Court quashes criminal proceedings due to exoneration by CEGAT, imposes costs on respondents.

The court quashed the criminal proceedings against the petitioner, accused No. 2, after finding that his exoneration by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) on the same facts was on merits. The court held that the exoneration in departmental adjudication proceedings should prevent continuation of criminal prosecution. The court imposed costs of Rs. 25,000 on the respondents to be paid to the petitioner within one month.

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Issues Involved:
1. Quashing the order of the ACMM dismissing the application for discharge under Section 245(2) Cr.P.C.
2. Admissibility and impact of statements recorded under Section 108 of the Customs Act.
3. Relevance of exoneration in departmental adjudication proceedings on criminal prosecution.

Issue-wise Detailed Analysis:

1. Quashing the order of the ACMM dismissing the application for discharge under Section 245(2) Cr.P.C.:

The petitioner sought to quash the order dated 23-10-2003 by the ACMM, New Delhi, which dismissed his application for discharge under Section 245(2) Cr.P.C. The petitioner was accused No. 2 in a criminal complaint filed by the respondent/DRI. The complaint alleged unlawful possession and attempted exportation of foreign currency by accused No. 1, Tankeshwar Singh, who implicated the petitioner in his statement recorded under Section 108 of the Customs Act.

The petitioner's counsel argued that the ACMM erred by not considering the exoneration of the petitioner by the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) in departmental adjudication proceedings. The CEGAT had set aside the penalty imposed on the petitioner, finding no reliable evidence connecting him with the seized foreign currency. The ACMM, however, held that the findings of the CEGAT were not binding on the criminal court, and criminal proceedings should be determined on their own merits.

2. Admissibility and impact of statements recorded under Section 108 of the Customs Act:

The statement of Tankeshwar Singh under Section 108 of the Customs Act implicated the petitioner. The ACMM noted that such statements are substantive evidence and cannot be disbelieved merely because they were retracted. The Supreme Court in Naresh J. Sukhwani v. Union of India held that statements made before Customs officials under Section 108 are material evidence and can be used to connect the accused with the contravention.

The respondents argued that the petitioner's exoneration by the CEGAT was due to insufficient evidence, not on merits, and thus did not impact the criminal proceedings. The trial court must independently assess the evidence, including statements under Section 108, to determine the petitioner's guilt.

3. Relevance of exoneration in departmental adjudication proceedings on criminal prosecution:

The petitioner relied on several judgments, including Sunil Gulati v. R.K. Vohra and G.L. Didwania v. Income Tax Officer, to argue that exoneration in departmental proceedings should lead to discharge in criminal cases if based on the same facts. The principle established is that if exoneration in adjudication is on merits, finding no contravention of the law, criminal prosecution on the same facts should not continue.

The CEGAT's order exonerated the petitioner on merits, finding no reliable evidence connecting him with the seized currency. The respondents did not appeal this order, accepting the Tribunal's findings. The petitioner's counsel argued that continuing criminal prosecution in light of this exoneration would be unjust.

The court, applying the principles from Sunil Gulati's case, concluded that the petitioner's exoneration by the CEGAT was on merits and identical to the facts in the criminal complaint. Therefore, the criminal prosecution could not be allowed to continue. The court quashed the proceedings arising from the criminal complaint against the petitioner and imposed costs on the respondents.

Conclusion:

The petition was allowed, and the criminal proceedings against the petitioner were quashed. The court emphasized that exoneration on merits in departmental adjudication proceedings should preclude continuation of criminal prosecution based on the same facts. The court also imposed costs of Rs. 25,000 on the respondents to be paid to the petitioner within one month.

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