Henna Export Corporation and Another vs Rakesh Mathur, Inspector, Anti-evasion, Central Excise Collectorate

V.K. Jhanji, J.—The present petition has been filed u/s 482, Cr. PC for quashing of complaint dated 28.11.1992 as well as order of summoning of even date, pending before the Chief Judicial Magistrate, Faridabad.

In brief, the facts as set out in the petition are that petitioners are engaged in the manufacture of "Black Rose Kali Mehndi, Rose Herbal Shikakai Powder and Red Rose Henna Mehndi Power (for use in hair)." This product, according to the complainant, is classified under sub-head 3305. 90 of the Schedule to Central Excise Tarrif Act, 1985. The products are chargeable to central excise duty in accordance with provisions of notification No. 140/83-CE dated 5.5.1983 (as amended). This notification provides for an exemption from whole of the duty up to an aggregate value of such clearance of Rs. 5 lacs and exempts the clearance of an aggregate value of Rs. 10 lacs immediately following the clearance, of first Rs. 5 lacs from 50 per cent of the effective rate of central excise duty chargeable thereon. The goods of sub-head 3305. 90 ibid are otherwise chargeable to duty in accordance with tarrif rate of 105 per cent ad valorem. Thus, the product of the petitioners in excess of Rs. 5 lacs attracted basic excise duty at the rate of 52 1/2 per cent ad valorem.

On 22.11.1990, a search was conducted at the premises of the petitioners, and on physical verification and necessary enquiries, the complainant found the petitioners to have violated the provisions of notification dated 5.5.1983. Two separate proceedings were initiated against the petitioners; one for imposition of penalty and the other one for prosecution of the petitioners. Accordingly, complaint u/s 9 of the Central Excise and Salt Act, 1944 (in short, the 1944 Act) was filed before the Chief Judicial Magistrate, Faridabad, in which petitioners have been summoned. Quashing of the complaint as well as order of summoning has been sought on the ground that the matter with regard to imposition of penalty is pending before the Customs, Excise and Gold (Control) Appellate Tribunal (in short, the Tribunal), in which recovery and confiscation has been stayed, which was earlier ordered by the Collector, who under the Act, is the Assessing Authority. In view of stay given by the Tribunal, a prayer has been made in this petition as well as by counsel for the petitioners that till such time the Tribunal gives its decision, no cause of action has arisen to the Department to file complaint against the petitioners. In answer to the submissions made by counsel for the petitioners, counsel appearing for the respondents contended that petitioners have rightly been proceeded against u/s 9 of the 1944 Act, as the petitioner had not paid the duty in accordance with the Rules and the notification.

After hearing learned Counsel for the parties, I am of the view that no case is made out for quashing of the complaint, or to accept the alternative prayer for staying the proceedings. The Collector, who under the Act is the Assessing Authority, after issuing show-cause notice to the petitioners for various contraventions of rules and notifications, found that the petitioners are not only liable for penalty but also liable to be prosecuted. The contention that no prosecution can be lodged against the petitioners because the matter with regard to imposition of penalty is pending decision before the Tribunal, cannot be accepted because under the Act, for contravention of Rules and notifications, not only penalty can be imposed, but prosecution can also be launched. In case, the Tribunal records the finding in favour of the petitioners, it shall always be open to the petitioners to make an appropriate application before the Court for discharge, or for any such appropriate order.

Accordingly, this petition shall stand dismissed with no order as to costs. Petitioners shall be at liberty to raise all such pleas available at their end during trial. Any observation made herein shall not affect the merits of the case. Records summoned in the case be sent back to the trial Court.

Parties through their counsel are directed to appear before the trial Court on 16.9.1994.