Final excise adjudication defeats criminal prosecution where suppression and intent to evade duty are not established.

Criminal prosecution for alleged central excise evasion cannot continue where the appellate tribunal has finally set aside the duty demand and penalty on the same facts and has found no suppression, misdeclaration or intent to evade duty. The prosecution was based on the same allegations rejected in adjudication; the assessee had disclosed its position, obtained approval of classification lists, explained its exemption claims and followed the prescribed procedure. Because the department did not challenge the tribunal's findings, they became final. Once the factual foundation of the prosecution is displaced by final adjudication, continuing the criminal case serves no purpose and amounts to abuse of process, so the proceedings were quashed.

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Issues: Whether criminal prosecution for alleged evasion of central excise duty can be sustained when the appellate tribunal has set aside the demand and penalty and has found no suppression, misdeclaration or intent to evade duty on the same set of facts.

Analysis: The prosecution was founded on the very allegations contained in the show cause notice and adjudication order. The appellate tribunal, however, found that the assessee had made full declarations, filed and obtained approval of classification lists, explained the basis of exemption claims, and followed the prescribed excise procedure. On that basis, it set aside the duty demand and penalty in toto and negatived the allegation of suppression or misdeclaration with intent to evade duty. Since the department did not challenge that finding, it became final. Where the very factual foundation of the prosecution stands displaced by a final adjudication, continuation of the criminal case would serve no purpose and would amount to an abuse of process.

Conclusion: The criminal prosecution could not be sustained and the proceedings were quashed in favour of the petitioner.

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