:

Indian-made spirit intended to be used in medicinal preparations which may be used for other than medicinal purposes.

In the explanation sub-joined to the schedule it is provided that for the purpose of this order, the preparations specified in a list annexed shall be deemed to be the medicinal preparations which may be used for other than medicinal purposes. In this list are included both spirit chloroform and tincture cardamom compound with which we are concerned. Accordingly spirit chloroform and tincture cardamom compound are such medicines as are referred to in item 1A of part I of the schedule to Rule 27. The question is whether the words "Indian-made spirit intended to be used in "medicinal preparations" are wide enough to include the finished medicinal preparations themselves. The learned Standing Counsel appearing for the State has urged that the medicinal preparations themselves when they contain Indian-made spirit are dutiable under this item and item 1 of part I of the schedule of Rule 27. This interpretation found favour with the possession of the purchaser, if the purchaser re-imports the same to West Bengal, the purchaser will be liable, if any duty is payable on such re-import. The question is whether any such duty is payable.

This question involves examination of several sections of the Bengal Excise Act and the rules made thereunder, viz., Sections 9(1)(c), 10(a), 27 and Rule 27 made u/s 27 of the Bengal Excise Act. Section 9(1)(c) lays down that no intoxicant shall be imported unless the duty, if any, payable under Chapter V has been paid, or a bond has been executed for the payment thereof. Section 10(a) provides that no intoxicant shall be exported or transported unless the duty, if any, payable under Chapter V has been paid or a bond has been executed for the payment thereof. Chapter V begins with Section 27 which is the section under which the State Government has the power to impose duty on import, export, transport and manufacture of any excisable article. Rule 27 is the notification made u/s 27 of the Bengal Excise Act. Rule 27 provides that foreign liquor specified in column I of the schedule appended to the rule shall be charged with duty at the rate specified in column III of the schedule when such liquors are imported exported, transported or manufactured under any license granted in respect thereof. We are concerned with part I of the schedule, items 1 and 1A. According to the prosecution case duty is payable when spirituous medicines like spirit chloroform and tincture card. Company are imported from Bihar to Bengal, under item 1A of part I of the schedule to Rule 27. Item 1 reads Indian-made spirit used for and contained in medicinal preparations (other than that named in Item 1A of this part) or for scientific and industrial purposes unless totally exempted in any case. Item 1 reads:

Indian-made spirit used for and contained in medicinal preparations (other than that named in Item 1A of this part) or for acientific and industrial purposes unless totally exempted in any case.

Item 1A reads:

Indian-made spirit intended to be used in medicinal preparations which may be used for other than medicinal purposes.

In the explanation sub-joined to the schedule it is provided that for the purpose of this order, the preparations specified in a list annexed shall be deemed to be the medicinal preparations which may be used for other than medicinal purposes. In this list are included both spirit chloroform and tincture cardamom compound with which we are concerned. Accordingly spirit chloroform and tincture cardamom compound are such medicines as are referred to in item 1A of part I of the schedule to Rule 27. The question is whether the words "Indian-made spirit intended to be used in "medicinal preparations" are wide enough to include the finished medicinal preparations themselves. The learned Standing Counsel appearing for the State has urged that the medicinal preparations themselves when they contain Indian-made spirit are dutiable under this item and item 1 of part I of the schedule of Rule 27. This interpretation found favour with would follow that the defence contention is correct, namely, that the purchaser of the finished medicinal products is not liable to pay any duty, the duty being payable by the manufacturers who use the Indian-made spirit for manufacturing the medicinal preparations.

