2017 (8) TMI 1444 - HC - Central Excise

Bail application - Clandestine manufacture - Pan Masala - it was alleged that applicant is a master mind and has made best attempt to secure financial benefit without paying excise duty while he was preparing pan Masala pouch as well as Jarda pouch bearing the Brand Poorvai which is corroborated from the computer records, hence the applicant is liable to be prosecuted for commission of offence under section 9 A and section 9AA of Central Excise Act 1944. Held that - It transpires that the applicant evaded the excise duty by procuring the raw material and also not accounting the clandestine and surreptitious production in the statutory books. The clandestinely manufactured goods were supplied in the market without cover of lawful documents. The applicant is the master mind and beneficiary of entire scheme of duty evasion. The applicant had knowingly and willingly made distance in order to create a veil and to escape legal liabilities cast upon him. According to section 9AA of Central Excise Act, every person who at the time, the offence was committed was in charge shall be severally and jointly liable for being prosecuted for the aforesaid offence. There is nothing in the Act that the prosecution depends upon the result of the adjudication. Two proceedings are quite independent. The finding in one is not conclusive in the other proceedings. Both can go on simultaneously and finding in the adjudication proceedings is not binding on the criminal proceedings. A prosecution can be launched even after the completion of adjudication. Since the offence under section 9 (1A) Excise Act is cognizable and non-bailable and is grievous in nature, hence this Court does not deem it congruous to interfere in such matters. The economic offences are undoubtedly more grave in nature than those offences which are non-cognizable. Bail cannot be granted and bail application is dismissed.

Issues Involved:
1. Legality of the bail application under sections 9/9AA of the Central Excise Act.
2. Allegations of illegal manufacturing and evasion of excise duty.
3. Validity of the search, seizure, and arrest procedures.
4. Applicant's claim of malicious prosecution and health condition.
5. Applicability of legal precedents cited by the applicant's counsel.
6. Prosecution's argument on the nature of the offence and potential misuse of bail.

Issue-wise Detailed Analysis:

1. Legality of the Bail Application under Sections 9/9AA of the Central Excise Act:
The applicant sought bail in Case Crime No. 700/9 of 2017 under sections 9/9AA of the Central Excise Act, pending in the court of Special Chief Judicial Magistrate, Meerut. The court noted that the offence under section 9(1A) is cognizable and non-bailable, making it difficult to grant bail in such cases due to the severity of the alleged crime.

2. Allegations of Illegal Manufacturing and Evasion of Excise Duty:
The prosecution alleged that the applicant was running a factory manufacturing Poorvi Pan Masala and Scented Zarda Tobacco without obtaining Central Excise Registration and evading excise duty. Surveillance and raids on the premises revealed significant evidence of illegal manufacturing activities, including the discovery of packing machines, raw materials, and finished goods labeled under M/s Poorvai Pan Masala Pvt. Ltd. The applicant and his wife were implicated in the clandestine operations, benefiting financially from the evasion of excise duty.

3. Validity of the Search, Seizure, and Arrest Procedures:
The applicant argued that the search, seizure, and arrest procedures were conducted improperly and without adherence to legal provisions. The prosecution countered that the operations were conducted with proper authorization, and the seized items were rightly confiscated under Rule 24 of the Central Excise Rules 2002. The court found that the search and seizure were conducted lawfully, and the applicant's arrest was justified given the evidence of duty evasion.

4. Applicant's Claim of Malicious Prosecution and Health Condition:
The applicant contended that he was being maliciously prosecuted based on false allegations and that his health condition was deteriorating. The court considered these arguments but found that the evidence against the applicant was substantial. The claim that the seized currency was meant for medical treatment was not convincing, and the applicant's health condition did not warrant bail given the gravity of the offence.

5. Applicability of Legal Precedents Cited by the Applicant's Counsel:
The applicant's counsel cited several legal precedents to support the bail application. However, the court found that these cases were based on different facts and circumstances and were not applicable to the present case. The court emphasized that economic offences, such as excise duty evasion, are more serious and warrant stricter scrutiny.

6. Prosecution's Argument on the Nature of the Offence and Potential Misuse of Bail:
The prosecution argued that the offence was serious, involving significant evasion of excise duty, and that granting bail could lead to the applicant misusing the liberty by threatening witnesses or tampering with evidence. The court agreed, noting that the applicant was the mastermind behind the scheme and had knowingly evaded legal liabilities. The potential impact on the state's economy and national security further justified the denial of bail.

Conclusion:
The court concluded that the applicant's involvement in the illegal manufacturing and evasion of excise duty was evident from the substantial evidence presented. The procedural aspects of the search, seizure, and arrest were found to be legally sound. Given the severity of the offence and the potential misuse of bail, the court rejected the bail application, emphasizing the need to address economic offences with due seriousness. The bail application filed on behalf of the applicant was thus dismissed.

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