1990 (8) TMI 162 - HC - Central Excise

Summary

Issues:
1. Discharge of accused under Section 245(2) of the Criminal Procedure Code.
2. Validity of the complaint filed against the accused for contravention of Central Excise Act and Rules.
3. Interpretation of the provisions of the Central Excises and Salt Act, 1944.
4. Application of excise duty on processed fabrics.
5. Reversal of High Court's decision by the Supreme Court.
6. Compensation to be paid to the accused for filing a complaint without reasonable ground.

Analysis:
The petitioner, the original complainant, filed a Revision Application challenging the order of the Chief Metropolitan Magistrate discharging the accused under Section 245(2) of the Criminal Procedure Code in a case involving contravention of the Central Excise Act and Rules. The complaint alleged evasion of excise duty by the accused, leading to the seizure of fabrics and non-compliance with statutory requirements. The Magistrate discharged the accused, citing a previous judgment of the Gujarat High Court and the absence of an offense before the enactment of the Central Excises and Salt and Additional Duties of Excises (Amendment) Act, 1980. The Magistrate also issued a notice to the complainant to show cause for compensation to the accused.

The petitioner contended that the Magistrate's decision was based on the High Court's judgment, which was later challenged in the Supreme Court. The Supreme Court, in its judgment, overturned the High Court's decision, emphasizing that processes like bleaching, dyeing, and printing on grey fabric constitute 'manufacture' under the Central Excises and Salt Act, 1944. Consequently, the Supreme Court rejected the High Court's interpretation and ruled in favor of applying excise duty on processed fabrics. As a result, the Magistrate's order discharging the accused was set aside, and the matter was remanded for further proceedings in accordance with the law.

In light of the Supreme Court's decision, the trial court's judgment was quashed and the matter was remanded for further proceedings. The Revision Application was allowed, and the rule was made absolute. The Supreme Court's ruling clarified the applicability of excise duty on processed fabrics, overturning the previous interpretation by the High Court. The case underscores the importance of legal clarity and adherence to statutory provisions in matters concerning taxation and compliance with excise laws.