Sri B. Papi Reddy

IN THE COURT OF THE PRINCIPAL SPECIAL JUDGE FOR C.B.I.

CASES, VISAKHAPATNAM.

Present: B.PAPI REDDY,

Principal Special Judge for C.B.I. Cases,

Visakhapatnam.

Monday, this the 31st day of December, 2018

C.C.No.29/2006

Between:

State represented by Inspector of Police, CBI, Visakhapatnam. …Complainant

And:

1. Sri Vasimalla Bhaskara Rao, S/o late V.Prakash Rao, aged 59 years, Occupation: Superintendent of Customs (Gazetted), Begumpet Airport, Hyderabad. R/o at D.No.43-115-04, New Ajit Singh Nagar, Vijaywada, Krishna District , A.P.

(A1 died and case against him abated on 16.02.2009)

2. ThopalliSubramanyam, S/oChakrapani,aged 56 years, Occupation:Suptd. Of Customs & Excise, Ongole Range, Ongole. R/at Plot No.11,Phase-II, Mohadevpuram Colony, Ashoknagar, Vijayawada-7.

3. Sri Pogula Naga Shankar Rao, S/o P.Lakshmaiah, aged 43 years, Occupation: Inspector, Central Excise, Vijayawada, R/o C/o K.Krishna Prasad, D.No.54-19-52/A, Mogalrajpuram, Vijayawada.

4. Sri Anil Kumar Aggarwal, ManagingDirector,M/s Kumar’sCotexLtd., Dokiparru,Medikonduru Mandal, Guntur, S/o late OM Prakash Aggarwal, aged 54 years, Occupation:Business, 2C.C.29/2006/Prl. CBI Court/VSP

R/at D.No.6-3-855/10/A, 1B, SampathjiApartments, Ameerpet, Hyderabad, A.P.,

5. Sri Abhishek Aggarwal, Director, M/s Kumar’s Cotex Ltd., Dokiparru, Medikonduru Mandal, Guntur, S/o Anil Aggarwal, aged 25 years, Occupation: Business, R/at D.No.6-3-855/10/A,1B. SampathjiApartments, Ameerpet, Hyderabad, A.P., R/at B-Block, 7th Floor, Surya Towers,SPRoad, Secunderabad-500003.

6. M/s Kumar’s Cotex Ltd., Dokiparru,Medikonduru Mandal, Guntur, a company Incorporatedunder Companies Act, being a juristic person represented by Sri Anil Kumar Aggarwal, Managing Director of the Company(Whois independently figured as A4) Occupation: Business, R/at M/s Kumar’s Cotex Ltd., Dokiparru,Medikonduru Mandal, Guntur.

….. Accused Nos.2 to A6)

This case came on 28.12.2018 for final hearing before me in the presence of Sri K.Suryanarayana, Ld. Sr.Public Prosecutor for the

State-Complainant and ofSri N.V.V.Prasad and N.Sankar,

Advocates for A.2 and A3 and of Sri G.V.P.B.S.N. Murthy, Advocate for A.4 to A.6 and the matter having stood over for consideration till this day, this Court doth the following:

J U D G M E N T

3C.C.29/2006/Prl. CBI Court/VSP

The State represented by Inspector of Police, CBI, Visakhapatnam filed the charge sheet for the offence under Section 120-B, 420, 468 and 471 of IPC and under Section 13(2) r/w 13(1)(d)(ii) of Prevention of Corruption Act, 1988.

2. The case of the prosecution as per the charge sheet is that

A6/M/s Kumar’s Cotex Ltd (for short KCL) is a 100% Export Oriented

Unit which imported 6 number of auto coners worth Rs.5.91crore in 1996 by availing the Customs Duty Waiver facility, as such the Custom

Duty waived on 6 Auto coners is of Rs.1.56 Crores, A4 is the Managing

Director and A5 is the Director of M/s KCL, they sought permission from Development Commissioner, Visakhapatnam on 27.02.2002 to scrap/destroy two number of auto coners out of 6 auto coners citing the reason that those two auto coners were burnt due to short circuit, hence not serviceable and the Development Commissioner,

Visakhapatnam accorded permission to dispose the said auto coners subject to observance of customs formalities in terms of provisions of

Para 9.19 of Export Import Policy 1997-2002 which envisages that if the capital goods are destroyed, no customs duty is to be paid by the assessee but if the capital goods are sold in the domestic market customs duty is to be collected on the depreciated value of the capital goods. M/s KCL requested the Deputy Commissioner, Central Excise,

Guntur on 22.7.2002 for destruction of the said two obsolete imported auto coners worth Rs.1.97 Crore and the Deputy Commissioner passed orders on 24.7.2002 for the destruction of the said two auto coners in the presence of Central Excise Officials and copy was marked to the Superintendent of Central Excise, Range Office, Guntur 4C.C.29/2006/Prl. CBI Court/VSP for compliance. Then A1/V.Bhaskar Rao the then Superintendent,

A2/T.Subramanyam and A3/P.Naga Shankara Rao, Inspectors of Central

Excise, Range-II, Guntur entered into criminal conspiracy with M/s KCL represented by A4 and A5, A4 is the Managing Director and A5 is the

Director of M/s KCL and in pursuance of the said criminal conspiracy

A1 to A3 went to M/s KCL on 25.07.2002 to supervise destruction but they did not ensure the destruction of the said auto coners in pursuance of the conspiracy by abusing their official position as public servants, they sent a compliance report to the Deputy

Commissioner informing that the auto coners were destroyed by breaking into pieces in the presence of Central Excise Officials. The scrap arising out of destruction of auto coners were sold to PW8-

M.Venkateswar Rao, Old Guntur for Rs.1,90,000/- and a sum of

Rs.30,400/- was deposited in the bank through TR-6 Challan towards

Central Excise Duty on the said scrap. The scrap was transported through lorry No.AP-7T-1436 but investigation revealed that Sri

M.Venkateswar Rao is not a scrap dealer but a lorry supplier and he owned a lorry AP 7T 1436 and the said lorry was used to transport some machinery on 25.07.2002 from M/s KCL to M/s Sri Jayalakshmi

Spinning Mills Ltd (for short “SJSML’), Chebrolu. Subsequently it is found that M/s KCL sold the said two auto coners to M/s SJSML for

Rs.50 lakhs on 9.10.2003. M/s KCL also suo motu paid Rs.5,17,869/- as Central Excise Duty at the rate of 5% on the said two auto coners but the said two auto coners were found in working condition at M/s

SJSML by Superintendent, Preventive, Central Excise, Guntur, hence they were seized as the auto coners were disposed off by evading customs duty in connivance with the then Central Excise Officers/A1 5C.C.29/2006/Prl. CBI Court/VSP to A3, the explanation was sought from the concerned officials who had supervised the destruction but A1 explained by submitting a false letter revealing that the two auto coners had not been destroyed but a cycle shed had been destroyed which were sold as scrap for

Rs.1,90,000/-. The Superintendent, Preventive, Central Excise also examined the personnel of M/s KCL under Customs Act, who corroborated the explanation of the central excise officials by explaining that the auto coners were not destroyed but cycle shed was destroyed. But investigation revealed that no cycle shed had been destroyed and still it is in existence as per the layout of the factory of M/s KCL, the investigation revealed that the destruction procedure for capital goods as well as consumable goods are same and in both the cases Central Excise Officials should ensure that the destruction is done in such a manner that the goods are irretrievable and cannot be marketed again as excisable goods. But the Central

Excise officials with a dishonest intention did not ensure the destruction of two imported auto coners. Then the Central Excise

Department issued a show cause notice to M/s KCL demanding the original customs duty of Rs.52.61lakhs(that had been waived).

3.The further case of the prosecution is that A4 established the unit M/s KCL at Dokiparu village, Medi Kondur Mandal, Guntur District and executed a bond in form B-17 with the Assistant Commissioner,

Customs & Central Excise, Guntur on 03.07.2000 binding themselves to discharge the obligations cast upon them under the provisions of the Customs Act, 1962 and Central Excise Act, 1944 and the

Rules/Regulations made thereunder. A4 being the Managing Director 6C.C.29/2006/Prl. CBI Court/VSP of A6 imported six number of auto coners (capital goods) during the year 1996 at a value of Rs.5,91,84,990/- by availing the conditional 100% waiver facility of customs duty Rs.2,21,94,373/- as per

Notification no.13/81-Customs. That after passing of the permission orders by the LW.13/Joint Development Commissioner the then

Deputy Commissioner Sri K.N.Pillai, Central Excise, Guntur along with

A1 to A3 visited M/s KCL on 23.7.2002 and verified the capital goods i.e., two auto coners to be destroyed. Thereafter K.N.Pillai permitted

M/s KCL on 24.7.2002 to destroy the said auto coners in terms of Para 9.19 of EXIM Policy 1997-2000 in the premises of M/s KCL in the presence of Central excise Officials by marking a copy to A1 the then

Superintendent of Central Excise, Range-II, Guntur. The destruction means that the auto coners should be irretrievable as excisable commodity and cannot be marketed except under the scrap. The

Superintendent including Inspectors must ensure the destruction but on 25.07.2002 A1 to A3 visited the premises of M/s KCL to supervise the destruction of the auto coners and the travelling allowance bills of

A1 to A3 reveal the same and all of them aware of the orders passed by Sri K.N.Pillai. But on 30.7.2002 A1 dishonestly prepared a letter informing the Deputy Commissioner, Central Excise, Guntur Division, that in compliance of the letter dated 24.7.2002 he along with the officers of Central Excise, Range-II, Guntur visited M/s KCL on 25.7.2002 and found the auto coners Nos.147-0296-3902 and 147- 0296-3913 in obsolete condition. Hence they were destroyed as per the permission granted by the Deputy Commissioner in the presence of Central Excise officers in the factory premises by breaking into pieces and destroyed pieces (scrap) sold and assessee has paid the 7C.C.29/2006/Prl. CBI Court/VSP duty at the rate of 16% which comes to Rs.30,400/- into the State

Bank of India, Guntur. So it is revealed that A1 to A3 entered into criminal conspiracy with A6 represented by A4, A5 and in pursuance of the said conspiracy they did not ensure the destruction of the two auto coners on 25.7.2002 but prepared the compliance letter dated 30.7.2002 and sent the same to the Deputy Commissioner, Division-II,

Guntur.

