Departmental exoneration does not automatically bar criminal prosecution for excise evasion where independent prima facie material supports the complaint.

Criminal prosecution for alleged central excise duty evasion is not barred merely because departmental adjudication or appeal has set aside the demand for insufficient evidence. Adjudication and prosecution operate independently, and prior exoneration prevents prosecution only when the finding is on merits and conclusively negatives the contravention itself. Where the departmental order rests on evidentiary insufficiency and the criminal complaint contains additional material and statements supporting clandestine removal, the prosecution remains maintainable and quashing is not warranted.

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Issues: Whether criminal prosecution for alleged evasion of central excise duty can be quashed merely because the departmental adjudicating authority or appellate tribunal has set aside the demand on the ground that the charge was not proved.

Analysis: The departmental proceedings and the criminal complaint were based on the same alleged clandestine removal of steel ingots, but the appellate tribunal had exonerated the assessee only because the departmental evidence was found insufficient. The complaint, however, referred to additional material and statements to support the accusation. The governing principle applied was that adjudication and prosecution are independent, and prior exoneration bars prosecution only where the exoneration is on merits and negatives the contravention itself, not where it rests on evidentiary insufficiency or where the criminal complaint contains independent prima facie material.

Conclusion: The criminal proceedings were held maintainable and the petitioners were not entitled to quashing of the complaint.

Ratio Decidendi: Exoneration in departmental proceedings does not by itself terminate a criminal prosecution for fiscal evasion unless the exoneration is on merits and conclusively negates the alleged contravention; where the departmental finding rests on insufficiency of evidence and the complaint discloses independent prima facie material, the prosecution may continue.

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