2017 (9) TMI 1255 - HC - Central Excise

Adjudication Order Set-Aside: Criminal Case Proceeds Independently

Rajeev Kumar And Another Versus M.K. Sondhi

The court upheld the validity of the complaint despite the set-aside adjudication order, emphasizing that the remand for re-quantification did not nullify ... Offence under Section 9 of CEA - framing of charge - case of petitioners is that once order of Commissioner Central Excise dated 28.7.2001 was set aside in appeal by Appellate Tribunal vide order dated 6.11.2003, the complaint which was based primarily on the order of demand dated 28.7.2001 could not be sustained since the genesis of the complaint had disappeared - Held that: - there is no ground to accept the petition and quash the complaint besides ancillary proceedings. The prosecution has been launched against the accused for committing an offences under Sections 9 and 9AA of the Act for the reason that chenille yarn was found in the factory premises of the accused without any record being maintained in that regard, rather it was wrongly described as cotton yarn. The complaint is based upon such allegations. When charge was framed against the accused by Chief Judicial Magistrate, Panipat, these very contentions had been raised there but were rejected by learned Chief Judicial Magistrate and accused was served with charge-sheet. They had filed a representation against the order framing charge but again were unsuccessful as their revision petition was dismissed by learned Additional Sessions Judge vide order dated 7.8.2014 giving detailed reasoning citing case law and observing that adjudication proceedings and criminal proceedings are independent and can go on simultaneously and finding in adjudication proceedings is not binding on criminal proceedings. The order passed by the Commissioner is a relevant piece of evidence to support the contentions in the complaint but besides that there is other evidence also both oral as well as documentary as it comes out from the perusal of the complaint. Therefore, no ground is made out to accept the petition and to quash the complaint and subsequent ancillary proceedings. Petition dismissed - decided against petitioner. Issues Involved:1. Validity of the complaint based on a set-aside adjudication order.2. Impact of non-finalized demand on the maintainability of the complaint.3. Threshold for prosecution based on the amount of excise duty evaded.4. Evidence of manufacturing chenille yarn post-January 1999.5. Continuation of criminal prosecution alongside pending adjudication.6. Validity of the sanction for prosecution based on a non-existent adjudication order.7. Continuation of criminal proceedings pending appellate adjudication.Detailed Analysis:1. Validity of the Complaint Based on a Set-Aside Adjudication Order:The petitioners argued that the complaint could not be sustained as the genesis of the complaint, the order of demand dated 28.7.2001, had been set aside by the Appellate Tribunal on 6.11.2003. The Tribunal remanded the matter for re-quantification, indicating that the initial basis for the complaint no longer existed. The court, however, held that the remand for re-quantification did not nullify the complaint, as the issue was the amount of penalty, not the contravention itself.2. Impact of Non-Finalized Demand on the Maintainability of the Complaint:The petitioners contended that since the demand for excise duty was not finalized, the complaint could not continue. The court found that the complaint was valid as the Tribunal had not nullified the demand but remanded it for re-quantification. The criminal proceedings could proceed independently of the adjudication process.3. Threshold for Prosecution Based on the Amount of Excise Duty Evaded:The petitioners argued that if the re-quantified demand was less than Rs. 25 lacs, the complaint would not be maintainable, as per the Central Excise Board's circular. The court did not specifically address this threshold but emphasized that the criminal proceedings and adjudication were separate processes.4. Evidence of Manufacturing Chenille Yarn Post-January 1999:Petitioners presented evidence, including bills and affidavits, indicating that chenille yarn was only manufactured from January 1999 to 16.2.1999, with a total sale/clearance amount of Rs. 30,45,572/- and excise duty of Rs. 4,56,836/-. The court noted that the presence of chenille yarn without proper records and its misdescription as cotton yarn formed the basis of the complaint.5. Continuation of Criminal Prosecution Alongside Pending Adjudication:The petitioners argued that criminal proceedings could not continue while adjudication was pending. The court held that adjudication and criminal proceedings could coexist, and findings in adjudication were not binding on criminal prosecution. The court cited precedents supporting the independence of these proceedings.6. Validity of the Sanction for Prosecution Based on a Non-Existent Adjudication Order:The petitioners claimed that the sanction for prosecution was invalid as it was based on an order no longer in existence. The court found that the remand for re-quantification did not nullify the basis for prosecution, as the contravention itself was not negated.7. Continuation of Criminal Proceedings Pending Appellate Adjudication:The petitioners argued that criminal proceedings should be halted until the appellate adjudication was complete. The court reiterated that criminal and adjudication proceedings were independent and could proceed simultaneously. The remand for re-quantification did not invalidate the complaint or halt the criminal process.Conclusion:The court dismissed the petition, finding no merit in the arguments for quashing the complaint and ancillary proceedings. The court emphasized the independence of criminal prosecution from adjudication proceedings and upheld the continuation of the criminal case based on the evidence and allegations presented.