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2012 DIGILAW 2618 (ALL)

APOLLO PIPES v. UNION OF INDIA

2012-11-07

NAHEED ARA MOONIS

body2012
Naheed Ara Moonis, J. Heard Sri Swetashwa Agarwal, learned counsel for the applicants, Sri B.K.S. Raghuwansi, learned counsel for the Union of India and perused the record. The instant petition has been filed for quashing of the criminal proceeding of Complaint Case No. 416/9 of 2011, Union of India Vs. M/s. Apollo Pipes Private Limited and others whereby the cognizance has been taken by the learned Special Chief Judicial Magistrate, Meerut on 16.3.2011 against the applicants under Sections 9 and 9-AA of the Central Excise Act, 1994, police station Sikandrabad, Division Deputy Commissioner, ( A.E.) Central Excise, Noida. A complaint was filed on 16.3.2011 by the opposite party no.1 Sashi Kant, Deputy Commissioner ( A.E.) Central Excise, NOIDA before the court of Special Chief Judicial Magistrate, Meerut with the allegation that the applicant Sameer Gupta, Director and N.S. Rana General Manager of M/s. Apollo Pipes Private Limited, D-20, & E-6, Industrial Area, Sikandrabad, Bulandshahr ( hereinafter referred to as APPL) have evaded central excise duty during the period December 2004 to February 2007 causing loss to the tune of Rs. 34,02,303/-. The applicants are engaged in the manufacturing of PVC pipes and fittings under Central Excise Tariff Act, 1985 and removed the manufactured goods clandestinely, which are subject to excise duty without payment of central excise duty leviable thereon. When the officers of the Central Excise Anti Evasion, Branch Noida visited the factory premises in 2007 the stocks were verified and physical verification of stock of finished goods was done. The officers of the factory had shown some excise invoices like weighment tickets of Jain Dharam Kanta but on the scrutiny of the said documents it was found that they had cleared quantity of goods clandestinely hence a show cause notice was issued against them on 18.7.2008. The Additional Commissioner, Customs Central Excise & Service Tax Noida on 12.5.2010 confirmed demand and imposed penalty of Rs. 34,02,303/- and interest and imposed personal penalty of Rs. 40,000/- on Sameer Gupta and Rs. 25,000/- on Sri N.S. Rana of APPL. The applicants preferred an appeal against the aforesaid order before the Commissioner ( Appeals) Customs & Central Excise, Noida. The appeal was rejected on 23.7.2010. 34,02,303/- and interest and imposed personal penalty of Rs. 40,000/- on Sameer Gupta and Rs. 25,000/- on Sri N.S. Rana of APPL. The applicants preferred an appeal against the aforesaid order before the Commissioner ( Appeals) Customs & Central Excise, Noida. The appeal was rejected on 23.7.2010. It is mentioned in the complaint that the statement of Sameer Gupta the Director ( the present applicant) and N.S. Rana the General Manager of APPL were recorded and who were responsible for the non-observance of the procedure of the Central Excise Act and Rules for not maintaining proper records and accounts to evade the payment of central excise and on account of their act and omission they are wholly responsible and liable to be prosecuted under the Central Excise Act, 1944 and Rules and to pay interest. The complaint was registered on the same day i.e. on 16.3.2011 as Case No. 416 of 2011. The learned Magistrate after perusing the documentary evidence in support of the complaint filed by the opposite party no.1 found that prima facie offence is made out against the applicants and Sri N.S. Rana hence took the cognizance of the offence and issued summons fixing 15.4.2011 for their appearance. The submission of the learned counsel for the applicants is that the learned Magistrate has not applied his judicial mind to the facts and circumstances of the case and proceeded mechanically in a routine manner by taking cognizance against the applicants straightway. No prima facie offence is made out under Sections 9 and 9-AA of the Central Excise Act as the basic ingredients to constitute such offence is lacking in the complaint itself. There was no evasion of any excise duty. Prior to the issuance of show cause notice the disputed amount of excise duty as mentioned in the complaint had already been deposited by the applicants on 28.2.2007 and 19.3.2007. This fact is evident from the record itself and has been categorically stated in para 17 of the affidavit filed in support of the instant application. The order of Original demand dated 26.2.2010 was challenged before the Commissioner Appeals which was rejected in arbitrary manner. This fact is evident from the record itself and has been categorically stated in para 17 of the affidavit filed in support of the instant application. The order of Original demand dated 26.2.2010 was challenged before the Commissioner Appeals which was rejected in arbitrary manner. The Appellate Tribunal, Customs Excise and Service Tax at New Delhi has granted indulgence by granting interim order in favour of the applicants on 9.7.2010 hence the disputed amount of liability, if any, is sub judiced before the Tribunal, therefore, no criminal