TaxTMI 
TaxTMI 
2023 (12) TMI 74
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.... Monali H Bhatt, App COMMON ORAL JUDGMENT 1. Since the issues and facts involved in all these applications are the same, at the request of learned advocates for the parties, they are heard and disposed of together by this common judgment. 2. These applications are filed under Section 482 of the Code of Criminal Procedure (`the Code' for short) praying to quash and set aside the Criminal Case Nos. 18 of 2011, 613 of 2012, 614 of 2012 and 615 of 2012, which are filed under the provisions of Section 138 of Negotiable Instruments Act, (`the Act' for short), pending in the Court of the learned Additional Chief Metropolitan Magistrate, Court No. 36, Ahmedabad and consequential proceedings pursuant thereto. 3. Heard learned advocates for the parties. 4. Learned advocates Mr. Thackar for the applicant submitted that the impugned complaints are filed for dishonour of the cheques, the details of which are mentioned as under: Sr.No. Application No. Cheque No. Date Amount 1. Criminal Miscellaneous Application No. 17170 of 2014 000260 11.10.2011 30,00,000/- 2 Criminal Miscellaneous Application No. 17171 of 2014 000267 01.01.2012 25,....
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....he applicant merely to show his bonafides before the learned trial Court at the time of praying for bail. Though the volition is shown by applicant but as such the cheques were obtained by the officers of the department under threat, pressure and duress. Thereafter, the demand raised by the department was challenged by way of statutory appeal, which was also allowed and such assessment was quashed and therefore, on date of issuance of cheque as well as on deposit of cheques, no legally enforceable debt was existing. 8. Learned advocate Mr. Thacker submitted that in cognate matters being Criminal Miscellaneous Application No. 11461 of 2015, 11467 of 2015 and 11468 of 2015, this Court (J.B. Pardiwala, J, as His Lordship then was) had considered identical set of facts and allowed the applications of the applicants therein and therefore, prayed to allow these applications. 9. Learned advocate Mr. Thackar further submitted that cheques cannot be collected by the authority without assessment and a show cause notice proposing to recover the amount towards the duty has to be issued in accordance with law. 10. Learned advocate Mr. Thackar for the applicant relied on the judgments o....
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....turers who are covered under the said Act and rules, Directorate General of Central Excise Intelligence is a Special Wing of the Central Excise Department constituted by the Central Government to detect the evasion of Central Excise duty by the manufacturer and proceed against them. 2. That, the accused No. 1 M/s. Nandeshwari Steel Ltd. is a Public Limited Company and registered under the Indian Companies Act and engaged in manufacture of SS ingotes, SS Round Bars falling under chapter - 72 of The Central Excise Tariff Act, 1985. The accused No. 2 Shri Mitesh Patel is the director of the said Company and looking after day to day affairs of the said company and is responsible for the said company M/s. Nandeshwari Steel Ltd. falls within the Jurisdiction of the Commissioner of Central Excise Ahmedabad III and are registered with Central Excise Division Office, Gandhinagar. Directorate General of Central Excise Intelligence, (herein after refereed to as DGCEI) having jurisdiction over the entire state of Gujarat for detecting and investigation of the cases of Central Excise duty evasion. 3. That on behalf of DGCEI, Senior intelligence officer Shri M.K. Sharma, has be....
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....A/c. M/s. Nandeshwari Steel Ltd. as their account for Central Excise duty is being maintained with Commissioner Central Excise, Ahmedabad-III. Sr. No. Cheque No. Date Amount 1. 000851 01.12.12 Rs. 50,00,000/- 2. 000852 15.12.12 Rs. 50,00,000/- 3. 000853 31.12.12 Rs. 50,00,000/- 4. 000854 15.01.13 Rs. 50,00,000/- 5. 000855 31.01.13 Rs. 50,00,000/- 6. 000856 15.02.13 Rs. 50,00,000/- 7. 000857 28.02.13 Rs. 50,00,000/- Total Rs. 3,50,00,000/- 7. That, out of the cheques mentioned in the table above three cheques mentioned at serial No. 04 and 05 above the cheque No. 000854, 000855 were deposited in the State Bank of India, Ashram Road Branch, Ahmedabad on 05.02.2013 for crediting the same in Government of India Account and the same were returned unpaid by their Bank of Baroda on 07.02.2013 with a remark of 'Payment Stopped by Drawer'. Therefore, the complainant could not recover their legal dues of Rs. 1,00,00,000/- (Rupees One Crore Only) from the accused. 8. That on 05.03.2013, the complainant through their advocate have served a legal notice U/s. 1....
