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TMI Blog2018 (2) TMI 2067X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accounted in the Raw Materials Receipt Register - FORM IV. They also seized Brass pipes, copper nickel pipes on the ground that the goods were not accounted in RG 1. Thereupon, a show-cause notice was issued for adjudication. The appeals are pending before Customs Excise and Service Tax Appellate Tribunal (for short "CESTAT"). The respondent based its claim on eligibility of "Cenvat credit", initiated proceedings in the context of the same visit and enquiries. The authorities scrutinized records, documents and found that the petitioners availed "Cenvat credit" fraudulently on the imported goods (copper ingots/wire bars) which according to authorities did not seem to have been received by the petitioners into their factory, as they could not have been received in the facts and circumstances of the petitioner No.1 - factory. On the assumption, the Commissioner issued show cause notice bearing No.66/2009 dated 08.12.2009 calling for explanation as to why "Cenvat credit" amounting to Rs. 1,81,09,125/- inclusive of Duty of Rs. 1,77,54,048/- and Education Cess of Rs. 3,55,077/-, fraudulently availed by them without actual receipt of inputs/raw material as detailed in Annexure E encl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under Section 9 of the Central Excise Act, 1944, which is registered as C.C.No.132 of 2017 before the Special Judge for Economic Offences, Hyderabad on the basis of the order-in- Original No.04/2011 dated 31.01.2011 passed by the Commissioner, which is the subject matter of appeals before CESTAT. The main ground urged before this Court by the petitioners is that when the appeals are pending against the order passed by the Commissioner, and CESTAT granted stay subject to deposit of certain amount by each appellant, the proceedings before the Court below cannot be continued since the guilt of the petitioners would depend upon the findings recorded by the CESTAT in the appeal pending before it. The petitioners also raised several other contentions, which are not germane to decide the real controversy between the parties. During hearing Sri Ch.Pushyam Kiran, learned counsel for the petitioners mainly contended that when appeals are pending before CESTAT against the Order-in-Original No.04 of 2011 dated 31.01.2011 passed by the Commissioner, the prosecution before the Special Judge for Economic Offences cannot be continued and the same is liable to be quashed for the reason that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rabad are independent and the result of prosecution in C.C.No.132 of 2017 would not depend upon the findings recorded by CESTAT. Considering rival contentions and perusing the material available on record, the point that arises for consideration is: Whether the pendency of appeals before CESTAT debars the respondent from prosecuting the petitioners for the offence punishable under Section 9 of the Central Excise Act, 1944, if so, whether the proceedings in C.C.No.132 of 2017 on the file of Special Judge for Economic offences, Hyderabad are liable to be quashed? POINT : The undisputed facts are that the Commissioner of Central Excise levied duty, penalty as stated above, for availing "Cenvat credit" fraudulently. The order passed by the Commissioner of Central Excise is the subject matter of appeals before CESTAT in the appeal Nos.E/1212/2011, E/1241/2011, E/1240/2011, E/1239/2011, E/1238/2011. While the appeals are pending, the respondent initiated prosecution against these petitioners for the offence punishable under Section 9 of the Central Excise Act for availing "Cenvat Credit" fraudulently. The contention of the petitioners before this Court is that when the availment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercise of the inherent powers under Section 482. It is not, however, necessary that there should be a meticulous analysis of the case, before the trial to find out whether the case would end in conviction or not. The complaint has to be read as a whole. If it appears on a consideration of the allegations, in the light of the statement on oath of the complainant that ingredients of the offence/offences are disclosed, and there is no material to show that the complaint is mala fide, frivolous or vexatious. In that event there would be no justification for interference by the High Court as held by the Apex Court in "Mrs. Dhanalakshmi v. R. Prasanna Kumar [AIR 1990 SC 494]" In "State of Haryana v. Bhajan Lal [1992 Supp (1) SCC 335]" the Apex Court considered in detail the powers of High Court under Section 482 and the power of the High Court to quash criminal proceedings or FIR. The Apex Court summarized the legal position by laying down the following guidelines to be followed by High Courts in exercise of their inherent powers to quash a criminal complaint: (1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of Copper Nickel Pipes etc. by the petitioner No.1 - company. Thus, the petitioner Nos.2 to 5 being the Managing Director, Executive Director and Chief Executive allegedly availed "Cenvat Credit" on the strength of the bills of entry related to imported re-melted Copper Ingots/Wire Bars of Sri Lankan origin shown to have been purchased on high sea sale basis from two Delhi based Importers - M/s. Dinesh International Ltd and M/s.Vipin Enterprises, without actual receipt of said remelted copper ingots/wire bars into their factory, on the strength of fabricated transport documents/transactions. These consignments of re-melted copper ingots/wire