prosecution could have been launched against the applicants alleging therein about the evasion of excise tax. The summoning order passed against the applicants is a non-speaking order, which is against the dictum of law laid down by Hon?ble Apex Court in Fakhruddin Vs. State of Uttranchal reported in 2008 ( 17) SCC page 157. To prop up his further submission the learned counsel for the applicants has relied upon the decision of Central Excise and Service Tax appellate Tribunal, New Delhi in C.C.E. Delhi-III, Gurgaon Vs. M/s. Machino Montell ( I) Ltd. wherein it is held that if the disputed duty has been paid by the party even before the issuance of show cause notice this would show that there was no question of any fraud, misrepresentation or suppression of facts, then penalty should not be imposed under Section 11-A and interest under Section 11-C should not be levied and the decision of the Apex Court reported in 1995 ( Supp.) ( 2) SCC 724 G.L. Didwaniya and another Vs. Income Tax Officer and another where the criminal prosecution was quashed. It has further been argued that the prosecution of the applicants have been launched after lapse of prescribed period of limitation. For the sake of repetition it has been contended by the learned counsel for the applicants that prior to the issuance of the notice dated 18.7.2008 the entire amount of tax have been deposited by the applicants, which was intimated by applicant no. For the sake of repetition it has been contended by the learned counsel for the applicants that prior to the issuance of the notice dated 18.7.2008 the entire amount of tax have been deposited by the applicants, which was intimated by applicant no. 1 vide letter dated 3.8.2007 yet the complaint has been filed in respect of tax evasion after lapse of four years in 2011 and the cognizance has also been taken by the learned Magistrate summoning the applicants to face trial without following the procedure of complaint case, therefore, the initiation of proceeding is an abuse of the process of Code as well as law hence liable to be quashed. Per contra learned counsel appearing on behalf of the complainant has refuted the contentions of the learned counsel for the applicants and has submitted that there is limitation of five years for issuing a show cause notice on the person chargeable with the duty as provided under Section 11-A. In the present case show cause notice was given on 18.7.2008 in respect of evasion of central excise duty during the period from December 2004 to February 2007. The order taking cognizance against the applicants do not suffer from any error of law. The learned Magistrate has found that prima facie offence is made out against the applicants on the basis of the materials on record filed in support of the complaint and at the stage of taking cognizance the defence of the accused may not be looked into. The acceptance of the contentions of the applicants would mean permitting the applicants to adduce their defence, which is not permissible under the law. At the stage of summoning the accused person the court is not required to consider the defense version or the defence evidence. In this regard the legal position is well settled even though the applicants have deposited the due amount of evaded tax prior to the issuance of notice it will not absolve them for criminal prosecution. Merely because the matter is sub judiced before the tribunal the applicants will not be relieved from such liability and the criminal proceedings can not be thwarted on this ground alone. The applicants have ample opportunity to lead their evidence at the appropriate stage. Merely because the matter is sub judiced before the tribunal the applicants will not be relieved from such liability and the criminal proceedings can not be thwarted on this ground alone. The applicants have ample opportunity to lead their evidence at the appropriate stage. Taking cognizance by the learned Magistrate on the basis of the material placed in support of the complaint does not require to pass a detailed order as only if the court upon considering all the material on record reaches to conclusion that there is no ground for prosecuting the accused then he is required to pass a detail order for not initiating any proceeding against them and for quashing the complaint. The applicants are not appearing before the court below in pursuance of the summoning order. Now bailable warrants have been issued successively since the date of the order of taking cognizance against them, have approached this court and have adopted short cut method for quashing the entire proceedings. The cases cited by the learned counsel for the applicant not applicable with the present set of facts and circumstances of the case. The petition is liable to be dismissed. I have considered the submission of the learned counsel for the parties. In my considered opinion the discretion exercised by the learned Magistrate cannot be assailed in the proceedings under Section 482 Cr.P.C. unless contrary to the provisions of law. It is not required to write a detailed reasoned order while summoning the accused. It