Itc Limited, Through Its Branch Manager & Constituted Attorney Mr. R. Shyam Krishnan vs Union of India & Ors

This application under Section 482 of the Code of Criminal Procedure has been filed for quashing entire proceeding of Complaint Case No.303-C of

1998 pending before the Special Judge (Economic Offences), Patna, for the alleged commission of the offences punishable under Section 9 and 9AA

of the Central Excise Act, 1944.

Basis of the present complaint case is the demand of central excise duty confirmed by the Adjudicating Authority vide order in Original Case

No.03/95 dated 29.12.1995, alleging therein commission of offence under Section 9 and 9AA of the Central Excise Act, 1944, (for short the

‘Act’) by this Petitioner amounting to evasion of payment of duty, removal of excisable goods in contravention of the provision of the Act and

the Rules made thereunder and failure to supply the information as required by the Rules and giving false information.

In accordance with Rules, show cause notice was issued proposing recovery of central excise short duty paid and imposition of penalty. In the

present case, for the period, in question, the Adjudicating Authority (Commissioner of Central Excise, Delhi) has imposed penalty amounting to Rs.7

crores against accused Company and Rs.3.15 crores against the Directors, Accused Nos.2 to 7, and the matter is, now, pending before the CEGAT in

appellate stage.

It is mentioned in the complaint that as per the said scheme of the Act, in addition to the adjudicating proceedings, offence committed under Section

9 & 9AA of the Act also amounts to criminal offence, punishable with imprisonment and also fine and cognizable by the Court. The offence relates to

period 1983 to 1987.

Counsel for the petitioner has submitted basis of the present case being the demand of central excise duty confirmed by the Adjudicating Authority

vide order in Original Case No.03/95 dated 29.12.1995, alleging offence under Section 9 and 9AA of the Central Excise Act, 1944, is completely

eroded and effaced by the judgment and order dated 10.09.2004 of the Hon’ble Supreme Court in ITC Limited Vs CCE, New Delhi and anr.

Reported in (2004) 7 SCC 591. Similar complaint cases arising out of the aforesaid order in Original filed in the Courts in Bengaluru and Kolkata have

been quashed by Hon’ble High Court of Karnataka at Bengaluru by its order dated 13.04.2005 and 09.01.2008 respectively and by the

Hon’ble Calcutta High Court by its order dated 13.12.2013, on the basis of aforesaid judgment and order of Hon’ble Supreme Court. True

copy of the aforesaid judgment and order of the Hon’ble Supreme Court, Karnataka High Court at Bengaluru and Calcutta High Court are

annexed as Annexure-1 series.

Counsel for the petitioner further submits that as on date, the demand of the Department having been effaced by the judgment of Hon’ble

Supreme court, continuance of the proceedings is unwarranted and even otherwise does not have sanction of law and amounts to an abuse of process

of Court. Counsel for the petitioner has relied on the decision of the Hon’ble Supreme Court in the case of Uttam Chand and ors. Vs. ITO

reported in (1982) 2 SCC 543, in which it has been held that if the core allegations made against the assessee are set aside in the departmental

proceedings, the criminal complaint based on the same allegations should be quashed. In another decision of the Hon’ble Supreme Court in the

case of Radheshyam Kejriwal Vs. State of West Bengal and another reported in (2011) 3 SCC 581, it has been held that in case it is found on merit

that there is no contravention of the provisions of the Act in the adjudication proceedings, the trial of the person concerned shall be an abuse of the

process of the Court. Further submission is that aforesaid principles have also been accepted by the Central Board of Excise and Customs and based

on these principles it has issued a circular No.998/5/2015-CX dated 28.02.2015 directing withdrawal of prosecutions where on identical allegation the

assessee had been exonerated in adjudication proceedings. Copy of the aforesaid circular has been annexed as Annexure-3. Learned counsel for the

petitioner has finally submitted that the petitioner-Company or the individuals accused ought not to be made to suffer and face the rigors of criminal

trial when the same cannot be sustained in the eye of law in view of conclusive findings of the Hon’ble Supreme Court.

Counsel for the Union of India was directed by order dated 26.04.2018 to seek instructions as to whether any step has been taken in the Court

below for withdrawing the case or not, but no such instruction was received by the counsel for the Union of India on the date of argument in this case.

Therefore, this case was heard on merit and judgment was reserved.