4.It is further case of the prosecution that M/s KCL dishonestly, carefully disassembled the said two auto coners from the manufacturing floor and sold to M/s Sri Jayalakshmi Spinning Mills Ltd., for Rs.50lakhs on 9.10.2003 through invoice No.72 and Sri

P.V.S.Sastry, authorized Signatory of M/s KCL raised the invoice in favour of M/s SJSML Ltd., M/s KCL paid Central excise duty @ 5% upon the depreciated value of the auto coners and M/s KCL received the proceeds of sale of auto coners through book adjustment but paid the central excise through challan by depositing cash of Rs.5,17,869/- in

State Bank of India, Guntur Branch which reveals from the letter submitted by M/s KCL showing calculation of Customs Duty that though the company has paid the Basic Excise Duty but the company has not paid Basic Customs Duty, counter veiling Duty and Special

Additional Duty, PW.2 Sri G.T.Kumar, Superintendent, Preventive &

Intelligence Unit informed Sri K.Vijayanadh, authorized signatory of

M/s SJSML Ltd on 27.9.2004 that M/s KCL had disposed two auto coners to them without permission from the competent Authority(The

Competent Authority had permitted to destroy/scrap but not reselling.

For reselling separate permission is required) and M/s KCL has to pay 8C.C.29/2006/Prl. CBI Court/VSP

Customs Duty. That on 28.9.2004 Sri G.T.Kumar examined LW.11

M.Yesob who was the authorized signatory of A6 from which he came to know that M/s KCL has disposed off two auto coners following the general procedure meant for manufactured items instead of following procedure of disposal of capital goods. On 29.9.2004 PW.2 seized the auto coners at the premises of M/s SJSML Ltd., in the presence of two independent witness PW.5, LW.10 Shaik Allaha Bakshi which were found in working condition at the time of seizure, A4 obtained orders fraudulently from the Joint Deputy Commissioner, VEPZ for destruction through deception knowing fully well that such a machine has resale value, the auto coners are rugged machines, capable of smooth functioning for at least 30 years and the rest of the auto coners are still in running condition at M/s KCL and two disposed auto coners also in running condition but only with an intention to evade the Customs

Duty, M/s KCL has intentionally disposed the serving auto coners for

Rs.50lakhs. PW.7 Sri K.R.Pandian, the then Assistant Commissioner,

Customs and Central Excise, Guntur Division called for explanation from A1 on 14.12.2004 regarding the destruction of auto coners and he submitted his explanation on 17.12.2004 but he dishonestly enclosed a forged copy of letter bearing OC.No.683 dated 26.7.2002 and pleaded that destruction did not take place in his presence as it will take at least 15 to 20 days time which requires technical expertise also. Hence M/s KCL asked to pay the total customs duty including

BCD, CVD and SAD which comes to Rs.52,61,941/-. The GEQD has confirmed the signature of A1 on the letters No.683/2003 dated 25/26.7.2002 and 30.7.2002, PW.15 Inspector of Police, CBI,

Visakhapatnam examined all the witnesses and after completion of 9C.C.29/2006/Prl. CBI Court/VSP entire investigation filed the charge sheet for the offence under Section 120-B, 420, 468, 471 IPC and u/Sec.13(2) r/w 13(1) (d) (ii) of

Prevention of Corruption Act 1988. Hence the charge sheet.

5.On filing of the charge sheet, this Court took cognizance for the offence punishable under Section 120-B, 420, 468, 471 IPC r/w 465

IPC against A1 to A6 and for the offence punishable under Section and u/Sec.13(2) r/w 13(1) (d) (ii) of Prevention of Corruption Act 1988 against A.1 to A.3 thereby issued summons to accused persons, on appearance of all the accused the case documents were furnished as required under Section 207 Cr.P.C to all the accused.

6.After examination of the accused under Section 239 Cr.P.C.

A1 died and the case against him was abated on 16.02.2009, after hearing both parties framed charge for the offence punishable under

Section 120-B, 420, 468, 471 IPC r/w 465 IPC and u/Sec.13(2) r/w 13(1) (d) (ii) of Prevention of Corruption Act 1988 but all the accused pleaded not guilty and claimed to be tried. .

7.During the course of trial, the prosecution examined PWs.1 to

PW.15 and marked Exs.P.1 to P.58, after completion of the prosecution evidence the accused No.2 to 6 were examined under Section 313

Cr.P.C by explaining the incriminating evidence against them but they denied the same, thereafter A2, A3 examined DW.1, through him Ex.D1 to D5 marked.

10C.C.29/2006/Prl. CBI Court/VSP

8.Heard both sides, gone through the entire evidence on record including the documents but as per the accused persons they did not made the destruction of the two auto coners, the defense of A2, A3 is that they are not responsible for the destruction and they have not participated for the same and the sanction is not in accordance with the law, according to A4 to A5 the scrap sold on 25-07-2002 is not related to auto coners and they paid all the duties and the same was confirmed by the Appellate Tribunal, Bangalore, hence in view of rival contentions now the points that arises for determination are :

1. Whether the sanction granted for the prosecution of A2 and A3 suffers from any infirmity or not?

2. Whether the prosecution proved the charge against A2 to

A6 for the offence punishable under section 120B,420,

468, 471 r/w 465 IPC?

3. Whether the prosecution proved the charge against A2

and A3 for the offence punishable under section 13(1)(d)

r/w 13(2) of Prevention of Corruption Act, 1988?

9. POINT No 1:

Whether the sanction granted for the prosecution of A2

and A3 suffers from any infirmity or not?

There is no dispute that A2 and A3 are the public servants and they charge sheeted for the offence under section 13(1)(d) r/w 13(2) of

Prevention of Corruption Act as such sanction as required under section 19 of the PC Act is required to prosecute them, that before going into the complicity of the accused it has to be seen whether the sanction granted for prosecution of A2, A3 suffers from any infirmity as contended by the accused. The object of sanction under section 19 of the Prevention of Corruption Act is to safeguard the innocent public servants from false accusations but it is not the shield to protect the 11C.C.29/2006/Prl. CBI Court/VSP unscrupulous servants as such in a case between CBI V/S ASHOK

KUMAR AGGARWAL reported in AIR 2014 (SC) 827 it is held that sanction lifts the bar for prosecution and held as “therefore, it is not an acrimonious exercise but a solemn and sacrosanct act which affords protection to the government servant against frivolous prosecution.

Further, it is a weapon to discourage vexatious prosecution and is a safeguard for the innocent, though not a shield for the guilty”.

10.The learned counsel for the A2, A3 argued by reiterating the contents of the written statement that the sanctioning authority has not gone through the entire material placed before them but only relying on the draft sanction order the sanction order was issued in this case and PW12 and PW13 are not the competent persons to grant sanction for prosecution of A2 and A3, the object under Section 19 of

Prevention of Corruption Act is to ensure that the the innocent public servants should not suffer harassment on false, frivolous, unconnected or unsubstantiated allegations as such it is the duty of the sanctioning authority to go through the entire material facts. The learned counsel for A2 and A3 by placing reliance on the following decisions argued that the sanction granted against A2, A3 in this case is not correct and proper:

1. 2015 (1) SCC (Cri) 344 between Central Bureau of Investigation

Vs. Ashok Kumar Aggarwal ” the prosecution has to establish and satisfy the Court that the entire relevant facts had been placed before the sanctioning authority and the authority had applied its mind , thereby granted sanction in accordance with the law”.

12C.C.29/2006/Prl. CBI Court/VSP

2. AIR 2005 SC 3606 between State of Goa Vs. Babu Thomas “ The sanction granted by Company Secretary and did not refer to any order or resolution of board of company under which he was authorized as such the sanction order is invalid, unless the sanction granted by the competent authority court should not take cognizance.

11.That relying on the above decisions the learned counsel for the

A2, A3 argued that the prosecution witness PW.12 and PW.13 evidence itself is sufficient to come to a conclusion that the competent authority has not granted the sanction, during the cross examination of both the witnesses it is clearly admitted that it is the President of India who is the competent to issue sanction order for prosecution against the

Inspectors, Central Excise Department. Even though they stated that the powers are delegated to Additional or Joint Commissioner but they clearly admitted that the sanction order does not contain about the delegation of such powers. Per contra, the learned public prosecutor argued that the sanction order itself clarified that the competent authority after going through the entire material only granted sanction.

12. PW.12 was the Additional Commissioner, Central Excise, Guntur, he deposed that the Additional Commissioner is appointing authority for Group ‘C” Non Gazetted Inspectors, Customs and Central Excise.

According to this witness he perused the FIR, statements of witnesses and all the relevant documents before granting the sanction against

A3 U/sec. 19(1)(c) of PC Act under Ex.P43 dated 27.3.2006. He further testified that after satisfying himself with full application of mind, he 13C.C.29/2006/Prl. CBI Court/VSP came to opinion that there is a prima facie case was made out against the accused and he has committed such act which is liable for prosecution as such issued sanction order. Apart from the evidence about the sanction during his cross examination it is elicited that during his tenure the said Jurisdiction was ear marked for each of the

Inspectors working in that range and without going through the record, he cannot say that one B.Srikrishna, Inspector, Central Excise is having exclusive territorial jurisdiction of A6 unit, even though the

Inspector will assist the Superintendents but the Superintendent is the competent authority to take final decision and in this case A1 is having Jurisdiction over A6 company, the Superintendent has to execute the order of destruction with the assistance of Jurisdictional

Inspector. It is also elicited that he examined the entire original file of

M/s Kumars Cotex Ltd relating to the destruction of machinery before passing sanction order under Ex.P.43, he clearly denied the suggestion that the CBI sent the draft sanction order and basing on the same he issued the sanction order, even though he stated that his excellency

President of India is competent to issue sanction for prosecution against Inspectors, Central Excise department but according to him now it is changed and powers were delegated to Additional or Joint

Commissioners, there is no requirement of mentioning the same in the sanction order as there is no provision which mandates, even otherwise the copy of proceedings appended to the sanction Ex.P43 issued by the office of Commissioner, Customs and Central Excise discloses that in excise of the powers conferred under Rule 14 of

Delegation of Financial Powers Rules 1978, the commissioner authorized the Additional Commissioner, Guntur as Head of office for 14C.C.29/2006/Prl. CBI Court/VSP the purpose of these rules, the sanction order also clearly discloses that PW12 additional commissioner being the competent Authority to remove A3 issued sanction order.

