Central excise prosecution cannot continue once duty demand and penalty are set aside and attain finality.

Where the central excise duty demand and penalty forming the basis of a criminal prosecution were set aside in appellate proceedings and that position was undisputed, the foundation of the complaint no longer survived. The Supreme Court held that the criminal prosecution for alleged duty evasion could not be sustained once the underlying demand and penalty had attained finality in favour of the assessee, and the complaint was quashed.

---

---

Issues: Whether the criminal prosecution for alleged evasion of central excise duty could continue after the duty demand and penalty had been set aside and the order attained finality.

Analysis: The demand of duty and the penalty, which formed the basis of the prosecution, had been set aside in appellate proceedings, and the Revenue did not dispute that position. In such circumstances, the foundation for continuing the criminal complaint no longer survived.

Conclusion: The prosecution could not be sustained, and the criminal complaint was quashed in favour of the assessee.

---