2024 (9) TMI 336 - SC - Customs

Criminal conspiracy - wrongful gain - Non-payment of Countervailing Duty (CVD) on Maximum Retail Price - Immunity granted by the Settlement Commission - HELD THAT - A perusal of the scheme of the CrPC 1973 allows to infer that mere registration of FIR cannot be interpreted to mean that it constitutes the initiation of such proceedings. A registration of FIR necessitates an investigation by a competent officer as per the detailed process outlined in Sections 155 to 176. It is only after a Final Report (or as referred in the common parlance, a Challan or a Chargesheet) is submitted as per the compliance of Section 173(2) of CrPC 1973, cognizance for the offence(s) concerned is taken. However, undoubtedly, the Court is not bound by the said report. In HIRA LAL HARI LAL BHAGWATI VERSUS CBI., NEW DELHI 2003 (5) TMI 63 - SUPREME COURT , even though the subject matter of the dispute pertained to Kar Vivad Samadhan Scheme, 1998 (hereinafter referred to as KVSS 1998 ), the observations of this Court came to the rescue of the Assessee-Company therein. As per the said factual matrix, the case of the Assessee-Company therein was settled under the KVSS 1998 on 10.02.1999 by the Designated Authority and as per the terms of the settlement, the Assessee-Company therein withdrew the appeal before this Court on 16.03.1999 and a certificate for full and final settlement was issued on 19.07.1999. Despite that, on 06.01.1999, a case was registered as against the Appellant therein in capacity as the office bearer of the Assessee-Company. It was held by this Court that continuation of such a prosecution would be inconsistent with the intent and provisions of the law. The Appellant therein was also obliged to withdraw the appeal before this Court, which might have had also impacted the merits of the criminal proceedings as against them. Furthermore, the Appellant-Company had successfully claimed immunity from prosecution under the CA 1962, CE Act 1944, and IPC 1860 vide Order dated 21.08.2007. In such a circumstance, there was no fiscal liability on the Appellant-Company, and accordingly, the Order dated 01.08.2010 passed by learned Special Judge, taking cognizance against the Appellant-Company, ought not to have sustained. As the very basis of the allegation of offence against the Appellant-Company was found to be nonexistent, it would have amounted to misuse rather abuse of the process of law. The proceedings against the Appellant-Company are quashed by setting aside the Impugned Order - Appeal allowed.

Summary

Issues Involved:
1. Allegations of criminal conspiracy and wrongful gain.
2. Non-payment of Countervailing Duty (CVD) on Maximum Retail Price (MRP).
3. Immunity granted by the Settlement Commission.
4. Rejection of discharge application by the Special Judge.
5. High Court's dismissal of the Criminal Revision Application.
6. Appeal to the Supreme Court.

Issue-wise Detailed Analysis:

1. Allegations of Criminal Conspiracy and Wrongful Gain:
The Central Bureau of Investigation (CBI) alleged that the Appellant-Company conspired with officials of Kandla Special Economic Zone (KASEZ) to clear goods into the Indian market on payment of CVD based on invoice value rather than MRP, causing a wrongful gain to themselves and a loss to the government exchequer amounting to INR 8 Crores.

2. Non-payment of Countervailing Duty (CVD) on Maximum Retail Price (MRP):
The Appellant-Company was accused of violating the proviso to Section 3(2) of the Customs Tariff Act, 1975, read with Section 4A(2) of the Central Excise Act, 1944, by not declaring MRP on goods cleared into the Domestic Tariff Area (DTA). Show Cause Notices were issued by the Revenue Authorities, leading to interception of goods.

3. Immunity Granted by the Settlement Commission:
The Appellant-Company received immunity under the Central Excise Act, 1944, Customs Act, 1962, and IPC 1860 through an order dated 21.08.2007 by the Settlement Commission. The Settlement Commission's powers under Section 32K of the CE Act 1944 and Section 127H of the CA 1962 provide an explicit bar from prosecution post-immunity.

4. Rejection of Discharge Application by the Special Judge:
The Appellant-Company's discharge application was dismissed by the Special Judge on 19.07.2017. The Special Judge observed that the retail price of goods must be declared as MRP under Section 4A(1) of the CE Act 1944, which the Appellant-Company failed to do.

5. High Court's Dismissal of the Criminal Revision Application:
The High Court of Gujarat dismissed the Criminal Revision Application No. 783 of 2017 on 15.09.2023, affirming the contentions of the Respondent-Agency and rejecting the Appellant-Company's arguments regarding immunity and procedural lapses.

6. Appeal to the Supreme Court:
The Appellant-Company appealed to the Supreme Court, reiterating its earlier contentions, including the granted immunity and the finality of the Commissioner of Customs (Appeals) orders. The Supreme Court noted that the Commissioner of Customs (Appeals) found the Appellant-Company was not required to pay CVD based on MRP, and the Appellant-Company was entitled to a refund. The Supreme Court emphasized that the prosecution's basis was non-existent and continuing the proceedings would amount to an abuse of the process of law.

Conclusion:
The Supreme Court allowed the appeal, quashing the proceedings against the Appellant-Company and setting aside the orders of the High Court of Gujarat and the Special Judge. The Court concluded that the Appellant-Company had successfully claimed immunity and there was no fiscal liability, thus the charges should not have sustained. Pending applications were disposed of.