The Telangana High Court reiterated that criminal prosecution on the same allegations can not continue if Exoneration in Departmental Proceedings is on merits.
The petitioner, M/s. Deccan Tobacco Processors Limited was a manufacturer of cut tobacco which is an excisable good as per the schedule incorporated under the provisions of the Act. The case of the prosecution is that on a surprise check on 15.06.1995 at the premises of one M/s. Tirupati Cigarettes Limited, Varanasi, Uttar Pradesh, it was found that 115 bags of cut tobacco accounted for 3,910 KGs was clandestinely cleared without separate documents and payment of excise duty.
The petitioner contended that departmental proceedings were initiated by issuing a show-cause notice vide proceedings wherein similar allegations were made against the petitioners based on the same evidence including statements recorded by the respondent department during the course of the investigation, we’re relied upon in the show cause notice. The petitioners gave a detailed reply to the show-cause notice. After considering the entire evidence including the defense of the petitioners, the competent authority viz. Commissioner (Adjudication), by order, held against the accused.
Mr. Pratap Narayan Sandhi, the Council for the appellant submitted that the CESTAT, which discharged judicial duties, having adjudicated the matter on merits, opined that there is absolutely no evidence to establish the guilt of the petitioners regarding evasion of excise duty or clandestine removal of goods.
Mr. Sandhi added that the respondent could not have proceeded to prosecute the petitioners, which amounted to a violation of the fundamental rights guaranteed to the accused. Since on the same set of allegations and evidence, the CESTAT opined that there is no offense committed by the petitioners, filing of the complaint by the respondent based on the orders passed by the Commissioner (Adjudication), virtually runs contrary to the orders passed by the CESTAT and thus, the impugned proceedings are arbitrary and amount to double jeopardy. The standard of proof in criminal proceedings is much higher than in departmental proceedings. In the instant case, when the department failed to establish the guilt of the accused in the departmental proceedings, it would not be possible to establish the same in a criminal case. Hence, initiation of criminal proceedings is illegal and arbitrary.
Mr. Sandhi submitted that the Economic Offences Court does not have the jurisdiction to try the case since even according to the complainant the offences were committed at Varanasi, Uttar Pradesh, which is beyond the jurisdiction of Hyderabad.
On the other hand, Mr. B. Narasimha Sarma, Senior Central Government Standing Counsel contended that based on the material and documents collected during investigation, the case was adjudicated. Since there was the complicity of many people spread all over India, the Commissioner at Delhi was nominated to adjudicate the case and the same was adjudicated on 08.06.2001 following due process of laws. The decision to launch prosecution was taken after due approval of the Chief Commissioner and the same was launched. The department has challenged the orders of CESTAT in Appeal before the High Court. Thus, the orders of CESTAT have not become final and the same is pending.
“The adjudication and prosecution are two different limbs. As per the provisions under Section 9(c) of the Central Excise Act, a presumption can be drawn with regard to culpable mental state. Thus, criminal case cannot be quashed on the threshold of prosecution, particularly, when the same requires detailed consideration,” Mr. B. Narasimha Sarma added.
The Single Judge Bench of Justice B . Vijaysen Reddy observed that the standard of proof in criminal proceedings is higher than the standard of proof in civil/departmental proceedings. In a reverse case, where criminal proceedings ended in acquittal but simultaneous departmental proceedings continued, the result of the criminal proceedings will not have any bearing on the departmental proceedings, as a judgment of the Criminal Court is not binding in civil or departmental proceedings.
However, the court said that in the instant case, when the departmental proceedings ended in favor of the accused and moreover when the prosecution launched is on the same set of facts and allegations, the continuance of prosecution would be a gross abuse of process of law. In the instant case, as pointed out above, a complaint was filed pursuant to the observation made by the Commissioner (Adjudication), that the department is not precluded from initiating further action in law for the time being in force. The order of the Commissioner (Adjudication) merged with the order of CESTAT wherein the appeal was allowed to reverse the order of the original authority. Further appeal filed by the department before the High Court came to be withdrawn.
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