Apart from the interpretation of the words used in item 1A of part 1 of the schedule, a consideration of the original provisions of the Bengal Excise Act, 1909, and the subsequent changes made therein according to the changes of the constitutional law would be relevant in this connection. The Bengal Excise Act, 1909, was originally enacted by the Bengal Government with the previous sanction of the Governor-General u/s 5 of the Indian Councils Act, 1892, and at that time the term "excisable "article" in Section 2(7) was defined as meaning any liquor or intoxicating drug as defined by or under this Act. "Liquor" was defined in Clause (14) of Section 2 as meaning liquid consisting of or containing alcohol and includes spirits of wine, spirit, wine, tari, pachwai, beer and any substance which the Local Government may, by notification, declare to be liquor for the purposes of this Act. "Intoxicating drug" was defined in Clause (13) of Section 2 as meaning ganja, bhang, etc., with which we are not concerned. The Government of India Act, 1919, for the first time defined the jurisdiction of Central and Provincial legislation. Under item 16 of Part II of the Devolution Rules made under the Government of India Act, 1919, the Provincial legislature was given the power to frame laws relating to excise, the item reading.

Excise, that is to say, the control of production, manufacture, possession, transport, purchase and sale of alcoholic liquor and intoxicating drugs, and the levying of excise duties and license fees on or in relation to such articles, out excluding, in the case of opium, control of cultivation, manufacture and sale for export.

Under this item, therefore, the articles on which excise duty might be imposed were alcoholic liquor and intoxicating drugs. After these Devolution Rules had been framed it was not considered necessary to amend the definition of "excisable article" as contained in Section 2(7) of the Bengal Excise Act, 1909, because ''''excisable article" was defined as meaning any liquor or ntoxicating drug; and the definition of "liquor" contained in 1(14), Section 2 makes it clear that "liquor" means alcoholic liquor. The Government of India Act, 1935, made some changes. Article 10 of List II of the Seventh Schedule relating to excise runs as follows:

Duties of excise on the following goods manufactured or produced in the Province and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India-

(a) alcoholic liquors for human consumption;

(b) opium, Indian hemp and other narcotic drugs and narcotics; non-narcotic drugs;

(c) medicinal and toilet preparations contaiiring alcohol or any substance included in sub-para. (6) of this entry.

For the first time medicinal and toilet preparations containing alcohol were specifically included as-an article on which duties of excise might be imposed and it might be imposed by the Provincial Government in view of the fact that the entry was contained in the Provincial Legislative List. After the Government of India Act, 1935, came into force there were changes made in the Bengal Excise Act, 1909, by the Government of India Adaptation of India Laws Order, 1937. By this Adaptation Order the definition of "excisable article'''' was altered to the following:

"Excisable article" means (a) any alcoholic liquor for human consumption (b) any intoxicating drug; and (c) ony medicinal or toilet preparation containing alcohol.

