1990 (3) TMI 84 - HC - Central Excise

Summary

Issues Involved:
1. Quashing of proceedings under Section 482 of the Criminal Procedure Code.
2. Classification and excisability of goods under the Central Excise Tariff Act, 1985.
3. Marketability of goods for excise duty applicability.
4. Mens rea in the commission of alleged offenses.
5. Impact of pending appeal before the Central Excise Gold Control Appellate Tribunal (CEGAT) on criminal proceedings.

Detailed Analysis:

1. Quashing of Proceedings under Section 482 of the Criminal Procedure Code:

The petitioners sought to invoke the inherent powers of the High Court under Section 482 of the Criminal Procedure Code to quash the proceedings pending before the Judicial Magistrate, Poonamallee, arguing that the prosecution was not maintainable and constituted an abuse of the process of the court. The court, however, found that the issues raised required detailed examination of evidence, which could not be done at this preliminary stage. Therefore, the petition to quash the proceedings was dismissed.

2. Classification and Excisability of Goods under the Central Excise Tariff Act, 1985:

The prosecution classified the goods manufactured by the petitioners as parts of mixies, wet grinders, and television sets, which would attract excise duty under Chapters 84 and 85 of the Central Excise Tariff Act, 1985. The petitioners contended that their goods were exempt under Chapter 39, which pertains to plastics and articles thereof. The court noted that the classification of goods and their excisability depended on the nature, quality, use, and effectiveness of the articles, which required evidence to be brought on record. Therefore, the court could not quash the proceedings based on the classification issue at this stage.

3. Marketability of Goods for Excise Duty Applicability:

The petitioners argued that the goods manufactured were not marketable as they were produced against specific orders and not involved in any marketing activity. The court referred to the Supreme Court rulings in Union Carbide India Limited v. Union of India and Others and Bhor Industries Limited v. Collector of Central Excise, which held that marketability is an essential ingredient for excise duty applicability. However, the court found that the question of marketability required evidence to be adduced before the trial court and could not be determined in the petition under Section 482.

4. Mens Rea in the Commission of Alleged Offenses:

The petitioners contended that there was no mens rea (guilty mind) as they acted based on the opinion of their excise consultant and the lack of indication from excise officials during inspections. The court noted that mens rea is a matter of inference from all facts and circumstances arising out of the evidence to be presented during the trial. The presumption of culpable mental state under Section 9C of the Central Excise Act could not be overlooked at this stage. Therefore, the issue of mens rea could not be a ground for quashing the proceedings at this preliminary stage.

5. Impact of Pending Appeal before CEGAT on Criminal Proceedings:

The petitioners argued that the criminal proceedings should be stayed pending the disposal of their appeal before the CEGAT. The court referred to the Supreme Court's decision in P. Jayappan v. S.K. Peruimal, which held that the pendency of an appeal does not bar criminal proceedings but may warrant an adjournment or postponement of the criminal case in appropriate circumstances. The court found that this was an appropriate case to stay the criminal proceedings for a reasonable period to facilitate the disposal of the appeal. Therefore, the court directed a stay of the proceedings in C.C. No. 31 of 1989 for six months.

Conclusion:

The court dismissed the petition to quash the proceedings but granted a stay of the criminal proceedings for six months to allow the petitioners to pursue their appeal before the CEGAT. The issues of classification, marketability, and mens rea were deemed to require detailed examination of evidence, which would be addressed during the trial.