2012 (10) TMI 686 - HC - Central Excise

Offence - Benefit of concessional rate of duty alleged that respondent No. 1 had wrongly availed all the benefit of concessional rate of duty in respect of paper classified under sub-heading 4805.90 in terms of Notification No. 138/86-C.E., dated 1-3-1986 as the goods were not manufactured out of specified raw material Held that - Complainant has not examined any independent witness - no person from the firms which supplied the waste and white paper to respondent No. 1 was examined - complainant has failed to prove the show cause notice was issued within prescribed time - respondents No. 1, 2 and 3 were discharged for offence punishable under Section 9 of the Act - under no circumstance the court shall give more than one opportunity to the complainant to examine pre-charge evidence - trial Magistrate shall decide the complaint in accordance with law - record of the trial court be sent back immediately so as to reach before the date fixed

Summary

Issues:
1. Alleged misuse of Central Excise Duty concession.
2. Failure to prove prosecution sanction against the respondents.
3. Lack of evidence and procedural errors leading to discharge of the accused.
4. Closure of evidence without reasonable opportunity to the complainant.

Analysis:

Issue 1: Alleged misuse of Central Excise Duty concession
The petitioner filed a complaint under Section 9 of the Central Excise and Salt Act, 1944 against the respondent company for availing concessional rate of duty on paper not meeting specified raw material requirements. The company was found to have wrongly availed the benefit of the concessional rate by using imported wood pulp instead of the required material. The show cause notice was issued, alleging a substantial amount of duty evasion by the company. The respondents were summoned, and in the pre-charge evidence, it was established that the company had indeed availed the concession through misrepresentation.

Issue 2: Failure to prove prosecution sanction against the respondents
The Judicial Magistrate noted that the prosecution sanction against the respondents was not adequately proved. The Circular No. 15/90-CX.6, dated 9-8-1990, mandates a specific procedure for prosecution sanction, including careful preparation of an investigation report and obtaining approval from the Principal Collector. The lack of proper documentation regarding prosecution sanction raised doubts about the validity of the charges brought against the accused.

Issue 3: Lack of evidence and procedural errors leading to discharge of the accused
The Judicial Magistrate observed significant gaps in the evidence presented by the complainant. It was noted that there was no record of the raiding party members present during the inspection at the company premises. Additionally, crucial witnesses, such as those from the firms supplying raw materials to the company, were not examined. The Magistrate also highlighted the failure to prove the issuance of the show cause notice within the prescribed time. These deficiencies in evidence and procedural lapses led to the discharge of respondents No. 1, 2, and 3 from the charges under Section 9 of the Act.

Issue 4: Closure of evidence without reasonable opportunity to the complainant
The Judicial Magistrate's decision to close the evidence of the complainant after only two opportunities was deemed improper. Considering the seriousness of the allegations and the public servants involved as witnesses, the Magistrate was criticized for not granting additional opportunities to produce evidence. The High Court set aside the order dated 31-3-2011, directing the trial court to allow the complainant one more opportunity to present the pre-charge evidence, emphasizing the importance of a fair and thorough trial process.

In conclusion, the judgment highlighted the importance of proper evidence, procedural adherence, and fair opportunities for all parties in criminal proceedings involving allegations of duty evasion and misuse of concessions under the Central Excise and Salt Act, 1944.