Excise prosecution can proceed despite dropped duty demand where manufacture and suppression disclose a prima facie offence.

A private excise complaint was upheld because the adjudication order still recorded that the company was the manufacturer, and the materials disclosed alleged manufacture at another premises, removal of excisable goods, suppression of facts, and evasion of duty. The dropping of duty recovery and penalties on limitation did not negate the alleged offence, so a prima facie case for prosecution remained. A departmental circular fixing a monetary threshold for launching prosecution was treated as an administrative instruction that could not restrict a criminal court's power to take cognizance of statutory offences. The request to quash the proceedings therefore failed.

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Issues: (i) Whether the private complaint under the Central Excise Act could be quashed on the ground that the adjudicating authority had dropped the demand and penal proceedings only on limitation, while still holding the company to be the manufacturer; (ii) Whether the departmental circular fixing a monetary threshold for launching prosecution barred the criminal complaint.

Issue (i): Whether the private complaint under the Central Excise Act could be quashed on the ground that the adjudicating authority had dropped the demand and penal proceedings only on limitation, while still holding the company to be the manufacturer.

Analysis: The adjudication order recorded a finding that the company was the manufacturer of the goods. The complaint and the materials before the Court also disclosed allegations of manufacture at another premises, removal of excisable goods, evasion of duty, and non-disclosure of material facts to the Department. The dropping of duty recovery and related penalties was only on limitation and did not amount to a finding that no offence had been committed. On the materials available, a prima facie case was made out for offences under the excise penal provisions.

Conclusion: The complaint was not liable to be quashed on this ground and the issue was against the petitioner.

Issue (ii): Whether the departmental circular fixing a monetary threshold for launching prosecution barred the criminal complaint.

Analysis: The circular was an administrative instruction to departmental officers and could not control the jurisdiction of the criminal court to take cognizance of cognizable offences under the statute. The prosecution in the case was not confined to non-payment of duty alone but also concerned suppression and failure to furnish information. Therefore, the monetary-limit circular had no effect on the maintainability of the complaint.

Conclusion: The circular did not bar the prosecution and the issue was against the petitioner.

Final Conclusion: As prima facie materials existed disclosing offences and no legal bar to cognizance was established, the request to quash the proceedings failed.

Ratio Decidendi: A finding of manufacture under excise adjudication, coupled with prima facie allegations of evasion and suppression, is sufficient to sustain criminal proceedings, and an administrative prosecution-guideline circular cannot curtail the criminal court's power of cognizance.

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