Assistant Collector, Customs vs Seamx Industries Ltd

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2026 Supreme(HP) 818

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
Rakesh Kainthla, J.
Assistant Collector, Customs - Petitioner
Versus
M/s Seamx Industries Ltd & Ors - Respondents
Cr. Revision No. 23 of 2012
Decided On : 07-07-2026

Important Points

At the stage of discharge, the court must determine a prima facie case; mere reliance on orders of excise authorities without independent evidence of evasion is insufficient for framing criminal charges.

Subject

Criminal Law - Central Excise Offences / Discharge

Act Referred

CENTRAL EXCISE ACT : S.9, S.9(aa)

Headnote

(A) Central Excise Act, 1944 - Sections 9 and 9AA - Criminal Procedure Code, 1973 - Sections 227, 239, 244 and 245 - Discharge of accused - Principles for framing of charges - At the stage of discharge, the court must determine whether a prima facie case exists, not whether conviction is likely - Mere reliance on orders passed by civil or excise authorities is insufficient for framing criminal charges - The criminal court must apply its independent mind to the evidence and cannot act as an executing court for orders of other authorities - Witnesses lacking personal knowledge and not producing primary records cannot establish a prima facie case. (Paras 12-17, 19-29)

(B) Evidence - Admissibility - Testimony based on record not produced in court is inadmissible - Witnesses who have not personally dealt with the case or investigated the matter cannot prove evasion of duty. (Paras 20-27)

Facts of the case:
The complainant (Assistant Collector, Customs) filed a complaint against the accused for evasion of central excise duty and non-compliance with an order of the Customs Excise and Gold (Control) Appellate Tribunal. The accused were discharged by the trial court on the ground that the complainant relied solely on orders of excise authorities and the witnesses had no personal knowledge of the evasion. The revision was filed against the discharge order.

Findings of Court:
The court held that at the stage of discharge, the judge must sift the evidence to see if a prima facie case exists. The complainant’s witnesses admitted they had no personal knowledge and their testimony was based on records not produced. The orders of excise authorities, without independent evidence of evasion, could not form the basis for framing charges. The criminal court is not bound by civil or quasi-judicial findings and must independently assess whether the ingredients of the offence are made out. The trial court correctly discharged the accused.

Issues: (i) Whether the trial court erred in discharging the accused despite the existence of orders from excise authorities showing evasion? (ii) Whether the evidence led by the complainant established a prima facie case for framing charges?

Ratio Decidendi: A person cannot be held criminally liable merely because a show cause notice was issued and penalties were imposed by excise authorities. The criminal court must have independent material to conclude that there is a prima facie case. At the discharge stage, the court must assume the prosecution material is true but can sift it to see if it discloses the ingredients of the offence. If the evidence, even if unrebutted, would not lead to conviction, discharge is proper. Witnesses who have no personal knowledge and rely on documents not produced cannot prove the essential facts.

Result: Revision dismissed. Order of discharge upheld.

Legal Category Hierarchy

Advocates Appeared:
For the Petitioner:Mr Vijay Arora, Senior Counsel with M/s Hitansh Raj and Ankit Chauhan, Advocates.
For the Respondent:Mr Rakesh Manta, Advocate, Mr Aryan Manta, Advocate, vice Mr T.K. Verma, Advocate.

JUDGMENT :

Rakesh Kainthla, J.

The present revision is directed against the order dated 12.09.2011 passed by the learned Judicial Magistrate First Class, Nahan, District Sirmaur, H.P. (learned Trial Court) vide which the respondents (accused before the learned Trial Court) were discharged. (The parties shall hereinafter be referred to in the same manner as they were arrayed before the learned Trial Court for convenience)

2. Briefly stated, the facts giving rise to the present revision are that the complainant filed a complaint against the accused before the learned Trial Court for the commission of offences punishable under Section 9 read with Section 9AA of Central Excise Act, 1944 for evasion of central excise duty and non- compliance of the final order dated 02.07.2001 passed by Customs Excise and Gold (Control) Appellate Tribunal, New Delhi.

3. It was asserted that the accused No.1 M/s Seamax Industries Ltd. (SIL), was earlier working under the name and style of M/s Seamax Steel Tubes (Pvt) Ltd. (SST). They were the manufacturers of M.S pipes, SS Mast or Towers falling under the Chapter Heading No. 7306.90 and 7308.20 of the Schedule to the Central Excise Tariff Act, 1985. The Structural Galvanising Industry (SGI) was situated inside the factory premises of SIL and was engaged in galvanising. SIL manufactured black pipes and MS pipes, and sent them to SGI for galvanisation without an exit pass/gate pass entry. SGI did not pay any excise duty on the galvanised pipes on the ground that the galvanisation of black pipe did not attract any central excise duty. M.S. Black Pipes were exempted from central excise duty till 28.02.1994. Accused nos. 1 to 3 did not enter the galvanised product after galvanisation in the record before its marketing. In this manner, MS pipes/black pipes manufactured by SIL and galvanised by SGI were sent to the market without payment of the excise duty. A search was conducted. Balance sheets were checked, and it was found that there was evasion of the excise duty. A show cause notice was served upon the accused no. 1 to 3, who filed a reply, but it was not found satisfactory. The proceedings were initiated against accused nos. 1 to 3. Commissioner Central Excise Adjudication, Delhi, found accused nos. 1 to 3 guilty and imposed the penalty. Accused Nos. 1 to 3 preferred appeals, and the Customs Excise & Gold (Control) Appellate Tribunal modified the order and gave 8 weeks time to comply with the terms and conditions imposed in the order. However, the terms and conditions were not complied with. The penalty was not deposited. Hence, a prosecution was launched for evasion of the excise duty.

4. Learned Trial Court found sufficient reasons to summon the accused. When the accused appeared, the pre-charge evidence was recorded. The complainant examined Nitin Wappa (CW1), Jodh Singh (CW2), Umesh Gupta (CW3), Ravi Barman (CW4), Kartar Singh (CW5) and RK Goyal (CW6).

5. Learned Trial Court held that the complainant relied upon the show cause notice, and the orders passed by various authorities in support of its complaint. A person cannot be held liable merely because of some findings recorded by the Civil Court. The complainant was required to lead proper evidence by producing the documents showing how the evasion had taken place. The witnesses also did not state that they had any personal knowledge of the evasion. The Criminal Court cannot be taken as an executing Court of the orders passed by the Civil Court. Hence, the accused were discharged.

6. Being aggrieved by the order passed by the learned Trial Court, the complainant has filed the present revision asserting that the learned Trial Court erred in discharging the accused. There was sufficient material on record to show the complicity of the accused. The penalties were imposed by the various authorities. The appeal preferred by the accused was dismissed. The testimony of R.K. Goyal (CW6), Assistant Commissioner of Central Excise, was sufficient to frame the cha