2008 (1) TMI 594 - HC - Customs

Mis-declaration of the goods imported - at nil rate of customs duty against proper Bills of Entry taking benefit of the Exemption Notification No. 23/98-Cus - fraudulent evasion of customs duty - proceedings both departmentally as well as in the criminal court - The appeal filed by the Petitioners was allowed by the Customs, Excise Gold Control Appellate Tribunal ( CEGAT ) reversing the order of the Commissioner of Customs and holding that the Petitioners were entitled to avail of the exemption - Department is able to show the court that irrespective of the departmental/adjudication proceedings which have resulted in total exoneration, there is some other independent evidence, not considered in the adjudication proceedings, on the basis of which the conviction could be obtained in the criminal court, then and only then can it be said that the findings of the departmental/adjudication proceedings will not bind the criminal court. If there is no other independent evidence and on the very same material which forms the basis of the prosecution there has been exoneration in the departmental proceedings, which has attained finality, then it will be futile to keep the criminal proceedings on the same material pending in the criminal courts - criminal proceedings were launched simultaneously and departmental proceedings ended in exoneration long after the criminal proceedings commenced Held that - The petition is allowed but in the circumstances with no order as to costs

Summary

Issues:
Quashing of Complaint Case No. 76/1 pending in the court of learned Additional Chief Metropolitan Magistrate, New Delhi, and setting aside of an order dated 19th May, 1999 passed by the ACMM dismissing the application filed by the Petitioners seeking discharge under Section 482 of the Code of Criminal Procedure, 1973.

Analysis:

Issue 1: Quashing of Complaint Case No. 76/1:
The Petitioners, engaged in the distribution of medicines, imported IV Cannulas at nil rate of customs duty under an Exemption Notification. Customs raided their godowns, alleging misdeclaration of goods and fraudulent evasion of customs duty. The Commissioner of Customs imposed penalties, which were later set aside by the Customs, Excise Gold Control Appellate Tribunal (CEGAT) and upheld by the Supreme Court. The Petitioners sought to drop proceedings based on these orders, but the ACMM dismissed their applications. The Petitioners argued that since departmental proceedings favored them, criminal proceedings should be quashed. Citing previous judgments, the Court reiterated that exoneration in departmental proceedings can impact criminal proceedings if based on the same facts.

Issue 2: Legal Principles on Departmental vs. Criminal Proceedings:
The Court discussed the legal principles established in previous judgments, emphasizing that departmental proceedings and criminal proceedings can proceed simultaneously. Exoneration in departmental proceedings can impact criminal proceedings if based on the same facts and if the exoneration is on merits. The Court highlighted that findings in departmental proceedings are not automatically binding on criminal courts but can impact them if there is no independent evidence for conviction. The judgment in State v. M. Krishana Mohan was distinguished as it involved completed departmental proceedings before the start of the criminal case, unlike the present case where both proceedings ran simultaneously.

Issue 3: Impact of Recent Judgments on the Case:
The Court addressed the impact of recent judgments, including Standard Chartered Bank and State v. M. Krishana Mohan. It clarified that findings in adjudication proceedings are not conclusive on criminal proceedings unless there is independent evidence for conviction. The Court held that if departmental proceedings result in exoneration based on the same material as the criminal case, it would be futile to continue the criminal proceedings. Consequently, the Court quashed Criminal Complaint No. 76/1 and all related proceedings as unsustainable in law, based on the principles established in prior judgments.

This detailed analysis of the judgment highlights the legal intricacies involved in quashing criminal proceedings based on exoneration in departmental proceedings and the established legal principles governing such situations.