Criminal prosecution under the Central Excise Act cannot be permitted to continue once the competent appellate authority decides the underlying matter on merits in favor of the assessee, as the basis of the prosecution ceases to exist.

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CRM-M-40724-2016 1

IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH

CRM-M-40724-2016

Reserved on:-18.05.2026

Pronounced on:-25.05.2026

Uploaded on:- 26.05.2026

Whether only operative part of the judgment is

Pronounced or the full judgment is pronounced: operative part/full judgment

M/S DHLLON KOOL DRINKS AND BEVERAGES LTD. AND ORS.

...Petitioners

Versus

GOVT. OF INDIA, CENTRAL EXCISE DEPARTMENT

....Respondent

CORAM: HON'BLE MS. JUSTICE MANDEEP PANNU

Present:- Mr. Amit Jhanji, Sr. Advocate, with

Ms. Kudrit Kaur Sara, Advocate

for the petitioners.

Mr. Sourabh Goel, Sr. Standing Counsel, CBIC with

Ms. Deify Jindal, Ms. Geetika Sharma, Advocates,

Ms. Himanshi Gautam, Mr. Reniet Malhotra, Advocates

for the respondent.

*****

MANDEEP PANNU, J.

1. Present petition has been filed under Section 482 Cr.P.C. for

quashing of impugned criminal complaint titled “Anil Swami Versus Dhillon

Kool Drinks & Beverages Ltd. and others” dated 02.08.2008 (Annexure

P/5) under Sections 9 and 9AA of the Central Excise Act, pending in the

Court of learned Chief Judicial Magistrate, Panipat, as well as summoning

order dated 07.01.2009 (Annexure P/6) passed therein.

ANU

2026.05.26 10:26

I attest to the accuracy and

integrity of this document

Chandigarh

CRM-M-40724-2016 2

2. Briefly stated, the complaint was filed by the Assistant

Commissioner, Central Excise, Panipat, against the present petitioners under

Sections 9 and 9AA of the Central Excise Act, 1944 alleging that petitioner

No.1-Company was engaged in manufacturing aerated water (Pepsi) at its

factory situated at Village Asgarpur, G.T. Road, Panipat and was holding

Central Excise registration for manufacture of aerated water. It was alleged

in the complaint that the Deputy Commissioner, Central Excise Division,

Sonepat had earlier withdrawn the facility of fortnightly payment of duty

and payment of duty through RG-23A Part-II for a specified period.

However, despite the said order, the accused persons allegedly started

showing payment of Central Excise duty by manipulating entries in the PLA

account without actually depositing the requisite amount in the designated

bank. The further allegations in the complaint are that the accused persons

cleared goods involving Central Excise duty by making fictitious debit

entries in their account current and fraudulently enhanced the credit limit in

the PLA account on the basis of fictitious TR-6 challans without actual

deposit of duty amount. It was alleged that in this manner inadmissible

credit to the tune of Rs.1,63,00,000/- was taken and credit amounting to

Rs.1,69,38,241/- was wrongly utilized, thereby causing total recoverable

amount of Rs.3,32,38,241/-. It was further alleged that during investigation

and inspection conducted by the department, the accused persons failed to

produce relevant TR-6 challans and statements of the concerned officials

were recorded. A show cause notice was thereafter issued and, pursuant to

adjudication proceedings, duty amounting to Rs.1,69,38,241/- along with

penalty was confirmed against the accused persons. On the basis of the

ANU

2026.05.26 10:26

I attest to the accuracy and

integrity of this document

Chandigarh

CRM-M-40724-2016 3

aforesaid allegations, the present complaint came to be instituted against the

petitioners.

3. Learned counsel for the petitioners contends that the entire

dispute pertains to adjudication under the Central Excise Act and the

petitioners had already deposited the duty amount along with interest much

prior to issuance of the show cause notice. It is further contended that the

adjudication order dated 11.10.2006 was initially passed ex parte by the

Commissioner, Central Excise, against which the petitioners preferred an

appeal before the learned CESTAT and the matter was remanded for fresh

adjudication vide order dated 09.04.2007. It is further contended that

thereafter fresh order dated 19.11.2007 was passed by the Commissioner

confirming the demand and imposing penalty, against which the petitioners

again preferred appeal before the learn