2017 (9) TMI 620 - SC - Central Excise

Evasion of duty - CENVAT credit - omission of Rule 56A - Held that - The ingredient of the offence is the evasion. The omission of a procedural rule for availing the credit cannot in any manner affect the said charge. The prosecution cannot be deprived of opportunity to prove evasion which by itself is an offence. In this view of the matter, there was no justification for the High Court to quash the charge merely on the ground of Rule 56A having been omitted - appeal allowed.

Summary

Issues:
1. Appeal against the High Court's order setting aside the trial court's decision and discharging the respondent in a criminal case related to the Central Excises and Salt Act, 1944.
2. Interpretation of the impact of the omission of Rule 56A on the charge of evasion of excise duty against the respondent.
3. Application of Section 6 of the General Clauses Act to the omission of a rule.
4. Consideration of the retrospective validation of prosecution under the Explanation to Section 132 of the Finance Act, 2001.

Analysis:
1. The appeal was filed against the High Court's decision to set aside the trial court's order and discharge the respondent in a criminal case under the Central Excises and Salt Act, 1944. The High Court held that after the omission of Rule 56A without a saving clause, the proceedings could not continue. The appellant argued that the charge of evasion of excise duty against the respondent remained valid despite the omission of the rule. The Supreme Court noted that the omission of a procedural rule could not affect the charge of evasion, which is the core offense. Therefore, the Court allowed the appeal and reinstated the trial court's order.

2. The key issue revolved around the impact of the omission of Rule 56A on the charge of evasion of excise duty against the respondent. The appellant contended that the evasion charge remained unaffected by the omission of the rule, as the core offense was the evasion itself. The Court agreed with this argument, emphasizing that the prosecution must have the opportunity to prove the evasion, which stands independently of procedural rules. Therefore, the Court reinstated the trial court's order, emphasizing that the charge could not be quashed solely due to the omission of Rule 56A.

3. The application of Section 6 of the General Clauses Act to the omission of a rule was discussed during the proceedings. The appellant argued that Section 6 applied to the omission of a rule, treating it as a form of repeal. The respondent, however, contended that Section 6 did not apply to the omission of a rule, citing precedents. The Court did not delve deeply into this aspect as it found the core issue to be the evasion charge, independent of procedural rules.

4. The retrospective validation of prosecution under the Explanation to Section 132 of the Finance Act, 2001 was raised during the arguments. The respondent claimed that prosecution could not continue without retrospective validation. However, the Court did not find it necessary to address this issue extensively, as it focused on the fundamental matter of proving evasion, which was not dependent on the retrospective aspect. Ultimately, the Court allowed the appeal, setting aside the High Court's order and restoring the trial court's decision.