TMI Blog2018 (2) TMI 2067X X X X Extracts X X X X X X X X Extracts X X X X ..... nherent power to quash the proceedings is called for only in cases where the complaint does not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise of the inherent powers under Section 482 - 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. The main endeavour of the learned counsel for the petitioners is that when appeals are pending against the orders passed by the Commissioner, the Criminal Proceedings cannot be continued and liable to be quashed since the finding of the CESTAT will have its own bearing on the criminal prosecution, if for any reason CESTAT concluded that these petitioners did not avail Cenvat Credit on the alleged fake bills, then the prosecution is liable to be ended in favour of the petitioners. Therefore, the criminal prosecution during pendency of appeals, against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the panchanama. They also seized 14.054 tonnes of Copper scrap available in the factory as it was not 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 ₹ 1,81,09,125/- inclusive of Duty of ₹ 1,77,54,048/- and Education Cess of ₹ 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i deposited ₹ 2,00,000/-, petitioner No.4 Surendra Prakash Bhandari deposited ₹ 4,00,000/-. Despite pendency of the appeals, respondent filed complaint 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C EX DIV, Ludhiana [2012 (276) ELT 479] and requested this Court to dismiss the petition since the proceedings pending before the CESTAT and Special Judge for trial of Economic Offences at Hyderabad 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 again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclose any offence or is frivolous, vexatious or oppressive. If the allegations set out in the complaint do not constitute the offence of which cognizance is taken by the Magistrate it is open to the High Court to quash the same in exercise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... look at the allegations made in the complaint would disclose that these petitioners have availed Cenvat Credit fraudulently creating fictitious documents without actual receipts of inputs against such documents and incorporation of those goods in manufacturing 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bars/Ingots covering 26 Bills of Entry. M/s. Time and Space Haulers, vide their letter dated 12.06.2008 have submitted ledger extract of Cubex petitioner No.1 herein in the accounts of M/s. Time and Space Haulers. Cubex petitioner No.1 herein vide their letter 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 Ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riminal proceedings to proceed even during the pendency of the proceedings under the Act. Moreover, the Apex Court relied on P. Jayappan vs. S.K. Perumal, First Income-Tax Officer, Tuticorin (referred supra) on which the respondent relied on, wherein the Apex Court held that the pendency of 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for punishment under Section 9(1)(c) of the Central Excise Act. The question as to whether the petitioner created fictitious supply of fly ash and misdeclared Andesite as fly ash and slag, to cover up non-usage of fly ash and Steel Slag is not the subject matter of determination by the CEGAT. The prosecution 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prosecution would be barred by limitation. Therefore, the Court need wait to take cognizance of any offence against the petitioners till disposal of the appeals before CESTAT. On the other hand, if for any reason the Criminal proceedings are stayed till disposal of the appeals, such order would clog the pendency in the criminal court. 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 punish ..... X X X X Extracts X X X X X X X X Extracts X X X X
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