2017 (2) TMI 14 - HC - Central Excise

Stay of proceedings - The plea of the petitioner herein is untill the proceedings in the Appeals preferred by them before the 2nd respondent/department, is finally disposed of, the proceedings pending for criminal case filed by petitioner in C.C.No.49 of 2013, before Principal Special Judge for CBI cases, Chennai, may be directed to be stayed - Held that - the criminal proceedings pending before the trial court shall go on and there is no need to entertain the plea of the petitioner to stay the proceedings in C.C.No.49 of 2013 - the criminal case is decided on the basis of evidence adduced therein and cannot be rejected on the basis of evidence in departmental proceedings and therefore, both proceedings pending before the CESTAT and the trial court shall go on simultaneously and there is no impediment for the same - petition disposed off - decided against petitioner.

Summary

Issues:
1. Claim for rebate on excise duty paid on export goods.
2. Dispute regarding manufacturing activity and entitlement to rebate claim.
3. Criminal investigation initiated against petitioner for fraudulent rebate claim.

Analysis:
1. The petitioner, a Private Limited Company, sought registration as a manufacturer for CKD Kits and Electronic Control Units. They procured components, paid excise duty, and exported goods under self-certification. The dispute arose when the Central Excise Department questioned the manufacturing process and rebate claim. The petitioner appealed against the rejection of their claim, leading to multiple proceedings and appeals before different authorities.

2. The Central Excise Department issued a show cause notice challenging the manufacturing process and rebate claim. The petitioner contended that their activities constituted manufacturing under the Central Excise Act. Various appeals and counter-appeals were filed by both the petitioner and the Department. The High Court emphasized the need for proper disposal of pending appeals before the CESTAT within a specified time frame but ruled against staying the criminal proceedings initiated against the petitioner.

3. A criminal investigation was launched against the petitioner for alleged fraudulent rebate claims. The respondents argued that the criminal trial and departmental proceedings could run concurrently, citing a Supreme Court ruling. The High Court concurred, stating that both proceedings could continue simultaneously. The Court directed the CESTAT to expedite the pending appeals within three months but refused to stay the criminal proceedings, emphasizing that each case should be decided based on the evidence presented in that specific proceeding.

Conclusion:
The High Court dismissed the plea to stay the criminal proceedings while directing the CESTAT to resolve the pending appeals promptly. The judgment highlighted the independence of criminal and departmental proceedings, emphasizing the need for evidence-based decisions in each case. The petitioner's claim for rebate on excise duty paid on export goods was subject to scrutiny and legal challenges, leading to a complex legal battle involving multiple appeals and investigations.