Supreme Court rules in favor of Company, quashes revenue's demands and criminal proceedings

The Supreme Court dismissed the revenue's appeal and allowed the Company's appeal regarding liability to pay duty and penalty under The Central Excise Act, 1944. The demands by revenue were set aside, leading to the High Court quashing proceedings against the Directors of the Company based on the Supreme Court's decision. The High Court also quashed criminal proceedings against the Company, following the Supreme Court's judgment and previous orders.

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Issues involved: Petition to quash proceedings under Section 9 and 9(AA) of The Central Excise Act, 1944.

Summary:

Issue 1: Liability of petitioner to pay duty and penalty
The Supreme Court adjudicated on the liability of the petitioner (referred to as 'Company') to pay duty and penalty. The appeals filed by both the Company and the revenue were considered, with the Supreme Court dismissing the revenue's appeal and allowing the Company's appeal. Consequently, the demands by revenue were set aside, leading to the Company approaching the High Court.

Issue 2: Quashing of proceedings against Directors
In a related case concerning the Directors of the Company, the High Court quashed the proceedings in view of a Supreme Court judgment in I.T.C. Ltd. Vs. Commissioner of Central Excise. The Supreme Court's decision negated the revenue's demand, stating that the Company (I.T.C. Ltd.) was not liable to pay the duty and penalty imposed by the department. The High Court, based on the Supreme Court's order, found that the very basis of the complaint did not stand, leading to the quashing of proceedings against the Directors.

Issue 3: Continuation of criminal proceedings against the Company
Considering the Supreme Court's judgment and the High Court's previous orders, the High Court concluded that the impugned criminal proceedings against the Company could not be sustained. Therefore, the High Court accepted the criminal petition and quashed the proceedings pending in C.C.No.488/1998 on the file of Special Court for Economic Offences in Bangalore against the petitioner (I.T.C. Ltd.).

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