TMI Blog2021 (3) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded exonerating the petitioner or comes to the conclusion of minimum limit, then it amounts to an abuse of process and the same would be unjust permitting the Enforcement Directorate to continue with the criminal prosecution. Hence, it is appropriate for the present the proceedings can be kept in abeyance till the disposal of the matter which is pending before the adjudicatory authority. This Court direct the petitioners herein to move an application before the adjudicatory authority to get the matter disposed of as early as possible within one year since the matter involved is with regard to payment of excise duty due for a period of more than 3 years and odd, which affects the economy of the country as held by the Apex Court as well as other High Courts. The proceedings initiated against these petitioners are kept in abeyance till the disposal of the adjudicatory proceedings for a period of one year - petitioners are directed to get it disposed off the appeal, which is pending before the adjudicatory authority, within a period of one year from the date of this order by taking steps immediately. If the same is not disposed of within the stipulated time of one year, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of various products with a total turnover of more than ₹ 1900 Crores in the year 2014-2015. Accused No.3 has supplied all the raw materials to accused No.1 represented by accused No.2 and the manufacturing activities were undertaken by accused No.1. Hence, vicariously held liable for the offence committed by accused No.1 by virtue of Section 9AA(1) of the erstwhile Central Excise Act, 1944 read with Section 174 of the CGST Act, 2017. 5. Accused No.4 is the Managing Director of accused No.3; accused No.5 is the Vice President/Executive Director-Supply Chain (manufacturing engineering and sourcing) of accused No.3; accused No.6 is the CFO of accused No.3; accused No.7 is the Senior General Manager-Finance of accused No.3; accused No.8 is the General Manager-Sourcing of accused No.3 and all of them were responsible in connection with procurement of raw materials and finished goods which involves the process of identification of vendors qualification of products, finalizing contracts and ensuring supply of raw materials of the vendors and have committed the offence punishable under Sections 9 and 9AA(2) of the erstwhile Central Excise Act, 1944 read with Section 174 of CGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 and not on accused No.3. The only course open is to recover from accused No.1. The question of abatement does not arise. The learned Magistrate while taking the cognizance has not adverted to the factual aspects of the case. 10. The contention of the learned counsel for the petitioners is that the petitioners are not liable to pay the excise duty which ought to have been paid by accused No.1 and not by accused No.3. The petitioners was under the bonafide belief that the amount to be paid is the service tax and not as excise duty and accordingly, paid the service tax. When the act of the accused/petitioners is bonafide one, there cannot be any criminal proceedings against the petitioners. Learned counsel also brought to the notice of this Court the circular and contend that the initiation of the criminal proceedings against these petitioners is an abuse of process. If the proceedings initiated against the petitioners are dripped by the Adjudicatory Authority i.e., by the Appellate Court, the petitioners would be subjected to mental agony and harassment. The initiation of the criminal case is a serious matter. Hence, first of all the petitioners are not liable for any crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 1996 (87) E.L.T. 345 (Raj.) and brought to the notice of this Court para No.12, wherein it has been held that in the matters relating to levy of tax, cess or duty on the subject, the orders, instructions or circulars are, no doubt, not binding upon the Courts but since, they are issued by a superior authority to its subordinate authorities employed in the execution of the statute they carry a binding force in so far as the subordinate authorities are concerned. Moreover, the intention behind issuing such circulars was not to launch fruitless criminal litigation and waste public money and energy in prosecution involving pettyamounts. Since the order passed by the learned Assistant Collector in the present case clearly stated that the petitioner had evaded the payment of excise duty amounting to ₹ 8,919.26/- only which was a figure below ₹ 10,000/-, no prosecution should have been launched in view of the clear and specific circulars issued by the Board. 15. Learned counsel relied upon the judgment of the Madras High Court in the case of V.G.HIRUSHA V. ASSISTANT COMMISSIONER OF C. EX., CHENNAI reported in 2009 (238) E.L.T. 60 (Mad.). The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a necessary ingredient for imposition penalty under Rules 25 and 26 of Central Excise Rules, 2002. 