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....e officers of the Central Excise department under threat, pressure and duress. The applicant no. 2 was pressurised by the officers to give a statement in writing on a letterhead of the company that the cheques were being drawn voluntarily and without any threat or duress. Mr. Trivedi submits that the adjudication proceedings under the Central Excise Act have not been initiated till this date. A show-cause notice proposing to recover a particular amount towards the duty has to be issued in accordance with law. The adjudicating authority, thereafter, will have to consider the claim put forward by the department by giving the applicants opportunity of leading appropriate evidence. Mr. Trivedi submits that the exact amount of the alleged evasion of duty is yet to be determined in accordance with law, and on the date when the cheques were obtained by the officers under threat, pressure and duress, there was no legally enforceable debt payable by the applicants to the complainant. Mr. Trivedi submits that the applicants have been charged with the offence under Section 9 of the Central Excise Act, 1944, i.e. for wrongly availing the Cenvat Credit of Rs. 3.27 crore. Such ....
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.... duty,- (a)the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (b) the person chargeable with duty may, before service of notice under clause (a), pay on the basis of,- (i) his own ascertainment of such duty; or (ii)the duty ascertained by the Central Excise Officer, the amount of duty along with interest payable thereon under section 11AA. (iii) The person who has paid the duty under clause (b) of sub-section (1), shall inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under clause (a) of that subsection in respect of the duty so paid or any penalty leviable under the provisions of this Act or the rules made thereunder. (2) Where the Central Excise Officer is of the opinion that the amount paid under clause (b) of sub-section (1) falls short of the amount actually ....
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....sion of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty has not been established against the person to whom the notice was issued, the Central Excise Officer shall determine the duty of excise payable by such person for the period of one year, deeming as if the notice were issued under clause (a) of sub-section (1). (10) The Central Excise Officer shall, after allowing the concerned person an opportunity of being heard, and after considering the representation, if any, made by such person, determine the amount of duty of excise due from such person not being in excess of the amount specified in the notice. (11) The Central Excise Officer shall determine the amount of duty of excise under sub-section (10)- (a) within six months from the date of notice in respect of cases falling under subsection (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under sub-section (4) (12) Where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer un....
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....v)) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (i)v)) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund; (i)v)i)) in the case where only interest is to be recovered, the date of payment of duty to which such interest relates. (c) Omitted. Explanation 2:- For the removal of doubts, it is hereby declared that any non-levy, short levy, non-payment, short-payment or erroneous refund where no show cause notice has been issued before the date on which the Finance Bill, 2015 receives the assent of the President, shall be governed by the provisions of section 11A as amended by the Finance Act, 2015." Thereafter, to Section 35 of the Act, which provides for appeals. It reads as under : "Section 35. Appeals to Commissioner (Appeals). - (1) Any person aggrieved by any decision or order passed under this Act by a Central Excise Officer, lower in rank than a Commissioner of Central Excise , may appeal to the Commissioner of Central Excise (Appeals) h....
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....tion No. 17170 of 2014 without producing complete documents of the said proceedings on record. It is submitted that reliance placed by the applicant to the proceedings of Criminal Misc. Application No. 17170 of 2014 filed by Shri Anil Govindbhai Metalia to support its case, is thoroughly misconceived inasmuch as the said Criminal Misc. Application No. 17170 of 2014 is admitted by this Hon'ble Court for consideration of contention raised by the said applicant that the post-dated cheque bearing Nos. 000260 dated 11.10.2011 was drawn in favour of ACAO, Central Excise, Bhavnagar, Whereas, the said cheque was submitted for realization at Junagadh by the office of ACAO, Central Excise, Junagadh in the State Bank of India, Junagadh. The said applicant has also produced photocopy of cheque in support of his plea, by way of draft amendment on 17.04.2015 and in these circumstances, this Hon'ble Court by order dated 17.04.2015 has allowed the draft amendment and issued rule on the petition. The applicant herein has relied upon the said order dated 17.04.2015, which is produced by him at PP-134. It is respectfully submitted that no such plea is available to the applicant in support of prayer f....
