Chief Justice of India B. R. Gavai, Justice Augustine George Masih, Supreme Court
No Bar On Parallel Proceedings With One Being By Department & Other Being Criminal In Nature Under Central Excise Act: Supreme Court
|The Supreme Court said that a direction for de novo proceedings on technical or procedural grounds cannot be assumed to be in equivalence to having been set-aside on merits, when it was specifically mentioned that the merits have not been considered.
The Supreme Court observed that there is no bar on the parallel proceedings with one being by the Department and the other being criminal in nature under the Central Excise Act, 1944 (CEA).
The Court observed thus in a Criminal Appeal preferred against the concurrent findings of dismissal of discharge application by the Special Chief Judicial Magistrate and the Allahabad High Court in the criminal proceedings that were initiated under Section 9 and 9AA of CEA.
The two-Judge Bench comprising Chief Justice of India (CJI) B.R. Gavai and Justice Augustine George Masih elucidated, “Collectively, in the light of aforesaid perusal of the relevant orders, a reference to Radheyshyam Kejriwal (supra) reveals that, as in the present case, there is no bar on parallel proceedings, with one being by the Respondent-Department and the other being criminal in nature, under the CEA 1944. Further, the attempt of the Appellants to distinguish the said decision, is primarily reliant on the observation that the Complaint was solely based on the Order dated 31.03.2011, which, at the time had been set aside.”
The Bench added that a direction for de novo proceedings on technical or procedural grounds cannot be assumed to be in equivalence to having been set-aside on merits, when it was specifically mentioned that the merits have not been considered.
AOR Syed Shahid Hussain Rizvi represented the Appellants while Additional Solicitor General (ASG) S. Dwarakanath represented the Respondents.
Brief Facts
In 2007, a search was conducted at the premises, offices, and factories of the Appellant no.1-company, unearthing serious irregularities that culminated in the initiation of proceedings via two separate Show-Cause Notices (SCNs). The first SCN alleged clandestine manufacture and illicit removal of excisable goods. The second SCN attributed direct and vicarious liability to the Director(s) of the Appellants-companies, for such unlawful removal of excisable goods along with evasion of excise duty, interest, and penal consequences. While the proceedings under the first SCN were dropped by the Additional Commissioner of Central Excise, the seized goods were released. The said decision was affirmed by the Commissioner (Appeals).
In relation to the second SCN, the Commissioner of Central Excise upheld a substantial demand of Rs. 6,68,94,028/- along with interest against the Appellants and further imposed a penalty of Rs. 25 lakhs. The Appellants sought relief before the Customs Excise and Service Tax Appellate Tribunal (CESTAT), which remanded the matter for de novo consideration. Consequently, a case was instituted before the Trial Court and summons were issued against the Appellants. Allegedly, there were repeated attempts by the Appellants to evade prosecution without securing a clean slate on merits from the Respondent-Department. The Trial Court and the High Court dismissed the discharge applications of the Appellants. Being aggrieved, they approached the Apex Court.
Reasoning
The Supreme Court in view of the above facts, said, “Reiterating further, the contention of the Appellants that the allegations for the purpose of criminal complaint, were therefore, not rendered “groundless” as has been contented on behalf of Appellants through reliance on decision in R. Soundirarsu (supra), is again, on the assumption and contention that the Order dated 31.03.2011 or even the concerned subsequent Order dated 28.08.2015 was on merits.”
The Court noted that the contentions raised and rendered on behalf of the Appellants on jurisprudence of discharge are misconceived and outside the scope of adjudication.
“Ergo, having perused the alleged conduct and the orders passed by the concerned authorities and the Courts below, the authorities relied upon by the Appellants are unable to substantiate their claim in the present facts and circumstances”, it remarked.
Accordingly, the Apex Court dismissed the Appeal and refused to interfere with the impugned Judgment.
Cause Title- M/S Rimjhim Ispat Limited and Others v. Union of India & Another (Neutral Citation: 2025 INSC 901)
Appearance:
Appellants: AOR Syed Shahid Hussain Rizvi
Respondents: ASG S. Dwarakanath, AORs Gurmeet Singh Makker, Ankit Goel, Advocates Rajat Vaishnaw, Prabhakar Yadav, S. Vijay Adithya, and Vikas Bansal.