cannot be said from the bare perusal of the complaint that no offence is made out against them. There is specific allegation that the applicants have not only evaded the payment of excise duty but have also removed the excisable goods viz PVC pipes and fittings in contravention of the provisions of the Act and Rules hence prima facie committed offence under Section 9 of the Act. Admittedly the applicant is the Director while non-applicant N.S. Rana is General Manager of Apollo Pipes Private Limited who are responsible for the business of the company, therefore, if any offence is committed by a company every person in charge of the company is responsible for the conduct of the business of the company and is liable to be prosecuted as provided under Section 9-AA of the Act. From the perusal of the material on record and looking into the facts of the case at this stage it cannot be said that no offence is made out against the applicants. All the submissions made at the bar relate to the disputed questions of fact, which cannot be adjudicated upon by this Court under Section 482 Cr.P.C. on the basis of documents filed by the applicants along with the petition as it is the function of the trial judge. At this stage only prima facie case is to be seen in the light of the law laid down by Supreme Court in cases of R.P. Kapur Vs. State of Punjab, A.I.R. 1960 S.C. 866, State of Haryana Vs. Bhajan Lal, 1992 SCC ( Cr.) 426, State of Bihar Vs. P.P.Sharma, 1992 SCC ( Cr.) 192 and lastly Zandu Pharmaceutical Works Ltd. Vs. Mohd. Saraful Haq and another ( Para-10) 2005 SCC ( Cr.) 283 that when there are prima facie materials available a petition for quashing the criminal proceeding cannot be entertained. The Appellate Tribunal, New Delhi while passing interim order in favour of the appellant has directed the applicants and N.S. Rana to deposit Rs. 50,000/- of penalty waiving balance amount and recovery stayed during the pendency of appeals, as discrepancy noticed between actual weight and in invoices and their statement showed suppression of weight of PVC pipes and suppression of production and clandestine removal which were in their knowledge. The order of the assessing authority is still subsisting and the pendency of appeal before Appellate Tribunal would not create any bar to prosecute the applicants as both the proceeding are independent of each other. Hence the decision in the case of G.L. Didwania ( Supra) is not applicable in the instant case as the appeal is pending before the Appellate Tribunal, New Delhi. Moreover finding in the Appellate Tribunal proceeding is not binding on court in criminal prosecution proceeding. Both the proceedings are independent of each other and can continue simultaneously and prosecution can even precede conclusion of proceeding by the Tribunal. The sanction for prosecution was obtained on 7.10.2010 by the Chief Commissioner, Customs and Central Excise, Meerut and it will be too premature to record a finding that there was no contravention of the provision of the Act or there is any illegality in passing the order against the applicants summoning them to face trial. The sanction for prosecution was obtained on 7.10.2010 by the Chief Commissioner, Customs and Central Excise, Meerut and it will be too premature to record a finding that there was no contravention of the provision of the Act or there is any illegality in passing the order against the applicants summoning them to face trial. The decision rendered in C.C.E. Delhi 111 ( Supra) where criminal prosecution was not in issue and it was decided on the premise that the duty amount was paid prior to issuance of show cause notice hence it was held that no penalty or interest can be imposed or demanded. The applicant cannot be relieved from criminal prosecution as the Appellate Tribunal proceeding is still pending and even though amount of evaded tax has been deposited prior to show cause notice. So far the question raised that summoning order is vitiated due to non-observance of requirement contained under Section 200 Cr.P.C. of examining the complainant and witnesses are concerned, the instant case comes within the ambit of Clause ( a) of the first proviso to Section 200 Cr.P.C. as the complaint is made in writing by a public servant acting or purporting to act in discharge of his official duty in this situation the Magistrate need not examine the complaint and the witnesses. Hence the most impressive ground for quashing the proceeding against the applicant cannot be accepted. In view of the prolix discussion made herein above the prayer for quashing of the criminal proceeding is refused accordingly the petition is dismissed. However, it is directed that the applicant Sameer Gupta shall appear and surrender before the court below within 30 days from today and apply for bail, their prayer for bail shall be considered and decided keeping in view of the settled law laid by this Court in the case of Amrawati and another Vs. State of U.P. reported in 2004 ( 57) ALR 290 as well as judgment passed by Hon'ble Apex Court reported in 2009 ( 3) ADJ 322 ( SC) Lal Kamlendra Pratap Singh Vs. State of U.P.