13.PW13 also the officer who granted sanction order against A2, he deposed that he worked as Commissioner, Central Excise of Guntur in the year 2006, at the time of sanction this A2 had already been promoted as Superintendent. Therefore Commissioner became the competent Authority for the sanction. According to this witness also he examined FIR, all the statements of witnesses including all the documents in the file and letters pertaining to this issue thereafter only sanction order was passed under Section 19(1) of P.C. Act under

Ex.P44, he categorically deposed that he applied his mind to the case and came to the conclusion that it is a fit case for launching prosecution against A2. During the cross examination he also stated that he does not remember whether Sri Krishna, Inspector had the

Jurisdiction over A6 company and Inspector will assist the

Superintendent and he has not produced any receipts in support of his version that he is competent to issue sanction order against A2 but the sanction orders Ex.P43 and Ex.P44 clearly discloses that they being the authority competent to remove the accused issued the sanction orders and Ex.P43 is appended with the delegation of the powers by the commissioner but even otherwise the accused has to prove that they suffered failure of justice due to infirmity in sanction order. in State of Bihar and others v. Rajmangal Ram reported in 2014(11) SCC 388, it is held as under: - 15C.C.29/2006/Prl. CBI Court/VSP "In the instant cases the High Court had interdicted the criminal proceedings on the ground that the Law Department was not the competent authority to accord sanction for the prosecution of the respondents. Even assuming that the Law Department was not competent, it was still necessary for the High Court to reach the conclusion that a failure of justice has been occasioned”.

14.That in the present case in view of the clear expression in the sanction orders as they are the competent persons to remove the accused and after going through the entire material only sanction was accorded there cannot be any reason to doubt the sanction orders, the accused has to show that any irregularity or infirmity in the sanction caused failure of justice to them but it is not the case of the accused as to what prejudice they suffered. Hence this Point is answered in favour of the prosecution.

15. POINT NO.2 TO 3:

2. Whether the prosecution proved the charge against A2 to

A6 for the offence punishable under section 120B,420,

468, 471 r/w 465 IPC?

3. Whether the prosecution proved the charge against A2

and A3 for the offence punishable under section 13(1)(d)

r/w 13(2) of Prevention of Corruption Act, 1988?

The learned counsel for the A2 and A3 argued by reiterating the contents of written statement that no witness deposed about any of the role of these accused either for participation in the destruction of the auto coners or they were no way connected with the case but the prosecution except the travelling allowance bills of these accused nothing is produced which is not sufficient to prove the guilt of the accused.

16C.C.29/2006/Prl. CBI Court/VSP

16.The learned counsel for the A4 to A6 argued that A1 under

Ex.P20 clearly informed that for the destruction of the machinery it would take 15 to 20 days time on the date of their visit to A6 unit on 25.7.2002 and there is no evidence that any of the accused informed about the destruction of the two auto coners to the Customs

Department and the investigation in this case started much prior to the registration of the FIR and the statements recorded under the

Customs Act are not admissible for the offence registered under other statues as there is clear bar under Section 138-B of Customs Act, even though there is discrepancy initially in the amount of Customs duty but the contention of A6 company is affirmed by the Bangalore

Appellate Tribunal and as admitted by the witnesses there is no revenue loss to the Government as such no ingredients for the charged offences are proved hence prayed for acquitting the accused.

17.The prosecution in order to prove the case examined PW.1 to

PW15, out of which PW1, PW2, PW6,PW7 are the witnesses from Excise department, PW3 was the employee of M/S SJSML, he along with PW5 deposed about the seizure of two auto coners on 29-09-2004 under

Ex.P7, PW4 examined to show that he is having auto rickshaw but not lorry, PW8 examined to show that he was the lorry supplier but not the scrap purchaser, PW9 examined to show that some machinery was transported from M/s KCL to M/s SJSML on 25-07-2002, PW10 and 11 are the mediators for the search conducted by the investigating officer at KCL and SJSML on 14-03-2006, PW12 and PW13 are the persons who granted the sanction for prosecution of A2 and A3, PW14 is the

Government examiner for questioned documents who gave opinion 17C.C.29/2006/Prl. CBI Court/VSP that Ex.P20 and 21, P45 and 46 signatures are similar signatures to prove A1 signature.

18.The undisputed facts are that A6 is the 100% Export Oriented

Unit engaged in the manufacture and clearance of cotton yarn and cotton waste, A4 and A5 are the Managing Director and Director of the

A6 company, the unit of A6 situated at Dokiparru village falls under the jurisdiction of Range-II of Guntur, Central Excise Division. The

Assistant Commissioner of Customs and Central Excise, Guntur

Divison, Guntur granted A6 private Bonded warehouse License under

Section 58 of Customs Act, 1962 and KCL has executed a Bond in Form

B-17 on 3.7.2000 binding themselves to discharge the obligations cast upon them under the provisions of the Customs Act, 1962 and

Central Excise Act, 1944 and the Rules/Regulations made thereunder.

A6 imported capital goods of six auto coners (including the two auto coners involved in this case) from Germany at a cost of DM 2550000(equivalent to Rs.5.91crores) availing the condition of 100% waiver facility of Customs duty of Rs.2,21,94,373/- as per Notification

No.13/81-Customs. A4 Managing Director made application dated 5.2.2002 under Ex.P29 to the Development Commissioner, VEPZ about the unserviceable condition of the two auto coners out of the six auto coners imported. He also further informed that the machines have become obsolete, burnt due to short circuit, hence no longer economically viable to make it operational again as such sought permission to dispose in DTA market as scrap or to destroy the said two imported obsolete auto coners and Joint Development

Commissioner, Visakhapatnam granted permission vide letter dated 18C.C.29/2006/Prl. CBI Court/VSP 27.2.2002 for disposal subject to observance of customs formalities in terms of the provisions of Para 9.19 of the EXIM Policy, 1997-2002 which envisages that if the capital goods are destroyed no customs duty be paid and if the capital goods are to be disposed to domestic tariff area(DTA), customs duty has to be collected from the depreciated value of the auto coners and there is no dispute for all these facts that A6 has imported six auto coners and wrote a letter on 5.2.2002 intimating the obsolete condition of the auto coners condition.

19.The further case of the prosecution is that on 23.7.2002 the

Deputy Commissioner along with A1 and A2 and A3 and one

B.Srikrishna who examined as DW1 visited KCL and verified the capital goods to be destroyed. Thereafter on 24.7.2002 Deputy

Commissioner accorded permission to KCL for destruction of the two machines in the presence of Central Excise Officers. That on 25.7.2002 A1 to A3 and one B.Srikrishna visited A6 company to supervise the destruction. Thereafter on 30.7.2002 A1 prepared a letter Ex.P21 informing the Deputy Commissioner LW13- Sri

K.N.Pillai(died) that in compliance to the permission dated 24.7.2002, he along with the officers of Central Excise , Range-II Guntur visited A6 on 25.7.2002 and found the auto coners in obsolete condition. Hence they were destroyed as per the permission given by the Deputy

Commissioner in the presence of Central Excise officers in the factory premises by breaking into pieces. The destroyed pieces were sold and the assessee has paid the duty @ 16% amounting to Rs.30,400/- and the said letter was dispatched vide OC No.683 to Sri K.N.Pillai.

19C.C.29/2006/Prl. CBI Court/VSP

20.The further case of the prosecution is that the procedure of destruction is described in Para 2.1 of Chapter 18 of Central Excise

Manual which clearly stipulates that the goods must be destroyed in such a manner that they become irretrievable as excisable commodity and further procedure revealed that the two auto coners were not destroyed at all but A6 sold to the same SJSML at a cost of RS.50lakhs on 9.10.2003 through invoice No.78 and authorized signatory of A6 raised the invoice in favour of M/s SJSML. A6 paid Central Excise duty @ 5% upon the depreciated value of auto coners in a clear after thought and the M/s KCL paid the Central Excise through the challan deposited cash of Rs.5,17,869/- and the said two autoconers were transported to M/s SJSML by two lorries of M/s

Jayalakshmi Group of Industries, Guntur and one auto rickshaw. A6 with dishonest intention prepared a delivery challan dated 25.7.2002 which mentioned that the scrap generated on destruction of the machinery was sold to one PW8-M.Venkateswara Rao who removed the same by truck No.AP TT 1436 and KCL paid Rs.30,400/- towards excise duty upon scrap value and made believed the Central Excise

Department that the two auto coners have been destroyed and disposed as scrap and even as per the Invoice No.78 dated 9.10.2003 there is short payment of custom duty of Rs.1,52,894/- for releasing auto coners into domestic tariff without permission, the permission given by the Deputy Commissioner vide letter dated 24.7.2002 for destruction of the machinery within the factory premises which was not carried out in accordance with the excise manual. But after the surprise checks when the department called for explanation of A1, he 20C.C.29/2006/Prl. CBI Court/VSP fabricated a letter with the same dispatch number i.e., OC No.683 by introducing it in the records of the range office . However he could not succeed as the earlier letter dated 30.7.2002 was available in the records, in the said fabricated letter he tried to convey that the two auto coners were not destroyed on 25.7.2002 to cover up the guilt. As such the above acts constitute for the offence under Section 120-B, 420, 468, 471 IPC agasinst A1 to A6, further A1 to 3 being the

Government Servants by abusing their official positions caused loss to the Excise Department as such they were charged for the offence under Section 13(1) (d) w/w 13(2) Prevention of Corruption Act.

21.The case of the prosecution is that A1 to A5 entered into criminal conspiracy and reported that the two auto coners in Ex.A6 company were destroyed and sold as scrap by paying Rs.30,400/- as excise duty on 25-07-2002 and subsequently A6 represented by A4, A5 disposed the said two auto coners to M/s SJSML for Rs.50lakhs.

Thereby cheated the Customs Department, Central Government, the accused forged the compliance report and invoice and the particulars of which and A1 fraudulently dishonestly used the compliance report and invoice as genuine by knowing fully, A1 to A3 being the public servants by illegal means by abusing their official position as such obtained for themselves and for A6 pecuniary advantage to the extent of Rs.52.61lakhs and caused corresponding loss to the Customs

Department, Central Department, thereby committed an offence punishable under Section 13(1) (d) r/w u/sec.13(2) of Prevention of

Corruption Act.

