2021 (10) TMI 384 - HC - Central Excise

Evasion of duty or not - Process amounting to manufacture or not - goods specified in third Schedule involving packing and re-packing etc - scope of Manufacturer as contained in Section 2(f) of the Central Excise Act, 1944 - HELD THAT - Whether the process undertaken by the revision petitioners resulted into emergency of manufactured goods will depend upon the test laid down by the Hon'ble Apex Court in the case of SOUTH BIHAR SUGAR MILLS LTD. VERSUS UNION OF INDIA 1968 (2) TMI 36 - SUPREME COURT and in the case of UNION OF INDIA VERSUS DELHI CLOTH AND GENERAL MILLS CO. LTD. 1962 (10) TMI 1 - SUPREME COURT - As to the interpretation of the said provision with the guidelines as prescribed by the Hon'ble Apex Court can be gone into only at the time of trial and hence, it is always open to the revision petitioners/accused to confront and challenge the department witness during the cross-examination. The trial Court has rightly passed an order dismissing the discharge petition filed by the petitioners and the same does not suffer from any perversity in finding and hence, the point is that the revision petitioners are tax evaders or not depends upon the fact that they are the manufacturer or fabricator and hence, the factual position has to be determined by the accused during the cross-examination of department witness and hence, the same cannot be determined at this stage. Therefore, the order of dismissal of discharge petition is confirmed. This Criminal Revision Case is dismissed.

Summary

Issues:
Determining whether the accused fall under the purview of Section 2(f) of the Central Excise Act, 1944, and if they are considered 'Manufacturer' or 'Fabricator of the material'. Evaluating whether there has been an evasion of central excise duty.

Analysis:
The Criminal Revision Case involved a challenge by the petitioners against the dismissal order passed by the Additional Chief Metropolitan Magistrate. The respondent, Deputy Commissioner of Central Excise, had filed a complaint alleging offences under Sections 9(1)(b), 9(1)(bb), and 9(1)(bbb) of the Central Excise Act, 1944. The accused petitioners sought discharge under Section 245(2) of the Cr.P.C, claiming they do not come under the purview of Section 2(f) of the Act, defining 'Manufacturer'. The accused argued they do not fall under this category due to the lack of specification in relation to certain goods.

During the proceedings, the nature of the activity carried out by the revision petitioners was detailed by the department. Witness testimonies and documents were presented in support of the complaint. The accused contested the prosecution's case, asserting they are not Manufacturers but Fabricators, and thus do not evade central excise duty. Both parties referred to various judgments on the question of 'Manufacturer'.

The Court considered whether the process undertaken by the revision petitioners resulted in the emergence of manufactured goods, citing tests laid down by the Apex Court in relevant cases. It was determined that the interpretation of the provisions and guidelines set by the Apex Court should be addressed during the trial. The Court held that the determination of whether the accused are Manufacturers or Fabricators, and consequently tax evaders, should be examined during the trial through cross-examination of department witnesses.

The Court found that the case was premature as it was filed after witness examination and document marking, leading to the dismissal of the discharge petition by the trial Court. The order was upheld, emphasizing that the factual position regarding tax evasion hinges on whether the accused are Manufacturers or Fabricators, a matter to be addressed during cross-examination. Consequently, the dismissal of the discharge petition was confirmed, and the Criminal Revision Case was dismissed.