2021 (3) TMI 693 - HC - Central Excise

Continuation of Criminal Proceedings - matter is pending for adjudication - evasion of Central Excise duty - service tax has been paid - offence punishable under Sections 9(1)(b),9(1)(bbbb), 9(1)(d), 9AA(1) and 9AA(2) of the Central Excise Act, 1944 - HELD THAT - The service tax is paid but the excise duty has not been paid and the same has been disputed, for which, the matter has also been before the Tribunal for adjudication. The main contention of the learned counsel for the petitioners is that if the excise duty payable is less than the minimum limit, there cannot be any criminal proceedings but actually the claim by the respondent is for ₹ 3,02,87,970/- and whether the same is reduced to less than the minimum limit or more than the minimum limit has to be adjudicated by the Tribunal. If the criminal prosecution is continued and the accused persons are convicted and if, subsequently, the adjudicatory proceeding has been concluded exonerating the petitioner or comes to the conclusion of minimum limit, then it amounts to an abuse of process and the same would be unjust permitting the Enforcement Directorate to continue with the criminal prosecution. Hence, it is appropriate for the present the proceedings can be kept in abeyance till the disposal of the matter which is pending before the adjudicatory authority. This Court direct the petitioners herein to move an application before the adjudicatory authority to get the matter disposed of as early as possible within one year since the matter involved is with regard to payment of excise duty due for a period of more than 3 years and odd, which affects the economy of the country as held by the Apex Court as well as other High Courts. The proceedings initiated against these petitioners are kept in abeyance till the disposal of the adjudicatory proceedings for a period of one year - petitioners are directed to get it disposed off the appeal, which is pending before the adjudicatory authority, within a period of one year from the date of this order by taking steps immediately. If the same is not disposed of within the stipulated time of one year, the respondent is given liberty to proceed with the matter for criminal prosecution.

Issues Involved:
1. Quashing of criminal complaint and proceedings.
2. Adjudication proceedings pending before the Appellate Authority.
3. Liability to pay excise duty.
4. Vicarious liability of company officials.
5. Simultaneous civil and criminal proceedings.
6. Abuse of process of law.

Detailed Analysis:

1. Quashing of Criminal Complaint and Proceedings:
The petitioners sought a writ of certiorari to quash the criminal complaint and proceedings in C.C.No.70/2020, as well as the order dated 07.11.2020 taking cognizance of the matter. The factual matrix involves allegations against the petitioners for evading Central Excise Duty amounting to ?3,02,87,970/- and removing excisable goods in contravention of the Central Excise Rules, 2002. The learned Magistrate, upon considering the complaint and documents, found prima facie evidence and issued summons against the accused.

2. Adjudication Proceedings Pending Before the Appellate Authority:
The petitioners contended that the Commissioner confirmed the notice and imposed a penalty, but there was no recommendation for criminal prosecution. The order has been challenged by filing an appeal, which is pending adjudication. The petitioners argued that criminal proceedings should not be initiated while the adjudicatory proceedings are pending, citing several judgments supporting the suspension of criminal proceedings until the resolution of the appeal.

3. Liability to Pay Excise Duty:
The petitioners argued that the primary liability to pay excise duty lies with accused No.1, not accused No.3. They claimed to have paid service tax, believing it to be the correct duty, and disputed the computation of excise duty based on transactional value rather than MRP. The petitioners asserted that if the excise duty is properly calculated, it would be less than the minimum limit required for criminal prosecution.

4. Vicarious Liability of Company Officials:
The petitioners, who are officials of accused No.3, argued that they cannot be held vicariously liable for the actions of accused No.1. They contended that the complaint did not specify the roles of accused Nos.4 to 9, and thus, the question of vicarious liability does not arise. The learned Magistrate was criticized for not considering these aspects while taking cognizance.

5. Simultaneous Civil and Criminal Proceedings:
The respondent argued that adjudication proceedings and criminal prosecution can be launched simultaneously, as they are independent of each other. However, the petitioners cited various judgments, including the Apex Court's decision in Videocon’s case, which held that if the adjudicating authority finds no contravention of the Act, continuing with criminal prosecution would be unjust and an abuse of process.

6. Abuse of Process of Law:
The petitioners claimed that initiating criminal proceedings while adjudicatory proceedings are pending is an abuse of process, causing mental agony and harassment. They relied on multiple judgments that support keeping criminal proceedings in abeyance until the resolution of adjudicatory proceedings.

Conclusion:
The court concluded that while both civil and criminal proceedings can be initiated simultaneously, it would be unjust and an abuse of process to continue with criminal prosecution if the adjudicatory proceedings exonerate the petitioners. The court directed that the criminal proceedings be kept in abeyance until the adjudicatory proceedings are resolved within one year. If the adjudicatory proceedings favor the petitioners, the criminal prosecution will not be revived. If the adjudicatory proceedings go against the petitioners, the criminal prosecution can be continued. The petitioners were directed to expedite the adjudicatory proceedings.

Order:
1. The criminal proceedings against the petitioners are kept in abeyance for one year, pending the resolution of the adjudicatory proceedings.
2. The petitioners are directed to expedite the appeal before the adjudicatory authority within one year.
3. If the adjudicatory proceedings are not resolved within the stipulated time, the respondent is given liberty to proceed with the criminal prosecution.

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