2007 (11) TMI 312 - HC - Central Excise

Prosecution - complaint under Section 9 of the Central Excise Act, 1944 read with Sections 193, 192 and 120-B of the IPC - Held that - After due consideration of the evidence produced by the department, the CEGAT has exonerated the accused company by returning a positive finding that the quantity of MS ingots alleged to be clandestinely manufactured and removed without payment of excise duty was in fact wastage occurring at the stage of production of forgings out of ingots. No fabrication or manipulation was found in the documents of the accused company. Since the Department has not challenged the order dated 19-9-95, the finding arrived at by CEGAT has attained finality. The order of the CEGAT exonerating the accused company is thus clearly on merits. In view of the above discussion, the complaint under Section 9 of the Central Excise and Salt Act, 1944 read with Sections 193, 192 and 120-B of the IPC (Annexure G to the petition) and the proceedings emanating out of the said complaint are quashed for the reason the departmental proceedings has resulted in the petitioners being exonerated on merits and the criminal prosecution is based on same set of facts and evidence.

Summary

Issues:
Petition under Section 482 of the Code of Criminal Procedure seeking quashing of complaint under Section 9 of the Central Excise Act, 1944 read with Sections 193, 192 and 120-B of the IPC and the proceedings arising from it.

Detailed Analysis:

Issue 1: Allegations in the Complaint
The complaint alleged clandestine manufacture and removal of goods and evasion of excise duty by the company, supported by incriminating documents found during a search at the company premises.

Issue 2: Reliance on Documents
The proof of allegations relied on documents found during the search, including scrap book, log sheets, bill book, and dispatch reports among others.

Issue 3: Adjudication Proceedings
The Central Excise Department initiated adjudication proceedings resulting in a demand for excise duty and imposition of a penalty on the accused company, which was partially allowed on appeal by CEGAT.

Issue 4: Exoneration by CEGAT
CEGAT later set aside its previous order, exonerating the accused company based on findings that the quantity in question was wastage during production and not clandestinely removed goods, leading to the return of the penalty deposited.

Issue 5: Legal Position on Exoneration
The legal debate centered on whether exoneration in adjudication proceedings should impact criminal prosecution, with arguments for and against continuing criminal proceedings after exoneration in departmental proceedings.

Issue 6: Final Decision
The High Court quashed the complaint and proceedings, citing the exoneration on merits by CEGAT and the identical set of facts and evidence in both departmental and criminal proceedings as reasons for ending the criminal prosecution.

In conclusion, the judgment highlighted the importance of exoneration on merits in departmental proceedings and its impact on criminal prosecution, ultimately leading to the quashing of the complaint and proceedings against the accused company based on the principles of justice and consistency in legal proceedings.