Full Text
HIGH COURT OF DELHI
Crl.M.C.2220/2016- ' -' M/S.FREEZAIR INDIA(P)LTD.& ANR. " .... Petitioners
Through: Mr.S. Sunii with Mr.Jagdish Advocates.
COMMISSIONER OF CENTRAL EXCISE,DELHI-II....Respondent
Through: Mr. Raghav Awasthi, Advocate .
01.09.2017
ORDER
1. The fjresent petition has been instituted under Section 482 of the Criminal, Code of Procedure, 1973 (hereinafter referred to as 'Cr.P.C.') for quashing and setting aside complaint dated 14.09.2012 filed against the petitioners under Section 9 and 9AA ofthe Central Excise y\ct. 1944;
2. Brief facts of the case are that, the petitioner company was incorporated on 29.01.1998 and petitioner no.2was instituted as a director ofthat company on the same date. The petitioner-company then took over a company called M/s Freezair India.
3. On 24.04.1999, acting on a specific information, the officials of respondent department conducted a search at the premises of the petitioner company. Following which, a complaint case, dated 08.06.2001, vyas filed by the respiondent departrnent against the petitioners alleging violation of Section 9 and Section 9AA ofthe CrLM.C.2220/2016 Page 1 of[7] 2017:DHC:8020 [■V Central Excise Act, 1944.
4. The petitioners then moved an application before the trial court, under Section 223 of the Cr.P.C. seeking separation of the trial of the present petitioners..The application was dismissed by the trial court vide order dated 27.07.2004.
5. Thereafter, the petitioners filed a revision petition before the Additional Sessions Judge (hereinafter referred to as 'ASJ') which was subsequently allowed vide order dated 16.07.2005.
6. The respondent department alleging that they were not heard in the' revision petition then approached this court, wherein the matter was remandedfto the court of ASJ, vide order dated 17.11.2006.
7. The Additional District Judge (hereinafter referred to as 'ADJ') allowed the petition vide order dated 26.04.2007 and the trial of Petitioner No, 2 was separated from the, trial of Petitioner No. 1 and one, Kuldeep Singh Punn. The ADJ observed that "That considering all thefacts of the case,Iam also of the opinion that joint trial of thepresentpetitionersfor evasion of dutyfor period prior to 29.01.1998 would cause prejudice to them as the said liability did not relate to the company which came into existence only on 29.01.1998:"
8. - A fresh complaint dated 14.09.2012 (impugned complaint), was then filed before Additional Chief Metropolitan Magistrate against, the petitioners alleging that the petitioners had' evaded central excise duty of Rs.45,62,325 and thus committed offences under Section 9, Section 9AA of the Central Excise Act, 1944.
9. The petitioners filed an application before ACMM for discharge on the ground that, as per order dated 26.04.2007, the petitioners were Crl.M.C.-2220/2016 - - ' Pa'7e2of[7] (( only liable for excise duty evasion post 29.01.1998 which amounted to Rs.10,04,895 while as per Trade Notice dated ' 12.12.1997, issued by Central Board of Excise & Customs (hereinafter referred to as 'CBEC'), the prosecution was, to- be launched only ifthe duty evasion was more than Rs.25 Lakhs. The petition was dismissed vide order dated 12.01.2015 on,the grounds: that,the petitioners were alleged to be habitual offenders and only at therStage of evidence can the allegation be proved. Hence, the application was held to be not maintainable. -, '
10. Thereafter, Criminal.Revision Petition was filed by the present petitioners before'the ASJ,whereinTt was,held thatunder Section 9. and Section 9AA ofCentral Excise Actthere is nothing to suggest that CBEC is empowered to set a monetary,limit for launching prosecution. Accordingly, the petition was dismissed,vide order / dated 06.02.2Q16.Hence,the present petition was filed. 11.; The learned counsel for the petitioner, Mr. S. Sunil, contends that circular issued by CBEC dated 12.12.^997 which enhanced the A monetary limit for launching prosecution to Rs.25 Lakhs, was. binding upon the authorities and thus, institution of complaint dated 14.09.2012 was in Violation of the said circular, thereby rendering initiation ofprosecution proceedings void ab initio. The - learned,counsel further contends that in the order dated 06.02.2016,, -the ASJ Qbser\^ed that,,"It. may be that the petitioners/accused persons may have a case to have the proceedings quashed on the ground that the iPdhufion ofthe complaint was in violation ofits own circular ofthe CBEC which was binding on all authorities - including the complainant. However, the said power is not Crl.M.C.2220/2016, V ' A. ^... Page3of[7] available with this court." -
12. The learned counsel'for the petitioners places reliance upon Collector of Central Excise, Vadodara Vs. Dhiren Chemical Industries reported in 2002 (143) ELT 19, Commissioner of Customs, Calcutta Vs. Indian Oil Corporation Ltd reported in 2004(165)ELT25-7 and S/S Bhasat Motor Co. P. Ltd. Vs. S.K. AbrolDCIT CrlMCNo.1545/2001.
13. Per contra,the learned counsel for the respondent department, Mr. n Raghav Awasthi, contends that the petitioner no. 2 is a habitual offender and in such cases,there is no monetary limitfor launching., prosecution.
