Criminal proceedings can proceed against accused despite earlier dropped departmental proceedings, as prima facie evidence is sufficient to substantiate claims under the Central Excise Act.

JUDGMENT :

AUGUSTINE GEORGE MASIH, J.

1. The present Criminal Appeal is moved against concurrent findings of dismissal of discharge application by the Special Chief Judicial Magistrate at Kanpur Nagar, Uttar Pradesh (hereinafter, “Trial Court”) and the High Court of Judicature at Allahabad (hereinafter, “High Court”) as moved by M/s Rimjhim Ispat Limited, M/s Juhi Alloys Limited, and Shri Yogesh Aggarwal (hereinafter, “Appellants”) in the criminal proceedings that were initiated against it under Section 9 and 9AA of the CENTRAL EXCISE ACT , 1944 (hereinafter, “CEA 1944”).

2. Against the Judgment dated 05.02.2016 passed by the High Court (hereinafter, “Impugned Judgment”), the strength of the argument for discharge application, as raised by the Appellants has primarily been the quashing of departmental proceedings initiated by the Respondent No.2 herein (hereinafter, “Respondent-Department”) against the Appellant by the High Court in Writ Tax No.771 of 2015 on similar grounds, the criminal proceedings are, not sustainable against the Appellants.

3. The factual matrix, as selectively presented by the Appellants, reveals that on 22.11.2007, a search was conducted at the premises, offices and factories, of Appellant No.1, unearthing serious irregularities that culminated in the initiation of proceedings via two separate Show Cause Notices (hereinafter, “SCNs”). The first, dated 16.05.2008 (hereinafter, “First SCN”), alleged clandestine manufacture and illicit removal of excisable goods. The second, dated 06.03.2009 (hereinafter, “Second SCN”), attributed direct and vicarious liability to the Director(s) of Appellant No.1 (specifically, Appellant No.3) and M/s Juhi Alloys Limited, being Appellant No.2 herein, for such unlawful removal of excisable goods during the Financial Year 2006-07, along with evasion of excise duty, interest, and penal consequences.

4. While the proceedings under the First SCN were dropped by the Additional Commissioner of Central Excise at Kanpur, the seized goods were released vide Order dated 14.07.2009. The said decision was subsequently affirmed by the Commissioner (Appeals) on 18.01.2010, and this outcome appears to have emboldened the Appellants, who overlooked the serious and distinct liabilities arising under the Second SCN.

5. In relation to the Second SCN, the Commissioner of Central Excise at Kanpur, vide Order dated 31.03.2011, upheld a substantial demand amounting to INR 6,68,94,028/- (Rupees Six Crores Sixty-Eight Lakhs Ninety-Four Thousand and Twenty- Eight only) along with interest against Appellants No.1 and 2, and further imposed a penalty of INR 25,00,000/- (Rupees Twenty- Five Lakhs only) upon Appellant No. 03 under Section 11AC of the CEA 1944, indicative of the gravity of their violations.

6. The Appellants sought relief before the Customs Excise and Service Tax Appellate Tribunal at New Delhi (hereinafter, “CESTAT”), which, while setting aside the said order on procedural grounds vide Order dated 25.02.2013, rather than addressing the merits of the findings, remanded the matter for de novo consideration, inter alia, observing that joint confirmation of duty against separate legal entities was impermissible, and liability was required to be assessed individually.

7. Exploiting the CESTAT’s procedural indulgence, the Appellants then proceeded to contest the initiation of criminal proceedings by the Respondent-Department. These proceedings stemmed from the Sanction Order dated 03.05.2013 by Directorate General of Central Intelligence (