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....ches various incriminating & clinching documentary evidences were recovered, which evidenced an evasion of a huge amount of duty of Central Excise by way of fraudulent availment of Cenvat Credit based on phony invoices without receipt of goods mentioned therein as well as clandestine removals of finished goods without issuance of Central excise invoices & without payment of Central excise duty. During the course of investigation, the applicant has by making statements dated 07.11.2012 & 08.11.2012 under Section 14 of the Central Excise Act, 1944, confessed that he was indulging into fraudulent availment of Cenvat Credit of Rs.3.27 Crores on the basis of phony cenvatable invoices issued by the various ship- breaking units of Bhavnagar showing sale of old & used MS Plates, without receipt of goods mentioned therein; that they were not having facility/shredding machine for cutting, shredding & using said old & used MS Plates in manufacture of finished excisable goods at their factory premises; that they shared duty of such phony invoices in 50:50 ratio; that he was also indulging into clandestine removal of excisable goods i.e. SS Rounds on cash basis without issuance of invoices & wi....
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.... 4.7 On 05.03.2013, the answering respondent through their Advocate have, served a legal Notice dated 05.03.2013 under Section 138 of the Negotiable Instrument Act, 1881 (hereinafter referred to as "NIA" for the sake of brevity) to M/s NSL to make payment of the aforesaid returned and unpaid cheques by Regd. Post AD. and the same was replied by M/s. NSL vide letter dated 21.03.2013, inter alia, disputing and denying the contents of the notice and it 'was further contended that no Show Cause Notice was issued by the Excise Department to demand the excise duty due and payable by the applicant and that the liability to make payment of excise duty would arise only when the tax liability is ascertained and that there is no provision in law to pay advance tax compulsorily. It was further stated that the cheques were not issued voluntarily but it was rather issued under threat and coercion. Therefore, the answering respondent has filed Criminal Case No. 746 of 2013 on 01.04.2013 for the offence punishable under Section 138 of the Negotiable Instrument Act, 1881 by the applicant, which is sought to be quashed by the applicant under the captioned application. The learned Metropolitan M....
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....1944 is the charging Section for levy and collection of Central Excise duty on the excisable goods manufactured in India. Accordingly, the excise duty shall be levied and collected in such manner as may be prescribed. The machinery of levy and collection of duty is made by the rules framed in exercise of powers conferred under the Central Excise Act, 1944. Accordingly, manufacturer of excisable goods is obliged to make payment of duty in the manner and at the time as prescribed under Rule 4 and Rule 8 of the Central Excise Rules, 2002. It is submitted that act of omission on the part of the manufacturer to make payment of duty according to the said provisions would result into "Legally Enforceable Debt" against such manufacturer. The applicant has admittedly fraudulently availed Cenvat Credit on the basis of phony invoices without receipt of corresponding goods in their factory premises and removed the excisable goods manufactured by him clandestinely and without making payment of excise duty during the period from FY. 2010-11 to F.Y. 2012-13 and, therefore, in the present case as on the date of issue of the cheque by the applicant there existed legally enforceable debt wi....
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....ords. At the end of the operation, the officials reached to the conclusion that the applicants were liable to pay an amount of Rs. 3.50 crore towards the excise duty. On the very same day, somehow the officials procured seven cheques of different amounts and of different dates aggregating to the tune of Rs. 3.50 crore duly signed by the applicant no. 2 and drawn in favour of the department. The moot question that falls for my consideration is, whether the officials could have acted in such a manner and asked the applicants to make good the payment without there being any adjudication in accordance with the provisions of the Excise Act and the Rules framed therein. In order to attract the penal provisions for the bouncing of a cheque, it is essential that the dishonoured cheque should have been issued in discharge, wholly or in part, or any debt or other liability of the drawer to the payee. The explanation to Section 138 of the Negotiable Instruments Act defines the expression "debt or other liability" as a legally enforceable debt or other liability. Unless the two conditions set out in Section 138 of the Act are satisfied, no criminal liability can be fastened. This is also....
