2025 (8) TMI 167 - SC - Central Excise

Criminal Proceedings Under Central Excise Act Allowed Despite Set-Aside Commissioner's Order, Investigation Validated

M/s. Rimjhim Ispat Limited And Others Versus Union Of India & Another

The SC dismissed the appeal challenging criminal proceedings under the Central Excise Act, 1944, for clandestine manufacture and illicit removal of ... Clandestine manufacture and illicit removal of excisable goods - Initiation of criminal proceedings u/s 9 and 9AA of the Central Excise Act, 1944 - sanction based on the Commissioner’s findings dated 31.03.2011, which the Appellants allege was relied upon through suppression of the CESTAT’s remand order by the very same Commissioner - HELD THAT:- Considering the contentions of the Appellant on the aspect of reliance on a non-existent Order dated 31.03.2011, on it having been set aside, even assuming the said contention to be so, it is clear from the materials on record that investigation and the Complaint are still in sustenance against the Appellants. The contents of the Complaint reveal that there is no reliance placed on the now-set aside Order dated 31.03.2011 rather it was only referred as an addendum to complete the sequence of facts of the case of the Respondent-Department. The irregularities which came to light on search and the contents of the investigation report, are sufficient to observe and opine prima facie on the existence of allegations as mentioned in the complaint against the Appellants, at the time of the consideration made by the Trial Court justifying the passing of the summoning order. A reference to Radheyshyam Kejriwal [2011 (2) TMI 154 - SUPREME COURT] reveals that, as in the present case, there is no bar on parallel proceedings, with one being by the Respondent-Department and the other being criminal in nature, under the CEA 1944. Further, the attempt of the Appellants to distinguish the said decision, is primarily reliant on the observation that the Complaint was solely based on the Order dated 31.03.2011, which, at the time had been set-aside. However, a direction for de novo proceedings on technical or procedural grounds cannot be assumed to be in equivalence to having been set-aside on merits, when it was specifically mentioned that the merits have not been considered. Hence, we are inclined to accept and adopt the decision in Pramod Kumar Dhamija [2016 (2) TMI 479 - SUPREME COURT] as referred by the learned ASG. Ergo, having perused the alleged conduct and the orders passed by the concerned authorities and the Courts below, the authorities relied upon by the Appellants are unable to substantiate their claim in the present facts and circumstances. It is not inclined to interfere with the Impugned Judgment - appeal dismissed. ISSUES: Whether criminal proceedings under Sections 9 and 9AA of the Central Excise Act, 1944 can be sustained against appellants when departmental adjudication orders relied upon have been set aside or remanded.Whether the Trial Court and High Court erred in rejecting the discharge application under Section 245(2) of the Code of Criminal Procedure, 1973.Whether parallel adjudication and criminal proceedings can be maintained simultaneously under the Central Excise Act, 1944.Whether reliance on an order set aside on procedural grounds negates the maintainability of criminal prosecution.Whether the appellants' fundamental right under Article 21 is violated by continuation of criminal proceedings based on allegedly non-existent or quashed orders.Whether the Trial Court correctly applied the legal distinction between discharge applications under Section 245(1) and Section 245(2) CrPC.Whether the High Court failed to appreciate the absence of a valid order as the basis for prosecution and the groundlessness of the criminal complaint. RULINGS / HOLDINGS: The criminal proceedings under Sections 9 and 9AA of the Central Excise Act, 1944 are sustainable despite the setting aside or remand of departmental adjudication orders, as the investigation and complaint contain sufficient prima facie evidence independent of the quashed orders.The Trial Court and High Court correctly dismissed the discharge application, holding that 'adjudication and prosecution were independent processes' and that the existence of a prima facie case is the test for issuing summons, not the eventual outcome of adjudication.There is 'no bar on parallel proceedings' with one being departmental adjudication and the other criminal prosecution under the CEA 1944, as confirmed by the precedent in Radheshyam Kejriwal v. State of West Bengal and Another.The setting aside of departmental orders on procedural or technical grounds does not equate to exoneration on merits, and thus does not invalidate the sanction for prosecution or the complaint based thereon.The continuation of criminal proceedings based on the material on record does not violate Article 21, as the procedure established by law has been followed and the complaint is not 'groundless' within the meaning of the law.The Trial Court did not err in considering material beyond the complaint for the purpose of discharge under Section 245(2) CrPC, and the appellants' reliance on distinctions between Sections 245(1) and 245(2) CrPC is misplaced in this context.The High Court rightly rejected the contention that no valid order existed to sustain prosecution and correctly applied the test of sufficiency of prima facie evidence rather than merits of the case. RATIONALE: The Court applied the legal framework under the Central Excise Act, 1944 and the Code of Criminal Procedure, 1973, particularly focusing on Sections 9, 9AA of the CEA and Sections 245(1) and 245(2) CrPC regarding discharge applications.Precedents relied upon include Radheshyam Kejriwal v. State of West Bengal and Another for the principle of parallel proceedings, Air Customs Officer IGI, New Delhi v. Pramod Kumar Dhamija for the legitimacy of criminal prosecution despite quashed adjudication orders on procedural grounds, and State of Tamil Nadu v. R. Soundirarasu and Others on the definition of 'groundless' complaints.The Court distinguished procedural setting aside of orders from exoneration on merits, emphasizing that the merits of departmental adjudication are not binding on criminal prosecution and that the existence of 'prima facie evidence' is the relevant criterion at the discharge stage.The Court rejected the appellants' argument that the Trial Court improperly considered material beyond the complaint under Section 245(2) CrPC, noting that the objections were not raised below and that the jurisprudence on discharge was correctly followed.No violation of Article 21 was found as the procedure established by law was adhered to, and the continuation of prosecution was not arbitrary or without basis.The Court reaffirmed the independence of criminal proceedings from departmental adjudication and upheld the principle that discharge applications require only a prima facie assessment rather than a detailed inquiry into merits.