2023 (9) TMI 1598 - HC - Customs

Company cannot escape fraud charges despite paying Rs 1.5 crore CVD after customs raid

M/s BACCAROSE PERFUMES AND BEAUTY PRODUCTS PRIVATE LIMITED Versus CENTRAL BUREAU OF INVESTIGATION & 1 other (s)

Gujarat HC dismissed the criminal revision application challenging charges under sections 420 and 120-B IPC against a company for evading countervailing ... Charges u/s 420 and 120-B of the IPC - malafide and dishonest intention on the part of the accused Company in connivance with officials of the department for evading countervailing duty and for getting wrongful gain - HELD THAT:- It is needless to say that so far as the allegation of conspiracy is concerned, it is very difficult to collect any direct evidence of conspiracy. From the material collected or the evidence adduced on record, inference of conspiracy is required to be drawn. The Investigating Officer has collected voluminous documentary evidences and evidence of the Intelligence Officers, the offence of evasion of CVD of 85% payable to the government on MRP of the products is noted. Merely because, subsequently in appeal the Customs Department has cleared the doubts and Company has subsequently paid the differential amount of CVD of Rs.1,51,45,378/- is not a ground to exonerate the applicant Company from the charges leveled against it as said proceedings are afterthought and amount paid after the raid conducted by the Customs Department. The said proceedings are initiated after closing of the present prosecution. Before the date of receipt of the application under Section 32-K of the Central Excise Act, already prosecution came to be instituted. Hence, no such immunity can be granted and said act is nothing but afterthought i.e. not prior to complaint and said fact is also not disclosed before the authority hence, question of bonafide intention and debatable question of interpretation of Rules also does not arise considering peculiar facts of the case. Even, the act on the part of the accused prima facie appears to be false. Section 23 of the IPC defines “Wrongful gain”, which provides that “wrongful gain” is gain by unlawful means of property to which the person gaining is not legally entitled and due to such act, wrongful loss is caused to the government for which government is legally entitled to recover dues. Thus, as per section 24 of the IPC, whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing “dishonestly”. Herein, only with intention of getting unlawful gain to company and to cause loss to government exchequer, act is committed. Whether the defence raised by the present applicant is bonafide or not, all these aspects are required to be considered at the time of full-fledged trial as the learned Special Judge is satisfied that prima facie case is made out and there is sufficient material and evidence and ground for framing of charge and the Court has not gone into the merits of the case and considered on the basis of material on record that the accused is likely to be convicted or not. Hence, the order passed by the learned Special Judge does not call for any interference as at the time of framing of the charge, Court has not to weigh evidence and come to conclusion as to whether or not there is a possibility of recording conviction. Court has to only see as to whether there is sufficient ground or material against the accused based on which accused may be put to trial. In view of the law laid down by the Hon’ble Apex Court in the case of P. Vijayan [2010 (1) TMI 1097 - SUPREME COURT], Ashok Kashyap [2021 (4) TMI 1299 - SUPREME COURT] and M.R. Hiremath [2019 (5) TMI 1986 - SUPREME COURT] and in view of the fact that on the basis of all the material on record, the learned Special Judge has satisfactorily come to conclusion that accused Company might have committed an offence so no any suspicion qua interpretation of Rules or provisions arise at this stage. Hence, present criminal revision application stands dismissed. Resultantly, the impugned order dated dated 19.07.2017 passed by the learned Special Judge (CBI), Ahmedabad in CBI Special Case No.48 of 2010 is hereby confirmed. As the offence is registered way back in the year 2005, learned Special Judge, CBI Court, Ahmedabad is directed to expedite the trial preferably within a period of one year. Rule is hereby discharged. Issues Involved:1. Whether the impugned order rejecting the discharge application was justified.2. Whether there was sufficient evidence to frame charges under Sections 420 and 120-B of the IPC.3. The applicability of the Standards of Weights and Measures Act, 1976, and related rules.4. The interpretation of the Central Excise Act, 1944, and the Customs Act, 1962.5. The existence of criminal conspiracy and wrongful gain.6. The role of the Settlement Commission and immunity provisions.Issue-wise Detailed Analysis:1. Justification of the Impugned Order:The applicant sought to quash the order dated 19.07.2017, which rejected the discharge application. The court emphasized that the Special Judge had not erred in rejecting the discharge application. The Supreme Court had allowed the applicant to raise pleas for discharge at the time of hearing charges, but this did not guarantee discharge. The court found that the Special Judge had sufficient grounds to proceed with the trial, as there was prima facie evidence against the accused.2. Evidence for Framing Charges:The court highlighted that at the stage of framing charges, the court must determine if there is sufficient material to proceed. The evidence collected indicated a prima facie case of cheating and criminal conspiracy. The applicant company was alleged to have evaded Countervailing Duty (CVD) by declaring invoice value instead of Maximum Retail Price (MRP), causing a significant loss to the government. The court concluded that the material on record disclosed grave suspicion against the accused, warranting the framing of charges.3. Applicability of Standards of Weights and Measures Act, 1976:The applicant argued that the dispute was a matter of interpretation of rules under the Standards of Weights and Measures Act, 1976, and related rules. The court noted that the applicant company's packages were wholesale, not retail, and thus did not require MRP declaration. However, the court found that the applicant's interpretation was not a defense at this stage, as the accused company had evaded duty under the guise of wholesale packaging.4. Interpretation of Central Excise and Customs Acts:The applicant contended that the issue was a debatable interpretation of the Central Excise Act, 1944, and the Customs Act, 1962. The court observed that the applicant had failed to declare MRP on products cleared in the Domestic Tariff Area, despite notifications mandating such declarations. The court concluded that the applicant's actions were not a mere misinterpretation but a deliberate attempt to evade duty.5. Existence of Criminal Conspiracy and Wrongful Gain:The court emphasized the elements of criminal conspiracy, including an agreement between parties to commit an illegal act. The evidence suggested that the applicant company conspired with customs officials to evade duty, resulting in wrongful gain. The court noted that the applicant's actions demonstrated a clear intention to deceive and cause loss to the government.6. Role of Settlement Commission and Immunity Provisions:The applicant argued that the Settlement Commission had settled the issue, and no prosecution should follow. However, the court clarified that immunity from prosecution could not be granted once proceedings had been initiated. The court held that the applicant's reliance on the Settlement Commission's order was misplaced, as it was an afterthought following the initiation of criminal proceedings.Conclusion:The court dismissed the criminal revision application, confirming the order of the Special Judge. It directed the trial to proceed expeditiously, emphasizing the sufficiency of material to frame charges. The court extended interim relief for 15 days to allow the applicant to approach the Supreme Court.