21C.C.29/2006/Prl. CBI Court/VSP

22.That to prove the ingredients for the offence of criminal conspiracy as per Section 120-A IPC the prosecution must prove that two or more persons are agreed to do or cause to be done an illegal act or an act which is not illegal by illegal means, such an agreement is designated as criminal conspiracy. As such in most of the conspiracy cases there cannot be direct evidence for the conspiracy but the circumstances surrounding has to be considered to prove the offence under Section 120-B IPC. Hence before discussing the said charge it has to be seen Whether the prosecution proved the other offences or not. As per section 420 IPC cheating and dishonestly inducing delivery of property, cheating is defined under Section 415

IPC which reads as under :

“ Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to "cheat".

23.The other charge is forgery for the purpose of cheating as envisaged under section 468 IPC, as per Section 471 IPC it must be proved that a forged document used as genuine, hence keeping in mind the ingredients of the charged offences the evidence has to be evaluated

24. PW1 worked as Superintendent in charge of Central Intelligence

Unit, Guntur Commissionarate, he deposed that he handed over Ex.P2 to Ex.P24 to Inspector D.Misra, CBI, Visakhapatnam on 10.1.2006 and admitted his signature on Ex.P1. According to this witness A6 M/s 22C.C.29/2006/Prl. CBI Court/VSP

Kumar’s Cotex Limited imported six auto coners under Ex.P2 original bill of entry No.4/96 dated 6.7.1996, there is no dispute for these facts by any of the party. Further as per this witness Ex.P3 is the original permission letter dated 27.2.2002 issued by the Joint Development

Commissioner, Visakhapatnam to A6 for disposal and not for destruction. Ex.P4 is the original letter issued by the Deputy

Commissioner of Customs & Central Excise, Guntur dated dt.24.7.2002. Ex.P5 is the carbon copy of invoice No. 21 dt.25.7.2002 of A6. Ex.P6 is the carbon copy of invoice No. 78 of A6 dt.9.10.2003.

Ex.P7 is the original mahazar dt.29.9.2004 at M/s.Sri Jaya Lakshmi

Spinning Mills. Ex.P8 is the original undertaking given by M/s.Sri

Jayalakshmi Spinning Mill Limited dated dt.29.9.2004. Ex.P9 to Ex.P11 are the statements of LW.11 M.Yesob recorded by the Customs

Officers. Ex.P12 and Ex.P13 are the statements of A5. Ex.P14 and

Ex.P15 are the statements of PW.3 who worked in Sri Jayalakshmi

Spinning Mills at the relevant point of time. Ex.P16 is the letter of A6 company dated 22.7.2002 to Dy. Commissioner, Guntur. Ex.P17 is the travelling allowance bill of A1. Ex.P18 is the extracts of X.T.1 of A1 from 16.7.2002 to 31.7.2002. Ex.P19 is the attested copy of compilation of new import and export policy and procedures, 1997– 2002 containing Para 9.19 of the policy. Ex.P20 is the letter dt.17.12.2004 issued by A1 by enclosing photo copy of the report dt.26.7.2002. Ex.P21 is the original letter dt.30.7.2002 issued by

Superintendent, Customs & Central Excise, Range-II, Guntur to the Dy.

Commissioner, Central Excise, Guntur Division. Ex.P22 is the original of

X.T.1 diary of A3. Ex.P23 is the bond executed by A6 on 3.7.2000 in form B-17. Ex.P24 is the copy of letter issued by A1, as per this 23C.C.29/2006/Prl. CBI Court/VSP witness on the instructions of the Additional Commissioner, Guntur, he furnished Ex.P2 to Ex.P24 and certified copy of the outward correspondence register covered under Ex.P1 acknowledgment but he did not worked with A1. During the cross examination it is elicited that as per the procedure, each unit will be allotted to the Inspector,

Central Excise in the Range office and the said Inspector concerned will look after all the affairs of the unit allotted to him. The Inspector will report to the Superintendent who is his immediate superior officer, as per the procedure, the Inspector will have the entire responsibility on behalf of the department with regard to the central excise affairs of the unit allotted to him and it is the discretion of the superintendent to allot the units to the Inspectors. It is also elicited that as per the procedure a duty is cast upon the Inspector to prepare all the correspondence pertaining to the unit which he is incharge and shall place the same before the Superintendent for approval. That even though this witness handed over Ex.P2 to Ex.P24 to the investigating officer but as admitted by him during the cross examination, he cannot say until and unless he gone through the files as to out of how many files, he picked up from Exs.P.2 to P.24 but on the CBI, Inspector instructions who gave description of the documents he picked up the documents and handed over the same to the Inspector, CBI,

Visakhapatnam, he denied the suggestions that Inspector D.Mishra prepared Ex.P.1 in his office and obtained his signature but he did not handover the documents but lastly he clearly stated that he does not have any personal knowledge with respect to the entries made in the outward register Ex.P.26 A & B and except handing over the certified copies of Ex.P.26 he does not know anything with respect to the said 24C.C.29/2006/Prl. CBI Court/VSP exhibits. Ex.P26 is the register extract of Range-II, Guntur for the purpose of identification sheet No.109 and 110, this witness except marking the documents not deposed anything against any of the accused but according to him, on the instructions of Inspector, he handed over the files to the CBI.

25.PW.2 was the Superintendent of Central Excise, Preventive and

Intelligence Wing, Divisional Office, headed by Dy. Commissioner,

Guntur Division, this witness stated that he also assigned to keep surveillance upon duty evasion prone manufacturing units. A6 and M/s

Jayalakshmi Spinning Mills Limited, Chebrolu, Guntur district, comes under his jurisdiction limits of P & I wing, Guntur division. A6 is a 100 % export oriented unit (EOU), manufacturers of cotton yarn and exporting the same and he know A6 imported six auto coners from

Germany under 100 % EOU scheme. This witness also confirmed under Ex.P.2 six (6) auto coners of SCHLAFHORST model No.238 of 60 spindles with accessories were imported by A6 and the customs duty was exempted for six auto coners as the same were brought under 100 % EOU scheme having chapter head No.8445.00 under notification 13/81, under export import policy 92-97 under chapter IX, there is no dispute about any of these averments.

26.PW.2 further deposed that the total duty foregone comes to

Rs.2,21,94,371/- on the total value of Rs.5,91,84,990/- by executing a bond before customs authorities and the Managing Director of A6 signed Ex.P.2 and took delivery of the auto coners which were valued at Rs.1,97,28,330/- in the year 1996, the total customs duties were approximately at 35 % but the same was exempted. Ex.P23 is the 25C.C.29/2006/Prl. CBI Court/VSP photo copy of B-17 bond executed by Managing Director of A6 on 3.7.2000. That as per the contents of the bond A6 is liable for payment in case of any discrepancies about non payment of customs duty and non fulfillment of export obligation and in such case the bond will be enforced for the realization of dues if any, the bond also reveals that A6 imported machinery worth Rs.2655.79 lakhs, involved a duty amount of Rs.1029.87 lakhs and there is no dispute for the same.

27.PW.2 further deposed that in the year 2004 he came to know that A6 disposed off two auto coners out of six auto coners mentioned above without payment of proper customs duties and he is only concerned with the disposal of the auto coners, hence he called LW.11

M.Yesob, authorized signatory of A6 and examined him under the

Customs Act, 1962. Ex.P9 to Ex.P11 are the statements of LW.11 recorded on different dates. According to this witness, A6 sold two auto coners on the strength of central excise invoice No.78 dt.9.10.2003, on payment of central excise duty of Rs.5,17,869/- to

M/s.SJSML under Ex.P.6 in which the date was changed from 8.10.2003 to 9.10.2003 and the consignment covered under Ex.P6 are shown as two items transported on a lorries bearing Reg.No. AP 7 T /6061, 6076 and 6090. He also examined P.W.3 and recorded his statement under

Ex.P14 and Ex.P15. According to him PW.3 stated that A6 already required to pay certain amounts to M/s.SJSML and by selling those two auto coners, they made the book adjustments but he was not shown with such book adjustments or any other record in respect of the sale transactions, at this stage the learned counsel for the A4 to A6 rightly placed relience on section 138B of Customs Act which mandates that 26C.C.29/2006/Prl. CBI Court/VSP the statements recorded under section 108 Customs Act can be used in any inquiry or proceeding under the said Act only but not under any other statutes, more over Lw11 was also not examined before the court.

28.Pw.2 further stated that on 29.9.2004, he visited M/s.SJSML along with team of officers as well as two mediators PW.5 and LW.10

Alla Bakshi to inspect the two auto coners purchased from A6 and after finding the same, they seized two auto coners under a mahazar dated 29.9.2004 under Ex.P.7 and Ex.P25 which was duly signed by the mediators and he recorded A4 statement under Ex.P12 and Ex.P16.

According to this witness enquiry A6 dismantled the two auto coners covered under Ex.P.6 but they have not destroyed them beyond use,

M/s.KCL did not dispose off any scrap concerning the auto coners to

L.W.15, the scrap sold under Ex.P.5 invoice is valued at Rs.1,90,000/- but the same was not disclosed about the auto coners but shown as destroyed machinery scrap. Ex.P16–A to D are the letters addressed by the A6 to the Deputy Commissioner seeking permission for disposal of two auto coners along with two machinery evaluation reports and opinion dated 19.7.2002 by the Textile consultant, Hyderabad.