This Court after looking into the complaint filed by the Complainant, namely, Mr. M. K. Srivastava, Assistant Commissioner, Central Excise,

Division- Bhagalpur, find that present complaint has been filed under Section 9 & 9AA of the Central Excise Act, 1944, for evasion of payment of

duty, removal of excisable goods in contravention of the provision of the Act and the Rules made thereunder and failure to supply the information as

required by the Rules and giving false information. In accordance with Rules, show cause notice was issued proposing recovery of central excise duty

short paid and imposition of penalty. In the present case, for the period, in question, (1983 to 1987) the Adjudicating Authority (Commissioner of

Central Excise, Delhi) has imposed penalty amounting to Rs.7 crores against accused-Company and Rs.3.15 crores against the Directors, Accused

Nos.2 to 7, and the matter is pending before the CEGAT in appellate stage. As per said scheme of the Act, in addition to the adjudicating proceedings,

offence committed under Section 9 & 9AA of the Act also amounts to criminal offence punishable with imprisonment and also fine and cognizable by

the Court.

It is admitted position in this case that genesis of the present complaint is the order in Original Case No.3/95 passed by the Commissioner of Central

Excise, New Delhi, dated 29.12.1995, which confirmed demands for differential excise duty made on the Petitioner-Company vide show cause notice

dated 27.03.1987 and levied penalty on the Petitioner-Company and the individual accused. The said order in original dated 29.12.1995 stood set aside

by the CEGAT vide its judgment dated 04.09.1998. The aforesaid order in so far as it set aside imposition of penalty on the Directors has since

become final inter parties upon dismissal of Department’s appeal by order of the Hon’ble Supreme Court dated 15.01.1999, and in so far as

order of CEGAT remanding the matter for a fresh adjudication, the same stands set aside and all demands against the Petitioner-Company was set

aside by the final judgment and order dated 10.09.2004 of the Hon’ble Supreme Court reported in (2004) 7 SCC 591. Central Board of Excise and

Customs based on the principles decided by Hon’ble Supreme Court has issued a circular No.998/5/2015-CX dated 28.02.2015 directing

withdrawal of prosecutions where on identical allegation the assessee had been exonerated in adjudication proceedings (Anneuxre-3).

In the instant case, Union of India was asked to seek instructions as to whether any such withdrawal petition has been filed on behalf of the

Department in terms of the aforesaid circular, but no instruction has been received by the Union of India.

Counsel for the petitioner has submitted that similar complaint cases arising out of the order in Original No.03/95 dated 29.12.1995 were filed in

the Courts in Bengaluru and Kolkata and have been quashed by Hon’ble High Court of Karnataka at Bengaluru by its order dated 13.04.2005 and

09.01.2008 respectively and by the Hon’ble Calcutta High Court by its order dated 13.12.2013, on the basis of aforesaid judgment and order of

Hon’ble Supreme Court. The judgment passed by Hon’ble Supreme Court as well Karnataka High Court at Bengaluru and Calcutta High

Court are annexed as Annexure-1 series.

This Court after looking into the judgment of the Hon’ble Supreme Court passed in the case of ITC Limited Vs CCE, New Delhi and anr.

reported in (2004) 7 SCC 591 finds that Hon’ble Supreme Court has set aside all the demands raised against the petitioner by the department.

Pursuant to judgment of Hon’ble Supreme Court exonerating and setting aside all demands, the individual accused in the present complaint

filed discharge application under Section 245(2) Cr. P. C. before the Court of the Special Judge (Economic Offences), Patna, seeking discharge from

the present complaint.

A report was called for from the Court below about the present stage of the case, which has been received. It is submitted in the report that case

is pending for hearing on the petition under Section 245 (2) Cr. P. C. filed on behalf of the petitioner.

This Court finds that when in terms of aforesaid judgment the Hon’ble Supreme Court has exonerated and set aside all the demands against

the Petitioner, the very foundation on which the present complaint has been filed is set at naught by the authoritative pronouncement of Hon’ble

Supreme Court and no demand survives in this matter.

In such circumstances, continuance of the criminal proceeding against the Petitioner in terms of order passed in Original Case No.03/95 dated

29.12.1995 will amount to abuse of process of the Court and mere harassment to the petitioner.

Therefore, entire proceeding of Complaint Case No.303-C of 1998 pending before the Special Judge (Economic Offences), Patna, launched

against the petitioner on the basis of order in Original Case No.03/95 dated 29.12.1995 is hereby quashed.

This application is, accordingly, allowed.