2019 (9) TMI 472 - HC - Central Excise

Evasion of Central Excise Duty - guilty of the offence set out under Section 9(1) of the Central Excise Act - special and adequate reasons within the meaning of proviso to Section 9 of the Act or not - HELD THAT - Section 9 of the Central Excise Act, 1944, sets out the offences and penalties. The respondent, in this case, had admitted and they were also found guilty of the offence set out under Section 9(1) of the Central Excise Act. Proviso to Section 9(1) of the Central Excise Act, 1944, prescribes a minimum term of six months imprisonment. Of-course, if there are special and adequate reasons, it is open to the trial Court to sentence the accused for a term of less than six months. The learned Special Public Prosecutor appearing for the Department would contend that the reasons assigned by the Court below cannot be called as special and adequate reasons within the meaning of proviso to Section 9 of the Act. I am in substantial agreement with the submission of the learned Special Public Prosecutor. But then, the question that arise for consideration is whether I should still interfere in the matter. As rightly pointed out by the learned counsel appearing for the respondents in Criminal Appeal (MD)No.307 of 2008, the cause of action dates back to the year 1983-1987. In other cases, the events date back to the year 1999 to 2001. Thus, it cannot be in dispute that there has been a very substantial lapse of time. It is not in dispute that all the accused are certainly in their late 70's - Though the age of the accused is an irrelevant factor, this Court cannot lose sight of the fact that they are all suffering from ailments. Medical grounds can certainly be taken note of by this Court. It is seen that even before the Court below, the accused have filed medical certificates to establish their medical condition. R2-D.D.Jayaraman is directed to pay a further sum of ₹ 50,000/- as fine to the credit of C.C.No.3 of 2005 on the file of the Chief Judicial Magistrate, Madurai, within a period of twelve weeks from the date of receipt of a copy of this order - Upon such deposit, the amount now directed to be paid will be disbursed to the complainant. Criminal appeal allowed in part.

Summary

Issues:
1. Central excise duty evasion allegations against companies and directors.
2. Sentencing discrepancy in imposing imprisonment term for guilty plea.
3. Interpretation of Section 9 of the Central Excise Act, 1944 regarding minimum imprisonment term.
4. Consideration of special and adequate reasons for sentencing below six months.
5. Impact of substantial lapse of time and age of accused on the case.
6. Medical conditions of accused as a factor in sentencing.
7. Additional fine amounts imposed on accused in different cases.
8. Disbursement of fine amounts to the complainant.

Analysis:

1. The judgment concerns cases of central excise duty evasion by companies, including an Iron Grill Manufacturing Company and Spinning Mills, leading to prosecution against the companies and the directors involved. The accused pleaded guilty, and the trial magistrate opted for a lenient sentence of till the rising of the Court instead of the minimum imprisonment term, prompting the appeal.

2. The interpretation of Section 9 of the Central Excise Act, 1944 is pivotal in this judgment. The section outlines offences and penalties, with a proviso setting a minimum six-month imprisonment term unless special and adequate reasons exist for a lower term. The prosecution argued that the reasons given by the lower court did not meet this standard.

3. The judgment delves into the application of Section 9(3) of the Act, which lists factors not considered as special and adequate reasons for a sentence below six months. These factors include first-time conviction, prior penalties, secondary involvement, and the age of the accused, guiding the court's decision-making process.

4. The impact of a substantial lapse of time on the case, spanning from 1983 to 2001, and the advanced age of the accused, all in their late 70s, are considered. While age alone is not a relevant factor, the court acknowledges the medical conditions of the accused and their filings of medical certificates as part of the sentencing considerations.

5. The judgment also addresses the imposition of additional fine amounts on the accused in different cases, with specific directives for payment within a stipulated timeframe. These fines are imposed in light of the appeals and without prejudice to the ongoing legal proceedings, ensuring compliance with the court's orders.

6. Lastly, the judgment outlines the disbursement of the fine amounts to the complainant upon payment by the accused, clarifying that the deposit is not contingent on the outcome of the pending appeals. The judgment partially allows the criminal appeals, emphasizing the non-refundable nature of the fine amounts, irrespective of the appeal outcomes.