20. Learned counsel also relied upon the judgment of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, JALANDHAR V. ROYAL ENTERPRISES reported in 2016 (337) E.L.T. 482 (S.C.), wherein the Apex Court has held that mere omission to disclose would not amount tosuppression of facts, unless there was deliberate attempt to evade duty. 21. Learned counsel for the petitioners further relied upon the judgment of the Apex Court in the case of GANGADHAR ALIAS GANGARAM V. STATE OF MADHYA PRADESH reported in (2020) 9 SCC 202 wherein it is held that with regard to the liberty of individual is concerned, if the Court is satisfied, that prosecution had failed to establish prima facie case, evidence led was wholly insufficient and there was gross misappropriation of evidence by Courts below, bordering on perversity, Supreme Court shall not be inhibited in protecting the liberty of individual. 22. Learned counsel also relied upon the order of the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru, wherein the miscellaneous application for early hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EXCISE, RAIPUR reported in 2013 (288) ELT 161(S.C.), wherein the Apex Court has held that mere non-payment of duties is not equivalent to collusion or willful misstatement or suppression of facts and positive action betraying negative intention of willful/deliberate default is mandatory prerequisite. 30. Learned counsel further relied upon the judgment of the Apex Court in the case of PEPSI FOODS LTD., AND ANOTHER V. SPECIAL JUDICIAL MAGISTRATE AND OTHERS reported in (1998)5 SCC 749, wherein the Apex Court has held that while invoking Section 204 for summoning the accused, the order must show that the Magistrate has applied his mind to the facts of the case and law applicable thereto. He should carefully scrutinize the evidence brought on record and may himself put questions to the complainant and his witnesses to find out the allegations. 31. Learned counsel also relied upon the judgment of the Apex Court in the case of NATIONAL SMALL INDUSTRIES CORP. LTD., V. HARMEET SINGH PAINTAL AND OTHERS reported in (2010)3 SCC 330, wherein the Apex Court discussed with regard to Section 141 of the NI Act and held that to put it clear that for making a person liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s defrauding Government exchequer. This clearly brings out their culpable state of mind and their complicity in the commission of the offence. Therefore, it is felt that this case is a fit case for launching prosecution against all the above mentioned notices. 35. Learned counsel in support of his contention relied upon the judgment of the Apex Court in the case of AIR CUSTOMS OFFICER, IGI NEW DELHI, reported in (2016) 66 TAXMANN.COM 293 (SC). Referring to this judgment, learned counsel brought to the notice of this Court para Nos.5, 6, 7 and 9, wherein the Apex Court discussed with regard to its earlier judgment in the case of PRITAM SINGH V. STATE OF PUNJAB and in the case of N.R. GHOSE V. STATE OF WEST BENGAL so also in the case of K.G.PREMSHANKAR V. INSPECTOR OF POLICE reported in (2002) 8 SCC 87. In para No.6 of the said judgment, the Apex Court has made an observation that in a criminal case, Section 300 of Cr.P.C. makes provision that once a person is convicted or acquitted, he may not be tried again for the same offence if the conditions mentioned therein are satisfied. If the criminal case and civil proceedings are for the same cause, judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 51. 40. Learned counsel also relied upon the judgment of the Apex Court in the case of ANANDA FABRICS V. ASSISTANT COMMISSIONER OF INCOME TAX, reported in (1990) 185 ITR 412 (Madras), wherein the Madras High Court has held that willful attempt to evade tax. When an order has been sought for quashing on the ground that departmental appeals were pending, the same cannot be quashed. However, the petitioner was free to request the Magistrate not to pronounce judgment till departmental proceedings were over. 41. Learned counsel also relied upon the judgment of the High Court of Madras in the case of N. ATHIMOOLAM V. INCOME-TAX OFFICER, reported in (2010) 327 ITR 603 (MADRAS), wherein it has been held that the proper course to be adopted by the High Court would be to allow proceedings to go on de hors orders setting aside penalty proceedings by Tribunal. Once the trial of the case has commenced with regard to willful attempt to evade the tax. 42. Learned counsel also relied upon the judgment of the Madras Court in the case of ASSISTANT COMMISSIONER OF INCOME-TAX V. N.K.MOHAMED ALI reported in (2010) 325 ITR 661 (MADRAS) with regard to willful atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se hearing is non-applicable as departmental and court proceedings are different. 