29.Ex.P28 is the show cause notice for demanding customs duty from A6 and as per the calculation the total duty payable by A6 is of

Rs.52,61,940/- but paid only an amount of Rs.5,17,869/- as basic

Excise Duty applicable in case of manufactured goods as detailed in

Ex.P6. But A6 themselves assessed suo moto the value of two auto coners at Rs.50lakhs in the year 2003. But according to this witness 27C.C.29/2006/Prl. CBI Court/VSP those auto coners are rugged machines and capable of functioning smoothly for more than 15 to 20 years and even the other four auto coners are still serving at the premises of A6. The two other auto coners which were disposed of to M/s Jayalakshmi Spinning Mills Ltd, are in running condition but only to evade Customs Duty they intentionally arrived the value at Rs.50 lakhs. As per Ex.P19 Export-

Import Policy 1997-2002 Provision 9.19 stipulates that once capital goods became obsolete they may be exported or disposed of in DTA with the prior permission of Development Commissioner subject to the payment of applicable duties on the depreciated value thereof. If at all any spares are there and which were not put to use, those are not eligible for depreciated value. Ex.P4 is the permission for the destruction of two auto coners dated 24.7.2002 in the premises of

A6 in the presence of Central Excise Officers, in the terms of Para 9.19 of EXIM policy, 1997-2002. Ex.P29 is the letter along with the communication addressed by the Joint Development Commissioner to

A6 dated 27.7.2002. Ex.P29 discloses that A4 made request to

Development Commissioner that their company has decided to dispose of two autoconers into DTA market as scrap as they cannot be put into use but occupying unnecessarily more space in the production area, the letter under Ex.P29 dated 27.7.2002 discloses that A6 can dispose of two auto coners on payment of applicable duties in Para 9.19 . Ex.P21 discloses that A1 visited the A6 company on 25.7.2002 and found two auto coners in obsolete condition and hence they destroyed as per the permission given by the Deputy

Commissioner, in the factory premises by breaking into pieces and the destroyed pieces was sold and the assesee had paid excise duty @ 28C.C.29/2006/Prl. CBI Court/VSP 16% on Rs.1,90,000/- which comes to Rs.30,400/- into the state bank of India, Guntur. Ex.P.26 is the original register of Range II, Guntur but as per Ex.P.26-A at S.No.683 the destruction of machinery with respect to the said autoconers and the said entries are made in the register from S.No.684 to 694. According to this witness the Range office of Central Excise is being headed by the Superintendent of

Central Excise, under whose control 2 to 3 Officers will work as

Central Excise Inspectors who will receive monthly returns submitted by the factories and verify the same and if any discrepancy is noticed by the Inspector of Central Excise, they will bring it to the notice of the Range superintendent . according to this witness as per the travelling allowance bills under Ex.P17, Ex.P18, Ex.P30, Ex.P32,

Ex.P31, A1 to A3 visited A6 company on 25.7.2002 and the purpose of visit was mentioned as destruction of two auto coners of A6 company.

30.According to this PW.2, the Superintendent is the head of the range and whatever decision have to be taken will be taken care by him and accordingly he will instruct his subordinate i.e., Inspectors, the imported auto coners have to be disposed into domestic tariff area or they can be destroyed after obtaining permission from the

Development Commissioner (VEPZ) and if they are in obsolete condition they can destroy by dismantling from the Manufacturing floor and by breaking it into pieces beyond use and the entire process has to be under taken in the presence of the Superintendent and

Inspector concerned and the said officers have to be satisfied themselves that the goods are no more in working condition and whatever instructions given by the Superintendent will be followed by 29C.C.29/2006/Prl. CBI Court/VSP the Inspectors. After completion of the entire process of destruction the range officer who is the Superintendent will submit his report to that effect to the Assistant or Deputy Commissioner and the Inspector concerned has to prepare the destruction report and submit the same to the Superintendent and he will in turn submit the same to the

Assistant or Deputy Commissioner, if required the Superintendent will take the signatures of the factory management.

31.PW.2 further stated that as per Ex.P4 Deputy Commissioner

Sri K.N.Pillai accorded permission to destroy the two auto corners bearing NO’s 147-0296-3902 and 147-0296-3913 in the premises of

M/s KCL in the presence of Central Excise Officers and as per Ex.P19 the Export and Import policy 1997-2002 Para 9.19 the capital goods and spares have become obsolete may either be exported or with prior permission of Development Commissioner disposal of in the DTA subject to payment of applicable duties on the depreciated value thereof by following the conditions by maintaining the prescribed

NFEP (Net Foreign Export percentage) and EP (Export performance).

That on perusal of Ex.P21 letter issued by Superintendent of Central

Excise A1 along with his staff visited M/s.KCL on 25-7-2002 and found two auto corners were in obsolete conditions and they destroyed the same as per the permission given by the Deputy Commissioner of

Central Excise. The destroyed pieces (scrap) was sold and the assessee paid the duty @ 16% on Rs.1,90,000/- which comes to

Rs.30,400/-. That as per the register Ex.P26 at page 218 at Serial

No.683 the Superintendent of Central Excise(A1) issued Ex.P21 on 29.7.2002. According to this witness during the sale of auto coners

A1 to A3 are working in Range-II and their main duties to receive 30C.C.29/2006/Prl. CBI Court/VSP returns, verification and supervision of destruction of machinery. On 14.3.2006 they proceeded along with the Inspector, CBI to M/s.KCL where he conducted Panchanama, photographs and videographs of the machinery of M/s.KCL were obtained but no such videos filed and the photographs are not supported by negatives. As per Ex.P5 invoice

M/s.KCL sold the destroyed machinery scrap worth Rs.1,90,000/- to

Sri M.Venkatedswara Rao, Old Guntur and collected Rs.30,400/- as excise duty through TR-6 challan.

32.This witness further testified that at that time the market price of 1 Kg. of iron was Rs.7/- and total weight of the destroyed machinery in this case is 27 tonnes approximately and the value comes to

Rs.1,90,000/-. As such it is unlikely to get that much huge quantity of scrap and it is not possible to get the same merely by dismantling one small cycle shed, the average weight of each auto coner is around 13.5 tonnes, as such the weight of two autoconers would be 27 tonnes, therefore M/s.KCL has issued this invoice with malafide intention, on same day they also visited M/s.Jayalakshmi Spinning Mills where they found two autoconers transported from Ms/.KCL and seized the same during his departmental investigation but the original serial number and the specifications, etc., have been removed.

33.PW.2 further deposed that whenever the assessee wants to dispose off the imported auto corners under EOU scheme, they have to request the customs authority by intimating the assessable value, rate of depreciation. Then the Asst. Commissioner is the competent to 31C.C.29/2006/Prl. CBI Court/VSP give permission who will examine thoroughly and arrive at the amount of duty payable and intimate the same to the assessee. But the machinery was cleared by the assessee in this case on 9.10.2003 after payment of Central Excise duties of Rs.5,17,869/- under TR-6 challan, but did not inform the same on the date of clearance. But

Later on 28.10.2003 he brought to the notice of the department. In fact the assessee is required to pay the customs duty on the duty free imported autocorners but whereas the assessee paid Central Excise duty. Ex.P32 is the letter dated 31.10.2003 addressed by Asst.

Commissioner to Joint Commissioner, Customs and Central Excise.

Ex.P33 is the letter dated 30.1.2004 addressed by Asst. Commissioner to the Deputy Commissioner with regard to certain discrepancies of

M/s KCL. That according to this witness as per Ex.P32 the assessee is required to pay Rs.5,03,073/- but paid Rs.5,17,869/-. But as per another method of calculation the assessee is required to pay

Rs.6,70,763/-. Thus the assessee has short paid an amount of

Rs.1,52,894/- but the assessee has adopted a wrong method of calculation. Ex.P.33 is the letter issued for recovery of Special

Additional duty. Ex.P34 is the letter addressed by A6 to Asst.

Commissioner of Central Excise dated 28.10.2003 with respect to the disposal off obsolete machinery. Ex.P.34 discloses that assessee adopted the method for disposal off obsolete machinery by claiming depreciation at the rate of 10% per annum i.e., from 30.11.1998 to 9.10.2003 total 49% i.e., for 313 days and deducted Rs.96,66,882/- from the actual value shown in the bill of entry. Ex.P35 is the letter

dated 20.11.2003 by Development Commissioner to the Joint

Commissioner as A6 is the 100% EOU change of date of Commercial 32C.C.29/2006/Prl. CBI Court/VSP production. Ex.P.35 discloses that A6 is eligible for depreciation from the date of starting of the Commercial production and the

Development Commissioner intimated the date of commercial production as 30.11.1998.

34.That apart from PWs.1 and 2, PW.6 and PW.7 are the witness from Excise Department whose evidence is very much relevant for the purpose of this case. PW.6 was the Assistant Development

Commissioner, Visakhapatnam Special Economic Zone, he deposed that Ex.P29 letter dated 27.2.2002 of Joint Development Commissioner to A6 and another letter dated 5.2.2002 of A4, Managing Director of

A6 addressed to Development Commissioner, Visakhapatnam along with covering letter dated 30.1.2006 handed over to CBI,

Visakhapatnam. Ex.P30 is the original letter dated 27.2.2002 covered under Ex.P29 but during the cross examination he clearly stated that except handing over of Ex.P29 to CBI officials, he do not have any personal knowledge about the contents of Ex.P29.

35.PW.7 was also the Assistant Commissioner who assumed charge on 6.10.2003 in the place of Sri K.N.Pillai at Guntur Division. According to this witness, A6 comes under his jurisdiction at Guntur. Ex.P37 is marked for limited purpose regarding remission of duty and destruction of goods. Ex.P38 is the manual export oriented units and SEZ Law and procedures, regarding disposal of absolute/surplus export and depreciation on capital goods. As per this witness also he issued

Ex.P32 letter to the Joint Commissioner, Customs and Central Excise 33C.C.29/2006/Prl. CBI Court/VSP by calculating short payment of customs duty by A6 in the matter of disposal of two imported autoconers. As per his calculation A6 has to pay Rs.6,70,763/- instead of Rs. 5,17,869/-. As such the difference amount to be paid by A6 is of Rs.1,52,894/-. The reasons for the said calculations are that basic customs duty as specified in schedule-I of

Customs Tariff Act 1975 and countervailing duty as specified in Sec.3 of

Customs Tariff Act and Special Additional duty as specified in Sec.3-A of

Customs Tariff Act were not taken by him. According to this witness

A6 has removed two Autoconers without permission of Development

Commissioner. As such the department booked a case against KCL for evasion of Customs duty according to the assembled value of autoconer at Rs.1.97crores. As such the department is claiming customs duty of Rs.52.61lakhs. The letter given permission to destroy or scrap the autoconers only and he identified the signatures of A1 on Ex.P17 travelling allowance bill.

36.PW.3 was the employee of M/s. Sri Jayalakshmi Spinning Mills (P) Limited which purchased the two autoconers from A6. According to this witness he was working in M/s SJSML and attending Central

Excise matters and PW.2 along with some other came to their office on 29.9.2004 and seized two auto coners. But he does not know as to why the said two auto coners were seized but he signed as signatory on Ex.P7.