It has already been mentioned that the previous definition included liquor which means alcoholic liquor and intoxicating drug. Accordingly a new Clause 12(a) was added, introducing a new term "intoxicant" meaning any liquor on intoxicating drug, which was previously the definition of the term "excisable article". Thus the term intoxicant would appear to include alcoholic liquor and intoxicating drug but not medicinal or toilet preparation containing alcohol, because if the term "intoxicant" included the same, there would be no necessity for introducing a new term "intoxicant" as meaning liquor and intoxicating drug only. In Sections 9 and 10 the words "excisable article" were altered to "intoxicant" by the Adaptation Order. Section 27 is the section which confers the power on the Provincial Government to impose duty and fix rates of duty in this section the term "excisable article" is retained. Thus the Provincial Government could impose excise duty on all classes of excisable article including medicinal or toilet preparations, but Section 9, 10, 11 and 12 relating to import, export on transport apply to "intoxicant" only after the Adaptation Order of 1937. If "intoxicant" is understood to mean only alcohol liquor and intoxicating drug but not medicine containing alcohol, it would appear that Sections 9 and 12 relating to import export, or transport would not apply at all to medicin containing alcohol. In Section 90 of the Act it is provided that the Provincial Government may by notification exempt and "intoxicant" from all or any of the provisions of the Bengal Excise Act and a notification u/s 90, which is Rule 37 of the rules includes spirituous toilet preparations and spiritual medicinal preparations, vide item 6 of Rule 37. It has, therefore been urged that spirituous medicinal preparations on medicinal preparations containing alcohol are really "intoxicants" and therefore Sections 9 to 12 and other sections of the Bengal Excise Act referred to would also apply to medicinal preparations containing alcohol. It is true that this notification u/s 90 of the Bengal Excise Act might suggest that interpretation, but in view of the considerations stated before, namely, the definition of "excisable article" introduced after the Government of India Act, 1935, had come into force and the introduction of the new term "intoxicant" as meaning any liquor or intoxicating drug which was the previous definition of the term "excisable article", it would be logical to hold that the term "intoxicant" was not intended to include item (c) in the definition of "excisable article", namely, medicinal or toilet preparation containing alcohol. This interpretation fits in with the interpretation of the terms used in Items 1, and 1A of the schedule to Rule 27 made u/s 27. In the absence of a specific notification imposing excise duty on medicinal preparations containing alcohol it cannot be said that medicinal preparations per se have been made chargeable with an excise duty imposed u/s 27, because as already explained, Rule 27 made u/s 27 does not include medicinal preparations as distinct from the alcohol or spirit used or intended to be used for medicinal preparations. We must, therefore, uphold the contention of the Appellants that no excise duty on medicinal preparations themselves have been imposed as distinct from the spirit or alcohol intended to be used or actually used for the preparation of the medicines and excise duty on such spirit or alcohol is made payable by the manufacturers when the medicines are issued from the bonded laboratories of the manufacturers and there is nothing in the Bengal Excise Act, or the rules made thereunder, which shows that when a purchaser of spirituous medicines imports or exports such medicines from one State to another he is either required to obtain a license or to pay any duty This appears to be a lacuna in the rules made under the Bengal Excise Act, because it is undoubtedly wrong that a person should be able to avoid the higher rate of Bengal excise duty payable on the spirit used by the manufacturers of spirituous medicines by causing the medicines to be exported to a State like Bihar where a lower duty is payable and then bringing back the medicines to West Bengal. But when there is no specific provision of law, making such evasion of excise law punishable, it cannot be said that the accused are criminally liable. It is a lacuna in the law to which the authorities concerned may direct their attention. We have looked for a rule made under the Bengal Excise Act by which a license may be required and duty may be payable for import, export, or transport of medicinal preparations containing alcohol, as distinct from spirit or alcohol which come within the definition of the term "foreign liquor", but" we have been able to find no such rule or provision. Notification No. 595 S.R., dated March 30, 1915, at pp. 32 to 47 of Part II of the West Bengal Excise Compilation contains rules as to import, export and transport of foreign, liquor for which license and pass have been provided for,, but as already stated foreign liquor does not include medicinal preparations and this notification which was issued in 1915 could not relate to medicinal preparations containing alcohol because at that time medicinal preparations were not within the scope of excise duty. There appears to be rules made in January, 1937, for the manufacture and sale of medicine containing bhang, vide pages 103 to 109, Part II of the West Bengal Excise Compilation, and rules for the manufacture of perfumes and toilet preparations containing alcohol vide pp. 114 to llfi of Part IE of the West Bengal Excise Compilation, and rules in connection with the Ayurvedic medicinal preparations like Mritasanjibani Sura, vide pp. 124 to 139, and rules relating to methyl alcohol which has been declared to be "liquor" for the purpose of the Bengal Excise Act, but there is no rule showing that the license is required for other kinds of spirituous medicines like spirit chloroform and tincture cardamom compound or that any duty is payable when a purchaser of such articles imports or re-imports such article into the State of West Bengal. It may be urged that the Appellants would be still guilty because though they wanted the medicinal preparations containing alcohol for consumption in West Bengal, they represented at the time of placing the orders with Smith Stanistreet and the Bengal Chemical that the medicinal preparations were wanted for export to Bihar. It does not however appear that such representation would constitute a breach of the excise law, though it might amount to an offence of cheating under the Indian Penal Code. The proviso to Rule 27 runs as follows:

Provided that when such liquors are exported to other provinces duty shall be charged at the rate in force in the province of import * * *

In the present instance the medicinal preparations were actually exported to Bihar by railway parcel, though they were subsequently re-booked to Calcutta. As they were in the first instance exported to Bihar, the lower rate of duty in force for Bihar was payable and it could not be said that the Appellants were guilty of contravention of the provisions of the Bengal Excise Act. If there was a specific provision of law imposing an excise duty or countervailing duty on medicinal preparations re-imported to the State of origin, namely, West Bengal, the Appellants would no doubt be liable for contravention of such provision of law. But no such provision appears to have been made under the Bengal Excise Act and in the circumstances we do not see how the Appellants can be held to be criminally liable.

In view of the finding made above it is not necessary to discuss the other points raised by Mr. Dutt in detail. We shall, however, briefly notice them. Mr Dutt''s contention is that the present prosecution is barred by limitation, because under the provisions of Section 92 of the Bengal Excise Act a criminal prosecution should be instituted within six months from the date when the offence was committed and in the present case though the last offence was committed in November, 1950, the case was instituted in December, 1951, the challan being submitted on December 29, 1951. Thus there was a delay of more than one year and it is urged that therefore the prosecution was barred. But in view of the terms of Section 92 of the Bengal Excise Act we do not accept the contention of Mr. Dutt. Section 92 provides that except with the previous sanction of the Provincial Government no Magistrate shall take cognizance of any charge made under the Excise Act unless the prosecution is instituted within six months after the date of the act complained of. When there, is no sanction by the Government, prosecution must be instituted within six months. When there is a previous sanction of the said Government the limiting clause does not apply. Accordingly the prosecution is not barred by limitation.

As regards the contention that Sections 9(1)(c) and 10(a) are no longer applicable because by the adaptation made after the Constitution, medicinal preparations containing alcohol have been omitted from the definition of "excisable article", we must reject the contention because by the adaptation made to Section 29A of the Act and by Article 277 of the Constitution if excise duties were legally chargeable before, they are still legally chargeable. There is no force in the contention that no rules have been made u/s 29A of the Act. No such rules are called for.

As regards the contention that the prosecution did not adduce evidence to show that duty has not been paid in Bihar and did not give sufficient opportunity to the accused to pay the duty on the consignments which were seized on November 27, 1951, it is clear from the manner in which the two accused were carrying on operations for over two years that they did not pay and had no intention to pay any duty even if such duty was legally payable. They were in fact bribing the station staff at Purabsarai, when necessary, as is clear from their letters already referred to; and in the circumstances, therefore, there is no force in this contention urged by Mr. Dutt.

The only other point urged is that there was no positive evidence to show that the spirit used in the manufacture of spirit chloroform and tincture cardamom compound was Indian-made spirit and not foreign spirit. This is, however, clear from the fact that the excise staff were in charge of the bonded laboratories where the spirit was used for the manufacture of these medicines. If foreign spirit were used, the excise staff would have no duty in the laboratories and the chemical manufacturers also would not allow the excise officers to be in charge of the bonded laboratories.

But in view of the finding already made that in the absence of specific provisions making a purchaser of spirituous medicines liable to pay excise duty on re-import to the State of origin, it must be held that the accused are not liable for the offences with which they are charged.

Accordingly the appeals must succeed and it is ordered that the convictions of the two Appellants u/s 46(a) of the Bengal Excise Act and u/s 109 of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act and u/s 120B of the Indian Penal Code read with Section 46(a) of the Bengal Excise Act and the sentences passed thereunder are set aside. The Appellants are discharged from their bail bond.

Let a copy of this judgment be sent to the Government in the Excise Department because it appears that the two Appellants have evaded payment of duty to the extent of Rs. 12,000 or Rs. 13,000 in the course of two years during which they are operating in spirituous medicines, but in view of the lacuna in the law they cannot be made criminally liable.

Mitter, J.

I agree.