49. Learned counsel also relied upon the judgment of the Supreme Court in the case of BENGAL IRON CORPORATON V. COMMERCIAL TAX OFFICER reported in (1993) 1993 TAXMANN.COM52 (SC), wherein the Apex Court has held that binding effect-Government instructions or circulars express Government view only and these are not binding on quasi-judicial officers. Courts alone can interpret law. 50. Learned counsel also relied upon the judgment of the Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II V. SUPER SYNOTEX (INDIA) LTD., reported in (2014) 43 TAXMANN.COM 140 (SC), wherein the Apex Court has held that if there are circulars issued BY CBEC which placed different interpretation upon a phrase in statute, interpretation suggested in circular would be binding on revenue regardless of interpretation placed by Supreme Court. It is further observed that it would not be appropriate for the Court to direct that circular should be given effect to and not view expressed in a decision of supreme Court or High Court. 51. Learned counsel also relied upon the judgment of the Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Learned counsel also brought to the notice of this Court para Nos.14, 15 and 16, wherein the Madras High Court has discussed with regard to escape of the accused from the clutches of the law, especially, in the light of the fact that the subject matter is an economic offence affecting the economic policy of the State creating imbalance in the financial status of the country. 55. Learned counsel for the respondent referring to the above judgments in reply to the contention of the learned counsel for the petitioners submits that there was no any recommendation for initiating the criminal action and that the communication is only an internal communication within the department. The recommendation is also not required and the petitioners also not having any vested right. If the stay is granted, the purpose of initiating the proceedings would be defeated. The prosecution is initiated against the persons who are responsible for the Company who were in the affairs of the Company matters and a specific allegation is made against these petitioners in the complaint. Hence, there cannot be any order of quashing or keeping in abeyance the criminal prosecution initiated against these pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice charges are paid. But the question before this Court is that the excise duty has not been paid. Hence, the prosecution is initiated against all the accused, but in this case, accused No.3-Company as well as its office bearers have filed the present petition. 60. The main contention of the learned counsel for thepetitioners is also that when the adjudicatory proceedings are pending, there cannot be any criminal proceedings. In support of his contention, he has relied upon several judgments before this Court as referred supra. Learned counsel appearing for the respondent also relied upon the several judgments. This Court also in Kavveri Telecom s case (referred supra) has held that the proceedings initiated are quashed for the present reserving liberty to the respondent to initiate the appropriate action depending upon the result of the proceedings pending before the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru. The Apex Court also in Additional Commissioner of Central Excise s case (referred supra) has held that the criminal proceedings could have been kept in abeyance till the disposal of the matter before the Appellate Authority/Tribunal. 61. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n abuse of process of the Court to permit the Enforcement Directorate to continue with the criminal prosecution. The Apex Court concurring with the said view in Radheshyam s case has come to the conclusion that it would be unjust and an abuse of process of Court to permit the Enforcement Directorate to continue with the criminal prosecution. 65. Having perused the material available on record and also the principles laid down in the judgments, no doubt, the Apex Court has held that simultaneously both the civil as well as the criminal proceedings can be launched even if the matter is pending for adjudication. But in the recent decision of the Apex Court, it has been held that the criminal proceedings can be kept in abeyance. The Apex Court in Additional Commissioner s case has held that at the most according to him, the criminal proceedings could have been kept in abeyance till the disposal of the matter before the Appellate Authority/Tribunal. This Court also in Kavveri Telecom s case quashed the proceedings for the present reserving liberty to the respondent to initiate appropriate action depending upon the result of the proceedings pending before the Customs, Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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