37.PW.4 is an auto rickshaw driver. According to him he purchased an auto rickshaw bearing No.AP 07T 6076 in the year 1997. After two years he sold the same for Rs.40,000/- subsequently he purchased another auto rickshaw bearing NO. AP 16W 7330, it is to be noted that the presence of the two auto coners at M/s SJSML is not in dispute, as 34C.C.29/2006/Prl. CBI Court/VSP per the prosecution on the date of destruction on 25-07-2002 the auto coners were transported under the guise of scrap whereas as per the accused A6 dismantled the auto coners and sold to M/S SJSML on 09- 10-2003 as such the transportation of the auto corners to M/s SJML not in dispute but wheather they were sold and transported when those machines are in working condition is the question.

38.PW.5 was the mediator for the proceedings under Ex.P7 on 29.9.2004 and he also deposed in the same lines of evidence of PW.3 by stating that the officers seized two auto corners in M/s SJSML in the presence of mediators by recording the Ex.P7.

39.PW.8 was examined by the prosecution to show that he is a lorry supplier but not a scrap dealer as he has not purchased any machinery scrap from A6 on 25-07-2012. PW.8 deposed that previously he was the lorry owner and supplier of the lorries, he know

A6 from where he used to receive calls from one Sastry to supply vehicles on hire for transport of Cotton waste. He know the lorry owner bearing No.AP7T 1436, Sri B.Venkateswarulu (PW.9), this witness used to send the lorry of PW.9 also to different companies for the requirement of lorries, for which he used to get commission of 3 to 4 % but he did not gone through any invoices but at the request of

Sastry in the year 2002 he sent lorry bearing No. AP7T 1436 but he never purchased scrap from any one at any point of time but as a supplier of lorries he used to supply lorries for transport and he never supplied his lorry to A6.

40.PW.9 was the owner of the Lorry bearing No. AP7T 1436, according to him at the request of PW.8, he sent his lorry to A6 on 35C.C.29/2006/Prl. CBI Court/VSP 25.7.2002 through a driver but the said lorry was sent for picking up of waste cotton material for which he used to give Rs.50/- to PW.8 as commission for one trip and he used to get Rs. 850/- for a trip but he does not know which material was transported in his lorry on 25.7.2002 and he also does not know as to where the material was delivered from M/s Kumars Cotex Ltd., he is not particular as to which material was transported from A6 to M/s SJSML on 25-07-2002 hence his evidence is not helpful to the prosecution to prove that the two auto coners were transported on 25-07-2002 itself.

41.PW.10 and PW.11 are the mediators, according to their evidence on 14.3.2006 they along with the Investigating Officer and Excise officials proceeded to A6 premises where they found four auto Coners and the particulars of four auto coners were noted and photograph also taken, Mahazar was prepared under Ex.P39. Thereafter proceeded to

M/s SJSML where PW.2 showed them two number of auto coners that were said to have been acquired from M/s KCL with Serial Nos.6 and 7 written in paint but the original machine serial numbers fixed by the manufactures was found tampered and the other two auto coners found with serial number and all the auto coners were videographed and photos were also taken in their presence by preparing Ex.P40 mahazar. Ex.P41 are the five photographs at A6. Ex.P42 ten photographs taken at M/s SJSML but admittedly no negatives are filed.

42.PW.12 and PW.13 are the persons who granted sanction for prosecution of A2 and A3 and they deposed about the sanctioning proceedings. PW.14 is the Government Examiner of Questioned

Documents who confirmed the signature of A1 on Ex.P20, Ex.P21,

Ex.P45 and Ex.P46.

36C.C.29/2006/Prl. CBI Court/VSP

43.PW.15 is the Investigating Officer, he deposed that while he was working as Inspector, SP, CBI, Visakhapatnam instructed him to registered a case in R.C.No.12(A)/2005 for the offence U/Sec. 120-B, r/w 420 IPC, and U/Sec.13(2) r/w 13(1)(d) of PC Act, 1988 against A1 to A3 and one B.Srikrishna. He registered the F.I.R under Ex.P48 on 30.05.2005. During the course of investigation he examined the witnesses and recorded their statements on different times and collected Ex.P1 to Ex.P48, he also collected the specimen writings and admitted writings of A.1 and forwarded the same to the expert for examination. On 14.03.2006 he took photographs and videographs of auto coner machine available at factory site of A6 and M/s SJSML by preparing the Panchnama, but no such videos are filed and photos also not supported by negatives, PW.15 after completion of entire investigation after obtaining the sanctioning order against A1 to A3 filed charge sheet for the offence under section 120-B, 420 , 465, 471 of IPC and under section 13(2) r/w 13(1)(d)(II) of PC Act 1988. Ex.P49 is the layout plan of A6, Ex.P50 is the covering letter, Ex.P51 is the sanction order against A1, EX.P52 is the covering letter along with the questionnaire forwarded to the expert, Ex.P.53 is the case proceedings

dated 1.10.2004 collected from PW.2, Ex.P.54 is the letter of M/s

SJSML dated 8.2.2006, Ex.P. 55 is the declaration form given by A6,

Ex.P. 56 is the letter forwarded by PW.1 dated 27.3.2006. Ex.P57 is the search warrant and search list along with the memo.

44.That in this case according to the prosecution A1 with the connivance of A2 and A3 in conspiracy with the other accused sent the destruction report to believe the Central Excise Department that 37C.C.29/2006/Prl. CBI Court/VSP the auto coners were completely destroyed and sold the scrap on 25- 07-2002 but according to the accused No.2 and 3 even if the entire evidence of PWs.1 to 15 is taken to be true and correct, no incriminating material has come at any stage of the evidence and no witness deposed about their role but except the travelling allowance bill there is nothing on record, travelling allowance bills alone cannot prove the complicity of the accused, all the material witnesses are clearly admitted that it is the superintendent, A2 and A3 being the

Inspectors have no role as they are neither the parties for destruction or for reporting the same and it is not the case of the prosecution that

A6 unit allotted to them but the said unit allotted to one Srikrishna,

Inspector.

45.That according to A4 to A6 they have not destroyed the auto coners but dismantled and subsequently sold to M/s SJSML by paying requisite duties to the Excise Department. That analyzing the entire evidence the sole crux of the matter revolves upon Ex.P20 and Ex.P21, as per the accused Ex.P20 letter sent by A1 by stating that the auto coners were dismantled but for destruction it will take 15 to 20 days time but as per the prosecution Ex.P20 created by A1 after thought but the correct letter is Ex.P21 by which A1 intimated the destruction of the auto coners. Ex.P17, Ex.P18 are the travelling allowance bills of

A1, Ex.P22, Ex.P30, Ex.P31, Ex.P46 and Ex.P58 are the travelling allowance bills of A1 to A3 but as admitted by the witnesses except

Ex.P21 there is no other evidence to prove the destruction intimation, the prosecution failed to collect any other material. During the cross examination of PW.1 it is elicited that as per the procedure each unit will be allotted to the rank of Inspector, Central Excise and Inspector 38C.C.29/2006/Prl. CBI Court/VSP concerned will look after the same, the Inspector will report to the

Superintendent who is his immediate superior officer in the range and the Inspector, Central Excise will have the entire responsibility on behalf of the department but it is the discretion of the superintendent to allot the units to the Inspectors. As per the procedure a duty cast upon the Inspector to prepare all the correspondence pertaining to the unit for which he is in charge and except marking of Ex.P21 he cannot say the details of the documents including Ex.P21 and even

PW.2 also stated that one Custom Inspector Sri Krishna was the in charge of A6 company and he alone is responsible for day to day activities of A6 company and he alone responsible for destruction of imported auto coners of A6 company for recovery of duty amount but no witness deposed against A2, A3 with regard to the destruction of the auto coners as contended by the prosecution but PW.2 clearly stated that he was examined by the CBI only for the limited purpose that he examined A5, but he did not gone through the adjudication proceedings which were initiated against A6 company at any point of time. He clearly stated that A5 stated before him that the company is prepared to pay whatever the custom duty payable to the department,

A5 stated before him while his examination that it was written in their books by mistake as Excise duty instead of custom duty and he came to know that the case against A4 to A6 closed by their department as there was no financial loss and he does not have any personal knowledge as he did not deal with the documents.

46.PW.3 was only an employee in M/S SJSML and he only deposed about the search in M/s SJSML on 29.9.2004 but according to him after purchase of the two auto coners they got repaired by purchasing the 39C.C.29/2006/Prl. CBI Court/VSP spare parts from Ahmadabad and Coimbatore and there is no other evidence contrary to his evidence as such there is no evidence that

M/s SJSML purchased two auto coners in running condition but according to A4 to A6 since from the inception the scrap sold on 25.7.2002 was not that of the two auto coners but it is a separate one and PW.5 also stated that he does not know the condition of the said auto coners when those were received by the M/s SJSML. PW.4 is the auto driver in which the part of auto coners were shifted from A6 company to M/s SJSML but as admitted by him except his oral evidence there is no documentary proof in respect of his evidence and he does not remember in which year and in which month he was examined by the CBI, his evidence is not sufficient for the complicity of any of the accused. PW.5 was also the mediator for Ex.P7 on 29.9.2004. PW.15 was the investigating officer but during the cross examination it is elicited that he has not received any complaint

before registration of FIR Ex.P48, there was no documentary proof for

the contents of FIR by the time of its registration. The Central Excise

Department imposed total duty of Rs.52,61,941/- under Ex.P28 for disposal of two auto coners as such he mentioned the same amount as wrongful loss and prior to registration of FIR. A6 paid an amount of Rs.5,17,869/- towards excise duty for disposal of two auto coners as per their calculation and he did not collect the replies given by A6 and he did not investigate about the due amount and A5 statement shows that two auto coners were sold to Jayalakshmi Spinning Mills for an amount of Rs.50,00,000/- and A5 further stated that they are ready to pay the duties if any as per law and he does not know whether A6 preferred appeal to the appellate authority and 40C.C.29/2006/Prl. CBI Court/VSP subsequently Central Excise Authorities issued letters that there is no loss and he clearly stated the respective superintendent is empowered to investigate the allotted case but not the Inspector and superintendent alone empowered, he has to give the information with regard to the action taken by him including the destruction of imported material but in this case A1 was the Superintendent and who dealt with the destruction of A6 imported machinery and one Sri

Krishna, Inspector entrusted to assist A1, he clarified that these A2 and A3 Inspectors have no role for ordering destruction, supervising or reporting of the destruction of the machinery and no inspector including A2 or A3 prepared any note of destruction, they did not play any role in destruction of imported machinery at A6 unit on 25.7.2002. There are no other documents against A2, A3 to show that they have played any role in this case and A1 not prepared the destruction report at A6.