14. I have heard the counsel for the parties and pemsed the documents on record'.; i, '
15. At the,outset, it is evident that the excise dut}' evaded by the petitioners would be calculated for the period post 29.01.1998 and as per the caleulation sheet^plaeed on the record by the petitioner the excise duty evaded post 29.01.1998is Rs.10,04,895.It is to be noted here that the petitioners had contended this amount before the court of ACMM and then before the ASJ, but.on both the occasionsthe respondent department did not contestthis amount. 1-6. Furthermore, the CBEC liad issued following guidelines for, prosecution:, T n _ "Prosecution under the Central, Excise Act - Enhancementofmonetary limit r am directed to refer to Board's letter.F.No... 208/31/92-CX.- 6, dated- 04.04.1996, whereby the Board's Circular No. 15/90-CX. 6 dated 09.08.1990 was modified so.as to enhance the monetary limit'for A raunching proseciitwnfrom Rs. 1 lakh to Rs: 5 lakhs. I '' CrI.M.C.2220/2016.' • / ' Page4of7" The Board has decided tofurther enhance the monetary limitfrom Rs. 5 lakhs to Rs. 25 lakhs prospectively so as to ensure better utilisation of manpower, time and ' resources ofthe department.. ':[Based-on Board's letter F.No. 208/31/97-CX. 6, dated 12-12-1997] "
17. A bare perusal of the Board's letter makes it amply clear that wherever duty evaded by the accused was less than Rs.25 lakhs, officials had been instructed not to launch prosecution as the same \. would amountto wastage ofthe resources on petty amount ofduty evasion.
18. At this stage, it is relevant to go through Section 37B,the Central. Excise Act, 1944: "Instructions to Central Excise Officers. The. Central Board of Excise and Customs constituted under the CentralBoards ofRevenue Act, 1963(54of1963).may, ifit considers'it necessary or expedient so to dofor the purpose ofuniformity in the classification ofexcisable goods or with respect to levy ofduties ofexcise on such goods, issue such orders, instructions and directions to the CentralExcise Officers as it may deemfit, andsuck officers arid aU otherpersons employedin the execution of this Act shall observe and follow such orders, instructions and directions ofthe said Board:Provided that,no such orders, instructions or directions shall be issued- (a)so as to require any CentralExcise Officer to make a • particular assessment or to^dispose ofa particular case in aparticular manner;or (b)so as to interfere_ with the discretion ofthe Collector * of Central Excise (Appeals) in the exercise of his. appellatefunctions. " ^ Cri.M.C.2220/2016 ' 'PagGSof?
19. It is trite law as has been held by the Apex Court in plethora of decisions that the circulars issued under Section 37B ofthe Central Excise Act are a binding on its officials. The same has not been disputed by the learned counsel forthe respondentas well..
20. - This court while dealing with the question whether prosecution, if launched,in violation ofthe circular issued by the Central Board of Direct Taxes would lie or not, observed in S/S Bhasat Motor Co. P.Ltd. Vs.S.K.AbrolDCIT CrLMCNo.1545/2001,that: "Since the alleged concealment is less than ^25000/- that the prosecution would not lie. I find force in this contention ofthe learned counselfor the petitioners that it is not open to the respondents to continue with the complaint which is against their own- circular. The circular ofthe respondent is very clear that wherever the income sought to be evaded by thepetitioners happens to ' be less than Rs.25,000/-, the prosecution ought not to have been initiated against such delinquentpersons. The reasonfor this is notfar to seek.-The reasonfor this is that these small insignificant cases should not be taken for prosecution as it results in considerable wastage of time, energ}> and resources ofthe Government and they must actually go after bigfish who are indulging in large scale and rampant concealment of the income and evasion ofincome tax. In order to attain this object, the circularseemsto have beenpassed"
21. Further, regarding the contention ofthe respondent that petitioners are habitual offenders,it is relevant to peruse that who is a habitual offender with respect to the proceedings relating to evasion of excise duty. The CBEC, vide its letter of F.No. 208/31/97-CX.[6] dated 12.12.1997, laid out that, "In the case ofhabitual offenders, the total amount ofduty involved in various offences may be taken into account while deciding whether prosecution is calledfor. If Crl.M.C.2220/2016 Page6of? IS' there is evidence existing to show mala fide intentions and systematic engagement ofa person or cornpany involving evasion over a period of time, prosecution should be considered irrespective of the monetaiy limit." In the present case, the petitioners had allegedly evaded duty in the year 1998-99 only.. ~ There is absolutely nothing on record to show, if the petitioners had evaded duty in the past and ifany confirmed,demand ofexcise duty was raised against the petitioners, to construe that there was systematic engagement and mala fide intention on the part ofthe petitioners. In the present circumstances, not even prima facie the petitioner can remotely be covered within the ambit pf the definition ofhabitual offender.,
22. It is evident that the complaint dated 14.09.2012, filed by the respondent department against the petitioners could not have been filed being against its own circular. Hence, in view of the facts - discussed above and the relevant case laws, it is indisputable that continuation ofproceedings against the petitioner's would be futile ■and would amount to travesty ofjustice.
23. Thus, petition is allov/ed. The impugned order dated 06.02.2016 isset aside and com.plaint dated,14.09.2012. is thereby quashed and proceedings dropped.
SEPTEMBER 01, 2017 //sr SANGITAiMTNGRA SEHGAL, J