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....dition of affairs which gives rise to an obligation to do a particular thing to be enforced by action, responsibility, legal responsibility. In other words, the condition of one who is subject to charge or duty which may be judicially enforced." My attention is drawn by Mr. Trivedi, the learned counsel appearing for the applicants, to one order passed by a Division Bench of this Court in the Special Civil Application No.959 of 2014 decided on 14th February 2014. It was a case arising from the proceedings under the Value Added Tax Act, 2003. The facts were almost identical to the one on hand. In that case also, the authorities somehow obtained cheques towards the VAT. A writ-application was filed by one Atul Motors Private Limited, questioning such action on the part of the authorities. The Division Bench observed as under : "On 22nd January 2014, the Court had passed the following order :- 1. The petitioners are the authorised distributors of Maruti cars. They have been filing returns under the Value Added Tax Act, 2003 (hereinafter referred to as 'the Act') regularly. It is the contention of the petitioners that they recover certain handling charges fr....
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....the circumstances, the respondents shall return three cheques collected from the petitioner to them latest by 28th February 2014. This is without prejudice to the power of the competent authority to pass appropriate order, if so found necessary to protect the interest of revenue. Petition is disposed of accordingly." The applicants have levelled serious allegations against the officials of the department of exerting undue pressure, threat and duress while obtaining the cheques in question. Indisputably, as on date, the adjudication at the end of the competent authority under the Act is yet to take place. I find it extremely difficult to accept the argument of the learned counsel appearing for the department that the liability was fixed on the basis of the statements made by the applicant no. 2 herein dated 7th November 2012 and 8th November 2012 respectively under Section 14 of the Central Excise Act, 1944. It appears that the department construed the two statements recorded under Section 14 of the Act, 1944 as a confession on the part of the applicants of indulging into fraudulent availment of the Cenvat Credit of Rs.3.27 crore on the basis of phony convertible invo....
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....ainst the view of Delhi High Court in Magnum Aviation (P) Ltd. versus State, (2010)172 DLT 91 and Mojj Engg. Systems Ltd. versus A.B. Sugars Ltd., (2008) 154 DLT 579, which was disapproved. 9. We have given due consideration to the submission advanced on behalf of the appellant as well as the observations of this Court in Indus Airways (supra) with reference to the explanation to Section 138 of the Act and the expression "for discharge of any debt or other liability" occurring in Section 138 of the Act. We are of the view that the question whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction. If on the date of the cheque liability or debt exists or the amount has become legally recoverable, the Section is attracted and not otherwise. 10. Reference to the facts of the present case clearly shows that though the word "security" is used in clause 3.1(iii) of the agreement, the said expression refers to the cheques being towards repayment of installments. The repayment becomes due under the agreement, the moment the loan is advanced and the installment falls due. It is undisputed that the loan was duly disbursed o....
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....r debt. There is, thus, no similarity in the facts of that case simply because in that case also loan was advanced. It was noticed specifically therein - as was the admitted case of the parties - that the cheque was issued as "security" for the advance and was not intended to be in discharge of the liability, as in the present case. 14. In HMT Watches Ltd. versus M.A. Abida[8], relied upon on behalf of the respondent, this Court dealt with the contention that the proceedings under Section 138 were liable to be quashed as the cheques were given as "security" as per defence of the accused. Negativing the contention, this Court held :- "10. Having heard the learned counsel for the parties, we are of the view that the accused (Respondent 1) challenged the proceedings of criminal complaint cases before the High Court, taking factual defences. Whether the cheques were given as security or not, or whether there was outstanding liability or not is a question of fact which could have been determined only by the trial court after recording evidence of the parties. In our opinion, the High Court should not have expressed its view on the disputed questions of fact in a petiti....
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....so travel beyond its jurisdiction to interfere with the proceeding which is otherwise genuine. The courts cannot also lose sight of the fact that in certain matters, both civil proceedings and criminal proceedings would be maintainable." 12. In Rallis India Ltd. v. Poduru Vidya Bhushan [(2011) 13 SCC 88], this Court expressed its views on this point as under: (SCC p. 93, para 12) "12. At the threshold, the High Court should not have interfered with the cognizance of the complaints having been taken by the trial court. The High Court could not have discharged the respondents of the said liability at the threshold. Unless the parties are given opportunity to lead evidence, it is not possible to come to a definite conclusion as to what was the date when the earlier partnership was dissolved and since what date the respondents ceased to be the partners of the firm." 15. We are in respectful agreement with the above observations. In the present case, reference to the complaint (a copy of which is Annexures P-7) shows that as per the case of the complainant, the cheques which were subject matter of the said complaint were towards the partial repayment of the du....