ORDER :

This criminal petition is filed by the petitioners/accused to quash the proceedings in CC.No.170 of 2005 on the file of the Special Judge for Economic Offences Court, Hyderabad.

2. The aforesaid case has been registered against the petitioners/accused on a complaint filed by the respondent No.2 to prosecute the petitioners for the offences under Sections 9, 9(10(b), 9(1)(bb), and 9AA of the Central Excise Act, 1944 (for short ‘the Act’) read with Section 120B of the Indian Penal Code.

3. The petitioner No.1 is a company incorporated under the provisions of the Companies Act and the petitioner No.2 was the Managing Director of the petitioner No.1-company at the relevant point of time.

4. The petitioner No.1-company, at the relevant point of time, was manufacturer of cut tobacco which is excisable good as per the schedule incorporated under the provisions of the Act. The case of the prosecution is that on a surprise check on 15.06.1995 at the premises of one M/s. Tirupati Cigarettes Limited, Varanasi, Uttar Pradesh, it was found that 115 bags of cut tobacco accounted for 3,910 KGs was clandestinely cleared without separate documents and payment of excise duty. The documents seized from the custody of the accused reflected that the documents required to be used only once were repeatedly reused mainly for payment of excise duty. It is the further case of the prosecution that on 15.06.1995, they have intercepted another vehicle which was carrying 230 bags of cut tobacco accounted for 7,820 KGs, without paying excise duty. The prosecution further asserted that it has seized 60 empty bags which, according to them, were from cut tobacco, which was sold to M/s. Tirupati Cigarettes Limited. Thus, on the claim that M/s. Tirupati Cigarettes Limited has evaded excise duty, at the instance of A1 company and on the instructions of A2, prosecution was launched against the petitioners.

5. It is the case of the petitioners that departmental proceedings were initiated by issuing a show cause notice vide proceedings No.OR.490/95 dated 05.12.1995 wherein similar allegations were made against the petitioners based on same evidences including statements recorded by the respondent department during the course of investigation, were relied upon in the show cause notice. The petitioners gave a detailed reply to the show cause notice. After considering the entire evidence including the defence of the petitioners, the competent authority viz. Commissioner (Adjudication), by order dated 08.06.2001 held against the accused. The following are the conclusions of the competent authority:

47. In view of the above findings, I : -

(i) confirm the demand of Rs.25,03,044.75 against DTPL being the Central Excise Duty payable @ 225% Adv. On 34495 Kgs. Cut tobacco valued at Rs.11,12,465.25 removed clandestinely without payment of duty and order immediate recovery of the duty of Rs.25,03,044.75 under Rule 9(2) of Central Excise Rules 1944 read with Section11A of Central Excise Act 1944.

(ii) Order confiscation of 11730 Kgs. (345 bags) of cut tobacco valued at Rs.378294 under Rule 173Q of Central Excise Rules, 1944. As these goods have already been released provisionally on execution of B-11 Bond of the value of 380248/- and furnishing of cash security in the form of STDR of Rs.1,00,000/- and thus re not available for confiscation, I impose R.F. of Rs.1,00,000/- and appropriate the said STDR towards Adjustment/payment of the said R.F.]

(iii) Order confiscation of the remaining 22765 Kgs. (690 bags) of cut tobacco valued at Rs.734171.25 under Rule 173 Q of Central Excise Rules 1944. However, I give option to redeem the same on payment of R.F. of Rs.2,00,000/-. Central Excise duty leviable on them will also be payable.

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(xi) Order confiscation of the vehicle bearing No. UP-65H-0167 seized by the Department under Section115 of the Customs Act, 1962 as applicable to the Central Excise cases. As this vehicle has already been released provisionally on execution of B-11 Bond o