M.N. Bhandari, J. - (1.) BY this petition, a challenge is made to the order dated 28.06.2008, whereby revision petition preferred by the non -petitioner was accepted.
(2.) LEARNED counsel for petitioner submits that a complaint was filed for the offence under Central Excise Act, 1944. Learned Magistrate took cognizance of offence followed by pre -charge evidence. At the aforesaid stage, an application was filed by the non -petitioners under Section 245 Cr.P.C. for their discharge. The application aforesaid was dismissed vide order dated 05.05.2008. The non -petitioners challenged the order by maintaining a revision petition and has been allowed. The non -petitioners were discharged mainly on the ground that separate proceedings for imposition of penalty were decided in favour of the non -petitioners. The discharge was in ignorance of the fact that proceedings were not terminated after determination of the issues on merit but on a technical ground of limitation. The revisional court was persuaded further by dismissal of reference by the High Court. It was again without realizing that dismissal was not on merit but on account of default of the department to appear before the court. The issue on merit was not touched either by the Tribunal or by the High Court so as to have consequence on the prosecution. Without realizing the aforesaid, impugned order was passed discharging the non -petitioners. The court below failed to make distinction between two separate proceedings and its effect. In one proceedings, recovery of excise duty along with penalty can be made, whereas in the other, order of punishment is passed. The two proceedings operated in distinct areas and with different consequences. To support the argument, a reference of judgment of Supreme Court in the case of Standard Chartered Bank & Ors. etc. v. Directorate of Enforcement & Ors. etc., reported in : AIR 2005 SC 2622 has been given. A prayer is accordingly made to quash the impugned order.
(3.) PER contra, learned counsel for non -petitioners submitted that allegation against the non -petitioners was for taking benefit of Modvat in an illegal manner. A notice was issued by the Commissioner of Excise. The Tribunal found notice to be beyond the period of limitation, thus it was set aside. A reference before the High Court also resulted with same date as it was dismissed in default. In view of the above, demand of excise duty by alleging wrongful benefit of Modvat was decided against the department and in favour of the assessee. Once the excise duty was not imposed, the prosecution for taking wrongful benefit of Modvat was not permissible. The revisional court, thus discharged the non -petitioner -company. Learned counsel has given reference of Sections 9 & 11 of Central Excise Act, 1944 (in short "Act of 1944") to show as to when the excise duty can be imposed and it can have consequence of offences and penalties. A reference of judgment of the Apex Court in the case of K.C. Builders & Anr. v. Assistant Commissioner of Income Tax, reported in : (2004) 2 SCC 731 is given apart from judgment in the case of Swathy Chemicals Ltd. v. Union of India, reported in : 2002 (139) E.L.T. 498 (Mad.). In those cases, the issue was similar to the present case. In the case of K.C. Builders (supra), the allegation against the assessee was for concealment of income. The issue was decided in favour of assessee, thus prosecution lodged against him was quashed by Apex Court. The facts of the present case are similar to that of K.C. Builders (supra), thus judgment aforesaid covers the issue. In the case of Swathy Chemicals Ltd. (supra), the issue was in reference to Central Excise Act itself. Therein, prosecution on same fact and evidence, on which the case was decided favourable to the assessee, was not permitted. In view of judgment aforesaid, there is no error in the order passed by the revisional court, thus while maintaining the aforesaid, the petition under Section 482 Cr.P.C. be dismissed.;