2011 (2) TMI 1145 - HC - Central Excise

Demand - Rule 5 of the Central Excise Act - While the proceedings before the Supreme Court was pending, the Department had filed Criminal case against the Company and its then Directors, alleging that they had tried to evade the payment of excise duty amounting to Rs. 8.29 crores - Held that - Once, the authority, who is competent to raise a demand, comes to a conclusion that there has been a miscalculation by the authority or that the excise duty to the tune of Rs. 8,29,10,883.29/- is not chargeable and the entire payment has been dropped, it cannot be said that the petitioner would be charged with the criminal intention of deliberate withholding the payment of excise duty to the Union of India - Decided in favor of the assessee

Issues:
1. Refusal of discharge application under Section 245 of the Code of Criminal Procedure for alleged offences under the Central Excise Act.
2. Determination of assessable value of cigarettes under Rule 5 of the Central Excise Act.
3. Legal proceedings and challenges against demand raised by the Central Excise Department.
4. Allegations of evasion of central excise duty by manipulating price structure.
5. Criminal cases filed against the company and directors for alleged evasion of excise duty.
6. Justification of excise duty payment and legal remedies available to the accused.
7. Conclusion on the discharge of petitioners in multiple Complaint Cases.

Analysis:
1. The petitioner challenged the refusal of the discharge application under Section 245 of the Code of Criminal Procedure for offences under the Central Excise Act. The Director General's order on determining the assessable value of cigarettes led to a demand, which was challenged through legal proceedings.

2. The assessable value of cigarettes was to be determined under Rule 5 of the Central Excise Act. The petitioner's challenge against the demand raised by the Central Excise Department resulted in a series of legal actions, including a writ application and an appeal under Section 35A of the Central Excise Act.

3. The legal proceedings involved challenges to the demand raised by the Central Excise Department, leading to a conclusion by the Commissioner that the demand was not substantiated. The Court reviewed the cases pending before it, detailing the period, amount, and date of cognizance for each case.

4. Allegations of evasion of central excise duty were based on the manipulation of the price structure of cigarettes to lower the assessable value. However, the Commissioner's finding indicated that there was no demand against the petitioner, ultimately leading to the discharge of the petitioners in multiple Complaint Cases.

5. Criminal cases were filed against the company and its directors for alleged evasion of excise duty. The Court considered the legal remedies available to the accused, emphasizing the right to justify excise duty payment and appeal against any demand raised.

6. The Court noted that the company promptly paid the initial demand in 1986, and subsequent increases in the demand were eventually dropped due to incorrect calculations. The conclusion was that the petitioner did not have criminal intent to withhold excise duty payment.

7. Ultimately, the Court quashed the impugned orders refusing to discharge the petitioners in the Complaint Cases, highlighting the lack of chargeable excise duty and the absence of deliberate withholding of payment to the government.

8. The applications were allowed, and the petitioners were discharged in the mentioned Complaint Cases, bringing the legal proceedings to a favorable conclusion for the petitioners.

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