Issue estoppel does not bar central excise prosecution where a writ set aside the CESTAT order on related-person findings.

Criminal prosecution for alleged central excise evasion was not quashed merely because an earlier writ petition had set aside the CESTAT order on related-person findings. The Court noted that the complaint rested on allegations of suppression of facts, related-person pricing and non-payment of duty under the Central Excise Act and Rules. It held that setting aside the CESTAT order did not amount to an acquittal or a finding in favour of the petitioners, so issue estoppel did not apply. The Court also accepted that adjudication and criminal prosecution operate in different fields, and the prosecution could proceed independently.

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Issues: Whether the criminal prosecution for alleged evasion of central excise duty could be quashed on the ground that the earlier writ petition had set aside the CESTAT order holding the petitioners to be related persons and that the adjudicatory finding had attained finality.

Analysis: The Court noted that the complaint and the adjudication were founded on allegations of suppression of facts, related-person pricing and non-payment of duty under the Central Excise Act and the Central Excise Rules. It also noted that the CESTAT had earlier recorded findings on mutuality of interest, but that order had been set aside in the writ petition. However, the Court held that the disposal of the writ petition did not amount to an acquittal or a verdict in favour of the petitioners so as to attract issue estoppel. The Court further accepted the submission that the criminal prosecution and the adjudication proceedings operate in different fields and that the prosecution should not be stifled merely because the writ challenge to the CESTAT order had succeeded.

Conclusion: The criminal proceedings were not liable to be quashed and the petitioners' request was rejected.

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