Madras High Court
Ajantha Biscuit Co. And Ors. vs Assistant Collector Of Central Excise ... on 6 September, 1991
Equivalent citations: 1992(40)ECC202
Author: Pratap Singh
Bench: Pratap Singh
ORDER Pratap Singh, J.
1. Accused 1 to 3 in C.C. 46 of 1989 on the file of Additional Chief Judicial Magistrate, Madurai have filed this petition under Section 482, Criminal Procedure Code praying to call for the records in the aforesaid case and quash the same.
2. The Second petitioner had died after the filing of the petition.
The respondent had filed the complaint against petitioners 1 to 3 and M/s. Nellai Confectionary, arraying them as accused 1 to 4. The allegations in it are briefly as follows:
3. Accused 1 and 4 are partnership firms.. The second accused is the partner of first accused firm. The third accused is the Manager of first accused firm. The third accused is also partner of fourth accused firm. Accused two and three were responsible for conducting the affairs of the first accused firm. The third accused is the partner of fourth accused firm and is responsible for conducting the affairs of fourth accused. Biscuits are subject to levy of Central Excise Duty and were classified under tariff item 1-C of the first schedule to the Central Excises and Salt Act, 1944, prior to 28.2.86 for levy of Excise duty. The first accused manufactured biscuits. It is functioning under self removal procedure under which an assessee can clear excisable goods without supervision of Central Excise Officer. The assessee is required to file classification list giving full description of the goods manufactured along with the tariff item under which it falls and the rate of duty payable. He was also required to file price list. Different proformas are prescribed depending upon the manner of sale. If the assessee sells his goods to an independent buyer, he has to file price list in proforma Part-I for collection of Excise Duty. In case, the assessee sells his goods, through a related person as defined under Section 4(4)(c) of the Central Excise and Salt Act, 1944, he is required to file a price list in proforma part IV for purpose of assessment of excise duty.
4. On 21.8.84, the Officer of the Preventive Group inspected the premises of fourth accused and certain documents were seized. On 25.9.84, the officer visited the premises of first accused and recovered certain documents. Scrutiny of the documents revealed that accused 1 and 4 though separate partnership firms, there was mutality of business interest between them. In first accused company, the second accused and daughter-in-laws and grand son of second accused are partners. In fourth accused company, besides third accused, grand son of second accused and his another son are partners. The third accused was also Manager of first accused. Investigation revealed that fourth accused and first accused had their production unit at one and the same place besides the head office. Both companies have common employees with common vehicles for transport of goods. There was mutality of business interest between both the companies. The biscuits manufactured by first accused being sold to fourth accused on assessable value approved under proforma I. The fourth accused in turn sold the goods at much higher price. The first accused company deliberately with an intention to evade payment of duty filed price list in proforma part I instead of Part IV. By suppressing the relationship between the companies and by mis-declaring the value and evaded payment of Central Excise Duty to the tune of Rs. 2,27,409.33. Hence they have contravened the provisions of the Act and are liable to be punished under Sections 9(1)(b)(i), 9(1)(bb)(i), 9(1)(c)(i) and 9(1)(d)(i) of the said Act read with Section 9AA. Hence the complaint.
5. Mr. G. Jermiah, the learned Counsel appearing for the petitioner, would contend that on 28.4.81, the Appellate Collector of Central Excise had passed order in Appeal No. 176/81 that fourth accused is not related company of first accused and in the stay petition, with regard to this levy, referred to in this complaint, the CEGAT, Madras has passed an order in which it had taken the fact that the issue relating "related person" between four has been decided by a competent authority (sic). The learned Counsel further pointed out that the first accused had wrote (sic) to the Assistant Collector, Central Excise, Tirunelveli on 29.5.91, that in view of the aforesaid order of the Assistant Collector, price list is filed in part I as before and that the Assistant Collector of Central Excise, Tirunelveli Division had returned it on 25.6.81 to the first accused that they are at libery to proceed further as per Appellate Collector's Order. From the above, the learned Counsel would contend that it has been held that fourth accused is not a related person of first accused and while so, it is no longer open to the respondent to file a complaint, on the footing that the fourth accused is a related person. Per centra, Mr.P. Rajamanickam, the learned Public Prosecutor appearing for the respondent would contend that these decisions and findings given in Departmental Proceedings are not at all binding on the criminal Court that they are parallel proceedings and so this finding of the Collector relied upon by the learned Counsel for the petitioner would not at all stand in the way of the maintainability of the complaint. He would further contend that on the materials then available as on 28.4.81, the Collector had passed that order and now the investigations which has been set out in the complaint had revealed the factors which lead to a conclusion that fourth accused is a "related person" and hence the complaint cannot be quashed at the threshold.
6. In the order of the Appellate Collector, Central Excise, dated 28.4.81, he has stated as follows.:
In the instant case, the appellants have factory-gate-sales to the tune of 4% and they are selling their products to four other independent wholesale dealers including M/s. Nellai Confectionary. It appears that though one partner of the appellants' concern is a partner of M/s. Nellai Confectionery the two companies are two separate legal entities carrying on their business on their own account and are not controlled by each other.
And then in the last para, he has stated as follows:
In this view of the matter I set aside the order of the lower Authority and allow the appeal.
According to the impugned order of the lower authority, accused 1 and 4 herein are "related persons". That finding was set aside by the Appellate Collector in the order referred to. Then in pursuance of this order, the first accused sought permission to file price list in Part-I. The Assistant Collector, Central Excise intimated the first accused that they are at liberty to proceed further as per the Appellate Collector's order. This letter is dated 25.6.81. The learned Counsel would contend that in view of this finding of the Collector, Central Excise, that accused 1 and 4 are not "related persons", the respondent cannot now allege that accused 1 and 4 are related persons and file this complaint.
7. Mr. P. Rajamanickam, contended that if on the allegations made in the complaint, the offences alleged are made out, the complaint cannot be quashed at the threshold. In this regard, he relied upon the ruling reported in (1991 Crl.L.J.1438) State of Bihar v. P.P.Sharma. It is, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything, if no offence is made out then the proceedings can be quashed by exercise of powers under Section 482 Criminal Procedure Code. In this case, it is not in dispute that allegations in the complaint do make out the offences alleged. But the contention was that because of the finding of the Collector as stated above, this complaint is barred. So the question is whether the finding of the Appellate Collector, referred to supra is a bar to the present complaint. Mr. P. Rajamanickam relied upon the ruling reported in (S.C.R. 1969 (2) 438) Assistant Collector Customs v. Malwani. In that case, a contention was taken that finding of the Collector of Customs operated as an issue of estoppel to the prosecution. The accused was given benefit of doubt by customs authorities in respect of alleged offence under Sea Customs Act, 1878. There was a subsequent prosecution before the Magistrate in respect of the same offence. It was contended that the finding of the Collector of Customs operated as an issue of estoppel to the prosecution. While rejecting that contention the Apex Court has held as follows:
In the instant case for the reasons already mentioned, we are unable to hold that the proceeding before the Collector of Customs is a criminal trial. From this it follows that the decision of the Collector does not amount to a verdict of acquittal in favour of accused Nos. 1 and 2.
He further relied upon the ruling Arun Spinning Mills v. Collector. In it, it was held that departmental proceedings initiated before the proper Officer is not covered by "legal proceedings." It was also held that Judgment of the criminal Court does not operate as res judicata in proceedings before departmental officers. In view of the above reasons, I hold that the finding of the Appellate Collector relied upon by the petitioner is not a bar to the launching of this complaint and on that score it cannot be quashed.
8. In view of the above, the petition is dismissed.