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Issues: (i) Whether the grant of immunity under the settlement scheme barred criminal prosecution when the proceedings alleged against the appellant-company were instituted after the immunity application and before cognizance; (ii) Whether the discharge application should have been allowed in view of the adjudication on duty liability and the consequent absence of a subsisting fiscal basis for the prosecution.
Issue (i): Whether the grant of immunity under the settlement scheme barred criminal prosecution when the proceedings alleged against the appellant-company were instituted after the immunity application and before cognizance.
Analysis: The immunity granted under the settlement provisions was held to operate as an express bar on prosecution where the proceedings for the offence were instituted after receipt of the immunity application. Mere registration of an FIR was held not to amount to institution of prosecution, as criminal proceedings reach the relevant stage only when cognizance is taken after filing of the final report under the criminal procedure law. The earlier adjudication and settlement order were treated as having legal significance in determining the bar.
Conclusion: The prosecution was barred and the issue was answered in favour of the appellant-company.
Issue (ii): Whether the discharge application should have been allowed in view of the adjudication on duty liability and the consequent absence of a subsisting fiscal basis for the prosecution.
Analysis: The customs adjudication had held that the goods were not liable to be assessed on the basis alleged by the prosecution, and the remand proceedings had resulted in a finding of refund entitlement. That order had attained finality. In these circumstances, the foundation of the criminal allegations, which rested on an asserted duty evasion, was found to be absent. Continuation of prosecution was therefore treated as unwarranted and as an abuse of process.
Conclusion: The discharge ought to have been granted and the issue was answered in favour of the appellant-company.
Final Conclusion: The criminal proceedings against the appellant-company could not be sustained, and the impugned orders were set aside.
Ratio Decidendi: Where immunity from prosecution is granted under a settlement mechanism and the alleged criminal proceedings are founded on a fiscal liability that has been finally negatived, continuation of prosecution is impermissible, and mere registration of an FIR does not constitute institution of prosecution for the purpose of the statutory bar.
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