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2018 (1) TMI 1170 - HC - Central ExciseOffence u/s 9 and 9(AA) of the Central Excise Act, 1944 - excise duty liability on asbestos cement sheets - petitioner was appointed as Managing Director of the said Company with effect from 24.06.2009 - Held that - Under Section 9(AA) of the Act, the persons who would be deemed to be guilty of an offence by a company are such persons who at the time of commission of the offence was in-charge of and was responsible to the day-to-day affairs of the company and to the conduct of the business of the company can be proceeded with and punished - In the present case in hand, the complaint implicates the petitioner only in her capacity as a Managing Director. Since she did not hold the post of Managing Director at the relevant time, the complaint cannot reach a logical conclusion to hold the petitioner herein guilty on the ground that she was the Managing Director during the relevant period. The proceedings against the petitioner herein should not continue and she must not be made to face the rigor of a criminal trial - petition allowed.
Issues Involved:
1. Maintainability of the impugned complaint. 2. Liability of the petitioner under Sections 9 and 9(AA) of the Central Excise Act, 1944. 3. Applicability of guidelines issued by the Central Board of Excise and Customs. 4. Inherent powers of the High Court under Section 482 CrPC to quash proceedings. Issue-wise Detailed Analysis: 1. Maintainability of the Impugned Complaint: The petitioner contended that the complaint is not maintainable since the order-in-original dated 06.05.2009 had been stayed by CESTAT. The petitioner was not the Managing Director during the period in question (2003-04 and 2004-05) and was appointed only on 24.06.2009. The complaint was based on the evasion of excise duty for the years 2003-04 and 2004-05. The court noted that the impugned complaint described the petitioner as the Managing Director and implicated her for the evasion of excise duty during a period when she was not in charge of the company's affairs. 2. Liability of the Petitioner under Sections 9 and 9(AA) of the Central Excise Act, 1944: Section 9(AA) specifies that only those who were in charge of and responsible for the conduct of the business at the time of the offense can be deemed guilty. The court observed that the petitioner was not the Managing Director during the relevant period, and the complaint did not indicate that other directors were responsible for the day-to-day affairs or liable for prosecution. The court emphasized that the law requires specific averments that the accused was in charge of and responsible for the company's conduct at the time of the offense. 3. Applicability of Guidelines Issued by the Central Board of Excise and Customs: The petitioner relied on guidelines dated 23.10.2015, which state that prosecution should not be launched indiscriminately against all directors but should be restricted to those in charge of day-to-day operations. The court highlighted that the guidelines caution against indiscriminate prosecution and require evidence to establish beyond reasonable doubt that the person had a guilty mind or fraudulent intention. The court found that the complaint was based on the petitioner's role as Managing Director, which she did not hold during the relevant period. 4. Inherent Powers of the High Court under Section 482 CrPC to Quash Proceedings: The court referred to precedents where inherent powers were exercised to quash proceedings when allegations did not constitute an offense or when there was no legal evidence. The court cited the Supreme Court's decision in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, which requires specific averments in a complaint that the accused was responsible for the conduct of the business at the relevant time. The court concluded that since the petitioner was not the Managing Director during the relevant period, the complaint could not logically hold her guilty. Conclusion: The court quashed the proceedings against the petitioner, stating that she should not face the rigor of a criminal trial for actions during a period when she was not in charge of the company's affairs. The Criminal Original Petition was allowed, and the proceedings in C.C.No.18 of 2016 on the file of the Chief Judicial Magistrate, Namakkal, were quashed.
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