bars, which are of Sri Lankan Origin, allegedly purchased on high sea sale basis, were shipped from Sri Lanka to JNPT, Nhava Sheva, Mumbai and then the same were transported to ICD, Tughlaquabad, Delhi by train. After the customs clearance at ICD, Tughlaquabad, Delhi, it was shown in the records that the goods were transported through M/s.Time and Space Haulers from New Delhi to the factory premises of Cubex, the petitioner No.1 herein. The said consignments of re-melted copper ingots/wire bars were shipped from Sri Lanka to JNPT, Nhava Shev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 27.06.2008 submitted Ledger printouts of M/s. Time and Space Haulers as available in the accounts of Cubex - petitioner No.1. Sri Praveen Agarawal, Partner of M/s.Time and Spece Haulers, Ahmedabad vide his letter dated 19.02.2009, addressed to the Additional Director, DGCEI, Ahmedabad, submitted revised ledger account of Cubex along with relevant bills. On perusal of the revised Ledger Account of Cubex along wth relevant copies of Bills submitted by Sri Praveen Agarwal, Time and Space Haulers, Ahmedabad vide his letter dated 19.02.2009 and also True Copies of Consignment Notes submitted by Sri Praveen Agarwal vide his letter dated 26.05.2009, got confirmed that M/s. Time and Space Haulers issued 70 Consignment Notes showing the transport of 698.375 M.T. of Remelted Copper Wire Bars/Ingots imported vide 26 Bills of Entry. Further basing on the said 70 Consignment Notes issued and bills raised by M/s. Time & Space Haulers, "Cenvat Credit" of Rs. 1,81,09,125/- was availed by Cubex - petitioner No.1 herein against 26 Bills of Entry. The respondent further made investigation and got confirmed that the petitioners by fabricating bills of entry and bills and availed "Cenvat credit" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the reassessment proceedings cannot act as a bar to the institution of the criminal prosecution for offences punishable under Section 276 C or Section 277 of the Act or Sections 193 and 196 of the Penal Code. The institution of the criminal proceedings cannot in the circumstances also amount to an abuse of the process of the Court. Thus, the law laid down by the Apex Court is consistent that pendency of appeals against the order passed by the primary authority would not debar the authorities to prosecute the individual for the offences punishable under penal provisions i.e. in the present case under Section 9 of the Central Excise Act. When a criminal prosecution is launched during pendency of appeals, in the criminal case all the ingredients of the offence in question have to be established in order to secure the conviction of the accused. The criminal court no doubt has to give due regard to the result of any proceeding under the Act having a bearing on the question in issue and in an appropriate case it may drop the proceedings in the light of an order passed under the Act. It does not, however, mean that the result of a proceeding under the Act would be binding on the crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is not launched merely on the ground that the petitioner failed to pay the amount of duty as determined by the Commissioner, whose order is stayed by the CEGAT. Therefore, I am unable to agree with the contention of the learned counsel for the petitioner that the issue before the CEGAT and the issue to be decided by the criminal Court are the same." Later in "Prabhava Organics P. Ltd. v. Deputy Commissioner of Income Tax" (referred supra) a similar situation came up before the Single Judge of this Court for consideration for quashment of the criminal proceedings, but the Single Judge of this Court held that the proceedings against the petitioners pending on the file of Special Judge are not liable to be quashed during the pendency of the appeal before the Income Tax Appellate Tribunal, however, granted stay of prosecution proceedings till a decision is rendered by the Income Tax Appellate Tribunal in the matter. The single Judge of High Court of Punjab; and Haryana in "Rajendera Pal Mangal v. Asstt. Collr. Cus & C EX DIV, Ludhiana" (referred supra) had considered the similar contention and negated the relief of quashment of proceedings on account of pendency of the appeals be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, to avoid such contingency, I am of the considered view that it is a fit case to stay pronouncement of judgment in C.C.No.132 of 2017 while permitting the Special Judge for Economic Offences at Hyderabad to try the accused for the offence punishable under Section 9 of the Central Excise Act. As I am sure that the CESTAT will decide the appeal Nos. E/1212/2011, E/1241/2011, E/1240/2011, E/1239/2011, E/1238/2011 pending before it as expeditiously as possible to enable the Special Court for Economic Offences at Hyderabad to decide the C.C.No.132 of 2017 pending before it as early as possible. In view of my foregoing discussion, I find no ground to quash the proceedings in C.C.No.132 of 2017 on the file of Special Judge for Economic Offences at Hyderabad, since I find prima facie material against these petitioners to constitute offence punishable under Section 9 of Central Excise Act and that initiating criminal prosecution against these petitioners during pendency of appeals before CESTAT does not amount to abuse of process of Court as held by the Apex Court in "P. Jayappan v. S.K. Perumal, First Income-tax Officer, Tuticorin" (referred supra) In the result, the petition i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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