2007 (2) TMI 228 - HC - Central Excise

Summary

Issues:
Challenge to summoning order under Section 482 Cr. P.C. based on dishonored cheques issued to Central Excise Department.

Analysis:
The petitioner challenged the summoning order issued by the Metropolitan Magistrate under Section 482 Cr. P.C. The petitioner contended that the cheques issued to the Central Excise Department were dishonored, but they were meant as security towards a balance amount of demand. The petitioner argued that the cheques were not to be presented without their written consent, as per a specific understanding. The petitioner's appeal against the assessment was pending in the Supreme Court, where it was admitted and directed for final hearing. Despite this, the trial court proceeded with the matter and issued summons.

The petitioner's counsel highlighted that the Supreme Court allowed the petitioner's appeal, overturning the assessment orders of the Central Excise Department. The Supreme Court clarified that the two factories in question were separate establishments with no commonality, thus rejecting the Department's basis for higher duty payment. The counsel argued that the complaint's foundation was no longer valid post the Supreme Court judgment, and the proceedings should be quashed in the interest of justice.

The respondent's counsel contended that the debts were legally recoverable when the cheques were presented, despite the subsequent setting aside of the assessment orders. The respondent opposed quashing the proceedings, citing public interest. However, the Court noted that the assessment orders and the basis for the demands were set aside by the Supreme Court, rendering the petitioner not liable for duty payment or deposit.

The Court acknowledged the technical correctness of the debt's existence when the cheques were issued but emphasized that the legality of the demand was nullified by the Supreme Court's judgment. Section 482 Cr. P.C. allows sparing parties in criminal proceedings from a full trial if the ends of justice require. Given the Supreme Court's judgment, the Court concluded that the petitioner's claim for quashing the proceedings was justified. Consequently, the petition was allowed, and all proceedings related to the complaint case were quashed.