47.That according to PW.1 and PW.2 that Sri Krishna, Inspector,

Excise Department was the Inspector who entrusted with the A6 company and he was examined as DW.1, he clearly deposed that A1 used to allot the work to Inspector company wise, all cases of A6 unit were allotted to him only, only A2, A3 are not concerned with the files and cases of that company including the destruction of any material.

The destruction order have to be passed by the Deputy Commissioner and it has to be implemented by the Head of the Department,

Superintendent and the Inspectors who assist have no power to destroy any material on their own . But on reaching the spot the

Deputy Commissioner has to take decisions whether to destroy or not but nothing happened to his knowledge as machinery was in the 41C.C.29/2006/Prl. CBI Court/VSP same condition, he did not asked the superintendent or inspectors as to why the machinery was not destructed and initially there was an audit objection for the destruction of auto coners and for the quantum of tax and until issuance of show cause notice the matter was pending with them for adjudication proceedings and from the beginning A4 and A5 stated that they dismantled/obsolete auto conerrs but not destroyed. Ex.D3 shown to him contains PW.2 signature. Question No.7 and 8 and answers mentioned in Ex.P12,

Ex.D4 are the answers given by A4 dated 22.1.2005, after receipt of of the order of the Tribunal , Bangalore Committee was constituted and they opined that there is no suppression of facts, no motive, no criminal misconduct and no revenue loss, the commissioner closed the file and Ex.D5 also shows that there is no revenue loss.

48.That as stated above the entire case of the prosecution depends upon the Ex.P20, Ex.P21 but even according to the investigating officer, there is no revenue loss to the excise department,

Ex.P3 order passed by the Development Commissioner for disposal of auto coners of A.6 on 27.2.2002 but not for destruction, this order was not cancelled at any time but subsequently the Deputy Commissioner passed orders for destruction of auto coners on 24.7.2002, but according to the prosecution A1 intimated that they made destruction of the auto coners under Ex.P21 dated 30.7.200. As per the prosecution destruction order passed on 24.7.2002 and destruction report under Ex.P21 sent on 30.7.2002 but according to

DW.1 the destruction of one Auto coner takes 20 to 30 days time hence Ex.D5 supporting the version of DW.1 as such some suspicious arises for Ex.P21, the prosecution filed Ex.P26 register to show that 42C.C.29/2006/Prl. CBI Court/VSP the entry no 683 refers to Ex.P21 but not related to Ex.P20 as such

Ex.P20 created by A1 after thought, at this stage on careful examination of Ex.P20 and Ex.P21, both are contains the same serial number of dispatch as 683 with different dates but on perusal of

Ex.P26 register it was entered as dispatched on 29.7.2002 but Ex.P21 contains the subsequent date as 30.7.2002 which cannot be possible to dispatch the letter which contains subsequent date mentioned in the register as such Ex.P21 seems to be doubtful. As per the register no letter was sent on 30-07-2002, Moreover, Ex.P6 invoice dated 09-10- 2003 clearly shows that they sold two obsolete auto coners for

Rs.25,00,000/- to M/s SJSML by paying the basic excise duty of

Rs.5,17,869/- and Ex.P16 letter issued by the Deputy Commissioner also shows that the Joint Development Commissioner has accorded permission for disposal of the obsolete machinery, hence they requested to permit for destruction of the obsolete machinery. That as per Clause 9.19 of Import and Export Policy Procedures 1997-2002 the capital goods and spares that have become obsolete may either be exported or with the prior permission of the Development

Commissioner, disposed off in the DTA subject to payment of applicable duties on the depreciated value thereof. The spares which have not been put to use will not be entitled for depreciation. That as per the Central Excise Manual para 1.4 (ix) the proper officer personally supervising the destruction will have to check the quantity by physical verification i.e., by weight or by counting or using appropriate method in case of liquids, as the case may be and the identity of goods by reference to relevant records and the application for destruction. The clearance of goods, within or outside the factory 43C.C.29/2006/Prl. CBI Court/VSP premises, shall be done on an invoice, indicating ’nil’ duty and the order of the proper officer permitting destruction and remission, should be quoted on the invoice. As per para 2.1 Manner of Destruction is clearly mentioned as under :

“ The goods intended and presented before the proper officer for destruction must be destroyed in such a manner that they become irretrievable as excisable commodity. The actual method of destruction will depend upon the nature of the goods to be destroyed”.

49.That as per clause 2.2 the officer supervising the destruction must endorse under his signature the relevant records/documents such as ARE-1, invoice and other relevant factory records indicating the description and quantity of the goods destroyed in his presence specifying the time and date. Further as per Clause 2.3 immediately after destruction of the goods is completed, the officer supervising destruction must also send a certificate to his immediate superior, countersigned by the factory manager and the factory officer but in this case except Ex.P21, the investigating officer has not collected any such destruction report or any other record signed by the A6 which are mandatory as per the Central Excise Manual as such it cannot be said that the prosecution proved by Ex.P21 that A1 intimated the destruction as Ex.P26 register is supporting Ex.P20 rather than Ex.P21 relied on by the prosecution. Ex.D3 is the letter issued by the Assistant

Commissioner, Central Excise by putting questionaire that Whether

A6 destroyed the auto coners or not but under Ex.D4 letter of A6 dated 22.1.2005 it is clearly mentioned that even though the Deputy

Commissioner has given permission for destruction of two number of 44C.C.29/2006/Prl. CBI Court/VSP obsolete coners but they have not done any destruction process but they only dismantled the two auto coners. On 25.7.2002 the Deputy

Commissioner and Range Superintendent along with the staff supervised the removal of certain parts from the main body of the obsolete auto coners i.e., drums, sensors, sackets and voltage monitoring card and from 26.7.2002 they have dismantled the two obsolete auto coners in the presence of their technical experts and the same was completed in 20 days time. Further Ex.D5 is the information given by the office of the Commissioner, Customs, Central Excise which shows that the Customs, Central Excise and Service Tax

Appellate Tribunal, Bangalore allowed the appeals filed by A6 by setting aside the order passed by the Commissioner of Customs &

Central Excise, Guntur and the Department has accepted the final order dated 13.6.2012 and there is no revenue loss to the government.

50.The above evidence clearly shows that there is no loss to the

Excise Department, there is no evidence that the auto coners were completely destroyed and accused intimation about the same the

Development commissioner granted permission for disposal of auto coners but not destruction under Ex.P3 on 27-02-2002 by observing the customs formalities on payment of applicable duties in terms of para 9-19 of EXIM Policy 1997-2002 and the said permission was not cancelled, Ex.P4 permission granted on 24-07-2002 for destruction in terms para 9.19 of Exim policy and both these orders were not canelled, as discussed above there is no sufficient evidence of destruction of auto coners as required in accordance with the mandatory procedure mentioned herein above but A6 disposed two 45C.C.29/2006/Prl. CBI Court/VSP obsolete auto coners vide E.P6 invoice dated 09-10-2003 by paying Rs 5,17,869/- through challan no 19/2003-04 on the same date but admittedly there is difference of opinion about the duties payable by

A6 but the version of A6 accepted by the Appellate Tribunal and there is no dispute for the same, show cause notice issued under Ex.P28 on 06-04-2004 and the FIR registered under Ex.P48 on 30-05-2005 on the other allegation of cheating and forgery but the learned counsel for the

A4 to A6 by placing two unreported decisions stated that this court has no jurisdiction and the Economic offences Court alone having jurisdiction but this case is not in respect of excise duty but for the offences under IPC and Prevention of Corruption Act as such it cannot be said that this court have no jurisdiction.

51.PW1 just handed over the documents Ex.P2 to P24 under Ex.P1 acknowledgement to LW23-Inspector Sri.D.Misra but he has not deposed anything except marking Ex.P1 to P24, Pw2 deposed lengthily but even according to him one Inspector Sri Krishna is alone responsible for A6 but not A2 or A3, the in charge inspector is alone have to submit the report including destruction but in this case the prosecution except Ex.P21 not placed any other record confirming the complete destruction of the auto coners and intimating the same to excise department, he clearly deposed that the in charge inspector alone is responsible but no other inspectors are liable, even though this witness deposed the entire prosecution case but he clearly confirmed that he was examined by the CBI only for the said limited purpose as he examined A5, he does not know whether CBI registered case against A4 to A6 on the allegation that they caused loss by evading the 46C.C.29/2006/Prl. CBI Court/VSP customs duty, lastly stated that he came to know that the case against

A4 to A6 closed by their department as there was no financial loss. At this stage it is relevent to refer a case before the Delhi High Court between R K SRIVASTAVA V/S CBI (2011 LawSuit(Del) 3272) wherein it is held as under:

“[34] The reason is obvious, criminal complaint is filed by the departmental authorities alleging violation/contravention of the provisions of the Act on the part of the accused persons. However, if the departmental authorities themselves, in adjudication proceedings, record a categorical and unambiguous finding that there is No. such contravention of the provisions of the Act, it would be unjust for such departmental authorities to continue with the criminal complaint and say that there is sufficient evidence to foist the accused persons with criminal liability, when, it is stated in the departmental proceedings that ex facie there is No. such violation. The yardstick would, therefore, be to see as to whether charges in the departmental proceedings as well as criminal complaint are identical and the exoneration of the concerned persons in the departmental proceedings is on merits holding that there is No. contravention of the provisions of any Act.

52.Even otherwise in this case admittedly there is no revenue loss to the Excise department, as per section 420 IPC there must be deceiving a person fraudulently or dishonestly induces to deliver the property, as per section 24 IPC dishonestly defined as any person does anything with the intention of causing wrong full gain to one person or wrongful loss to another, section 25 IPC defines fraudulently as if the things committed with intent to defraud but not other wise but when there is no loss at all it cannot be said that the prosecution proved the ingredients for the offence under section 420 IPC, Ex.P20 is convincing rather than Ex.P21 as such there is no evidence of any forgery or obtaining any thing by such forged documents, even as per the prosecution witnesses there is no role of A2 A3 and they were not entrusted with any duties of A6 as such they are not liable for the 47C.C.29/2006/Prl. CBI Court/VSP punishment for the offence punishable under section 13(1)(d) r/w 13 (2) of Prevention of Corruption Act. Hence these points are answered against the prosecution.

