Criminal acquittal on the same evidence defeats identical excise demands and penalties based on clandestine removal allegations

Where excise adjudication and criminal prosecution were founded on the same evidence, an acquittal on merits in the criminal case meant the departmental case of clandestine removal could not be sustained on identical material. The record referred to recovered slips, alleged shortages, unaccounted goods and statements of connected persons, but the criminal court had found that the evidence did not prove clandestine removal or intent to evade duty. Applying that principle, the excise demand, interest and penalties were held unsustainable, the impugned order was set aside, and the assessee succeeded.

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Issues: Whether the excise demand, interest and penalties could be sustained when the assessees had already been acquitted in criminal proceedings on the same evidence and same allegations.

Analysis: The adjudication rested on the same materials that were relied upon in the criminal prosecution, namely the recovered slips, alleged shortages of raw material and finished goods, unaccounted bags, and statements of persons connected with the assessee. The criminal court had examined those materials and found no sufficient evidence to prove clandestine removal or intent to evade duty, and the acquittal was on merits. The governing principle applied was that where the prosecution and adjudication proceed on the same set of facts and the person stands exonerated on merits in criminal proceedings, the lesser standard in departmental proceedings cannot override that finding to sustain identical allegations.

Conclusion: The demand, interest and penalties were not sustainable and the assessee succeeded.

Final Conclusion: The impugned appellate order was set aside, and the connected appeals were allowed because the criminal acquittal on the same evidence displaced the departmental case of clandestine removal.

Ratio Decidendi: When criminal proceedings and departmental adjudication are founded on the same evidence and the accused is exonerated on merits in the criminal case, identical excise demands and penalties cannot be sustained on that very material.

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