(a)When any licence, permit or pass granted under this Act is liable to be cancelled or suspended under Clause (a) or Clause (b) of sub- section (1) of Section 28, or when any person is reasonably suspected of having committed an offence under this Act, other than an offence under Section 57, the Excise Commissioner or a Collector, instead of enforcing such cancellation or suspension or instituting a prosecution in respect of such offence, may accept from the holder of such licence, permit or pass or from such person a sum of money not exceeding five hundred rupees, and thereupon such holder or person if in custody, shall be discharged, and no further proceedings in respect of such liability or offence shall be taken against him.