53.In the result the accused 2 to 6 are found not guilty for the charges U/Sec.120-B, 420,468, 471 r/w 465 IPC and A2 and A3 are not found guilty for the charges U/Sec.13 (2) r/w. Sec.13(1) (d) of

Prevention of Corruption Act framed against them respectively and they are acquitted U/Sec.248 (1) Cr.P.C for the offences U/Sec.120-B, 420.468, 471 r/w 465 IPC and Sec.13 (2) r/w. Sec.13(1) (d) of

Prevention of Corruption Act. A1 died hence case against him abated.

The accused 2 to 6 shall be set at liberty and the bail bonds shall stands cancelled after expiry of six months. A2 to A6 are directed to execute bail bonds as required u/Sec.437 A Cr.P.C.

Typed to my dictation by the Stenographer-Grade I, corrected and pronounced by me in the open court, this the 31st day of

December, 2018.

S/d B.PAPI REDDY

PRINCIPAL SPL. JUDGE FOR CBI CASES

VISAKHAPATNAM

APPENDIX OF EVIDENCE

LIST OF WITNESSES EXAMINED ON BEHALF OF PROSECUTION.

P.W.1/11.10.2012 : Mothiki Kumara Ganesh

P.W.2/16.10.2012 : Gosala Tirumala Kumar

P.W.3/18.10.2012 : Katrapati Vijayanand

P.W.4/: 07.04.2015 : Udumula Sekhar Reddy

P.W.5/08.04.2015 : Katta Arun Kumar

P.W.6/09.04.2015 : Kotaru Govinda Rao

P.W.7/13.04.2015 : Kokkali Ramaswamy Pandian 48C.C.29/2006/Prl. CBI Court/VSP

P.W.8/13.04.2015 : M.Venkateswara Rao

P.W.9/: 13.04.2015: Bavirsetty Venkateswarlu

P.W.10/15.04.2015: V.Badari Prasad

P.W.11/15.04.2015: K.Krishna Rao

P.W.12/ 12.09.2017 : J.S.Chandra Shekar

P.W.13/19.09.2017: Subhas Chandra Chowdhury

P.W.14/: 20.08.2018 : A. Balaswamy

P.W.15/20.08.2018: Dibakar Misra

LIST OF WITNESSES EXAMINED ON BEHALF OF DEFENCE

D.W.1 /05.11.2018: B. Sri Krishna

LIST OF DOCUMENTS MARKED ON BEHALF OF PROSECUTION.

Ex.P1 : Original receipt of documents dt.10.1.2006 handed over to LW.23. Ex.P2 :Original bill of entry No.4/96 dt.6.7.96. Ex.P3 : Original permission letter dt.27.2.2002 issued by Joint Development Commissioner, EX.P4 : Original letter dt.24.7.2002 issued by Dy. Commissioner of Customs & Central Excise, Guntur division. Ex.P5: Original carbon copy invoice No. 21 dt.25.7.2002. Ex.P6 : Original carbon copy invoice No. 78 dt.9.10.2003. Ex.P7 :Original Mahzar dt.29.9.2004. Ex.P8 :Original undertaking dt.29.9.2004 given by M/s.Sri Jayalakshmi Spinning Mill Limited. Ex.P9 :Original statement dt.28.10.2003. Ex.P10:Original statement dt.9.9.2004. Ex.P11:Original statement dt.28.9.2004. Ex.P12: Original statement dt.30.9.2004. Ex.P13:Original statement dt.1.10.2004. Ex.P14:Original statement dt.27.9.2004. Ex.P15 :Original statement dt.1.10.2004. Ex.P16 : Original letter dt.22.7.2002 addressed by M/S KCL to Dy. Commissioner with enclosures. EX.P16-A: Machinery evaluation report dt.22.7.2002 in respect of two autoconers with machine no. 147-0296-3902. Ex.P16-B: Machinery evaluation report dt.22.7.2002 in respect of two autoconers with machine no.47-0296-3913. Ex.P16-C : Letter dt.19.7.2002 addressed by G.Venkateswararao to the Managing Director, M/s.KCL. EX.P16-D : Letter dt.19.7.2002 addressed by G.V.Rao, Textile consultant, santisikharan apartments, Rajbhavan Road, Hyderabad.

49C.C.29/2006/Prl. CBI Court/VSP

Ex.P17 :Travelling allowance bill of Sri V.Bhaskararao, Superintendent for the month of July, 2002. Ex.P18 :Extracts of X.T.1 diaries of of Sri V.Bhaskararao, Superintendent from 16.7.2002 to 31.7.2002 in original (2 sheets). Ex.P19 : Certified copy of provision of para 9.19 of import export policy and procedure 1997-2002. Ex.P20 :Original letter dt.17.12.2004 issued by Sri V. Bhaskararao, Superintendent of Central Excise to the Asst. Commissioner of Central Excise, Guntur Division, Guntur enclosing photo copy of report dt.26.7.2002. Ex.P21 : Original letter dt.30.7.2002 of V.Bhaskara Rao under OC No.683/2002 of Range-II , Guntur. Ex.P22: Original of X.T.1 diary of Sri P.Nagashankara Rao, Inspector for the period from 23.7.2002 to 31.7.2002. Ex.P23 :Attested photo copy of B-17 bond(Eleven pages) executed by Kumar’s Cotex Limited on 3.7.2000. Ex.P24 :Photostat copy of letter dt.25/26-7/2002 issued by Sri V.Bhaskararao, Superintendent, Central Excise, Range-II, Guntur to the Dy. Commissioner, Customs & Central Excise, Guntur Division, Guntur. Ex.P25 : Seizure memo dt.29.9.2004. Ex.P26 :O.C. Register (Relevant pages 109, 110 OC Register extract). Ex.P26-A : Original of Sheet No.109 in Ex.P26. Ex.P26-B : Original of Sheet No.110 in Ex.P26. Ex.P27 : Copy of the instructions of the manual relating to Customs Tariff of India 2004-05, 38th edition and the relevant pages extracted are 402, 424 & 484 . Ex.P28:Showcausenoticedt.06.10.2004bearing C.No.VIII/10/111/2004-ADJ.(CUS) and OR No.05/2004-CUS issued by the Commissioner of Central Excise and Customs to M/s.Kumars Cotex Ltd., for demanding customs duty. Ex.P29 : Letter No.8/EOU/76/VEPZ /2002.1095-96, dated 27-7-2002 along with cover letter dt.30.1.2006. Ex.P30 :Travelling Allowance bill of P.Naga Shankara Rao for July, 2002.

Ex.P31 : Travelling allowance bill of T.Subramanyam for July, 2002.

Ex.P32 : letter dated 31.10.2003 addressed to the Joint Commissioner, Customs and Central Excise Head quarters, Guntur by the Asst. Commissioner Mr. K.R.Pandian vide letter bearing No. C.NO.V/19/22/2003-Prev. Ex.P33 : Letter dated 30.1.2004 addressed to the Assistant/ Deputy Commissioner, Customs and Central Excise, Guntur division by A.Balakishnan Raju, Asst. Commissioner (A.E & A.S). Ex.P34 : Letter dated 28.10.2003 addressed by M/s Kumar’s Cotex ltd., to the Asst. Commissioner of Central Excise, Guntur Division. Ex.P35 : Letter dt. 20.11.2003 addressed to Sri. M.V.Subba Reddy, Joint Commissioner, Office of the Commissioner, Customs and Central Excise, Guntur by Sri P. Ramesh Kumar, Development Commissioner.

50C.C.29/2006/Prl. CBI Court/VSP

Ex.P36 : Photostat copy of Circular No.29/03 of Customs dated 3.4.2003. Ex.P37 : Attested copy of Central Excise Law Manual 2005-06 Chapter-18. Ex.P38 : Export oriented units and SEZ Law and procedure page Nos.228, 229. Ex.P39 : Mahazar prepared on 14.3.2006 at M/s Kumar Cotex Ltd. Ex.P40 : Mahazara dt14.3.2006 prepared at SJSML Ltd., Chebrolu, Guntur. Ex.P41 : Five photographs taken at M/s KCL on 14.3.2006. Ex.42 : Ten Photographs taken at M/s SJSML Ltd., on 14.3.2006. Ex.P43 : Sanction Order dt.27.3.2006 issued against A3. Ex.P44 : Sanction Order dt.31.3.2006 issued against A2. Ex.P45 : S.1, S.2 signatures. Ex.P46 : Signature of A.1 to A.3. Ex.P.47 : Opinion of GEQD. Ex.P48 : F.I.R. Ex.P49 : Layout plan of Kumar Cotex Ltd., Ex.P50 : Covering letter dt.21.3.2006. Ex.P51 : Sanction order against A1. Ex.P52 : Covering letter along with the questionnaire forwarded to the expert. Ex.P53 : Case proceedings dated 1.10.2004. Ex.P54 : Letter dated 8.2.2006 forwarded by Sri.Jaya Lakshmi, Spinning Mills limited along with audit accounts. Ex.P55 : Declaration form given by Kumar Cotex limited. Ex.P.56 :Letter dated 27.3.2006 forwarded by P.W.1. Ex.P. 57:Search warrant and search list along with the memo. Ex.P58 : D.A. Bill of B.Srikrishna (Carbon copy)

LIST OF DOCUMENTS MARKED ON BEHALF OF DEFENCE.

Ex.D1 : Photostat copy of letter dt.5.4.2002 issued by Superintendent, Central Excise Range-II, Guntur.

Ex.D2 : Relevant portion of 161 Cr.P.C statement of PW.9

Ex.D3 : PW.2 signature

Ex.D4 : Signature of A4 dt.22.1.2005.

Ex.D5 : Signature

MATERIAL OBJECTS MARKED ON BEHALF OF PROSECUTION

NIL

S/d B.PAPI REDDY

PRL. SPL. JUDGE FOR C.B.I. CASES,

VISAKHAPATNAM

Copy submitted to The Hon’ble Registrar (Judicial), High Court of Judicature at Hyderabad 51C.C.29/2006/Prl. CBI Court/VSP for the State of Telangana and the State of Andhra Pradesh

Copies to:

1. The Superintendent of Police, C.B.I., Visakhapatnam.

2. The Commissioner of Customs & Central Excise, Guntur.