Telangana High Court
The Deputy Commissioner Legal vs M/S. Saachi Textiles Pvt. Ltd. on 1 November, 2022
Bench: K.Surender
HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
*****
Criminal Appellant No.325 OF 2010
Between:
The Deputy Commissioner (legal)
Customs & Central Excise,
Hyderabad-IV Commissionerate,
Hyderabad, rep. by Spl. Public Prosecutor,
Hyderabad. ...Appellant
And
M/s.Saachi Textiles Pvt. Ltd.,
and another. ... Respondents
DATE OF JUDGMENT PRONOUNCED: 01.11.2022
Submitted for approval.
THE HON'BLE SRI JUSTICE K.SURENDER
1 Whether Reporters of Local
newspapers may be allowed to Yes/No
see the Judgments?
2 Whether the copies of judgment
may be marked to Law Yes/No
Reporters/Journals
3 Whether Their
Ladyship/Lordship wish to see Yes/No
the fair copy of the Judgment?
__________________
K.SURENDER, J
2
* THE HON'BLE SRI JUSTICE K. SURENDER
+ CRL.A. No. 325 of 2010
% Dated 01.11.2022
# The Deputy Commissioner (legal)
Customs & Central Excise,
Hyderabad-IV Commissionerate,
Hyderabad, rep. by Spl. Public Prosecutor,
Hyderabad. ... Appellant
And
$ M/s.Saachi Textiles Pvt. Ltd.,
and another ... Respondents
! Counsel for the Appellants: Sri A.Rajsekhar Reddy.
^ Counsel for the Respondents: Sri B.Chandrasen Reddy,
Learned Senior Counsel
>HEAD NOTE:
? Cases referred
1
(2013) 11 supreme court Cases 688
3
THE HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL APPEAL No. 325 OF 2010
JUDGMENT:
This Criminal Appeal is filed by the
Appellant/Complainant aggrieved by the acquittal recorded by
the Metropolitan Sessions Judge, Hyderabad, in
Crl.A.No.385/2008 dt.02.06.2009 whereby the learned Sessions
Judge set aside the conviction and the sentence passed by the
Special Judge for Economic Offences at Hyderabad in C.C.No.6
of 2000 dt.27.11.2008, convicting the accused under Sections
9(1)(b) and 9(1)(bb) read with Section 9-AA of Central Excise Act.
2. Heard both sides and perused the record.
3. The appellant-Deputy Commissioner of Customs and
Central Excise, Hyderabad filed a complaint against the
respondents alleging violation of Sections 9(1)(b) and 9(1)(bb)
read with Section 9-AA of Central Excise Act.
4. The case of the appellant/complainant is that the 1st
respondent Company are manufacturers of polyester textured
yarn and twisted yarn and fall within the ambit of Central Excise
Tariff Act, 1985. It was found by the complainant that the
respondents were procuring raw material on fictitious names
and using them for manufacture of finished goods resulting in
evasion of Central Excise Duty. On 11.10.1996, the Central
Excise Officers physically verified the premises of Accused No.1
company and having gone through the books maintained and
also the stocks available found discrepancies in textured yarn
goods and twisted yarn goods which were in excess and some of
the textured yarn was in shortage. Thereafter, proceedings were
conducted in the factory premises and also residential premises
of Accused No.2. All the relevant material was seized. It was
found that Accused No.1 has declared their values during 199-
1997 as 3,64,68,404/- and concessional rate of duty benefit was
not available to those manufacturers whose value of clearances
exceeds 300 lakhs during preceding financial year. For the said
reason A1 was required to pay differential duty of Rs.6,25,000/-
as BED and Rs.93,750/- as AED, accordingly, show cause
notices were issued.
5. On 28.11.1997, the Commissioner of Customs and Central
Excise, confirmed the duty of Rs.1,01,17,322/- as BED and
Rs.15,17,598/- as AED under Central Excise Rules and
confiscated the textured yarn weighing 1339.59 Kgs. and twisted
yarn weighing 871.80 kgs.
6. It is the case that Accused No.1 company managed by
Accused No.2, deliberately and willfully suppressed the
acquisition, manufacture and clandestinely moved excisable
goods without payment of duty. For the said reason the acts
resulted in evasion of Central Excise Duty as stated above which
are punishable under the provisions of Section Sections 9(1)(b)
and 9(1)(bb) read with Section 9-AA of Central Excise Act and
also violation of Central Excise Rules, 1944.
7. The learned Special Judge for Economic Offences by
Judgment dated 27.11.2008 in C.C.No.6 of 2000 found both the
respondents guilty of the offences and convicted them. However,
on appeal by the respondents, the learned Sessions Judge found
that the respondents were guilty for the offences alleged,
however, it was not open for the complainant to launch
prosecution proceedings or to continue the prosecution
proceedings against the respondents, having regard to Ex.D8
which is appeal order dt.28.02.2006 and also in view of Ex.D6- a
confidential circular issued by the Department, dt.04.04.1996.
Exs.D6 and D7 are the circulars of the Central Excise
Department which are not disputed by PW1, which are the
circulars issued framing guidelines for launching prosecution
under Central Excise Act, 1944 and enhancement of monetary
limit which prescribed for launching prosecution was 25 lakhs
prospectively from 12.12.1997. Ex.D7 is another circular
dt.04.04.1994 issued clarifying guidelines for prosecution under
the Central Excise Act, 1944, that before launching any
prosecution it is necessary that the Department should have
evidence to prove that the person, company or individual had
guilty knowledge of the offences and had fraudulent intention to
commit the offence in any manner which indicates mens rea.
Further, Ex.D7 also contains guidelines for withdrawing
prosecution which were improperly initiated.
8. The learned Sessions Judge further found that as claimed
by the Special Public Prosecutor Exs.D6 and D7 though are in-
house circulars, the complainant is estopped from putting
forward any contention contrary to Ex.D6. Further, in relation to
the prosecution, it is not open to the complainant to pick and
choose on his whims and fancies irrespective of the monetary
limit mentioned in Ex.D6 as it amounts to discrimination and
forbidden by the Constitution of India.
9. Sessions Judge found that the ultimate duty payable as
per Ex.D8-final order passed by the CESTAT (Customs Excise
and Service Tax Appellate Tribunal), BED payable by Accused
No.1 comes to Rs.17,74,021/- and AED payable by A1 comes to
Rs.1,98,848/-, and the total being Rs.19,72,869/- which
amount is below the monetary limit for launching prosecution as
per Ex.D6.
10. The learned Special Public Prosecutor appearing for the
appellant/complainant Sri A.Rajashekar Reddy, argued that the
findings of the trial court punishing the accused for the offences
alleged are correct and the Appellate Sessions Court has
misinterpreted the circulars and has come to an erroneous
conclusion that the duty imposed on accused is less than Rs.25
lakhs. In the CESTAT order dt.28.06.2006 which is Ex.D8, the
Special Counsel submits that the said Tribunal has not reduced
the payment of Rs. 1.16 crores, but upheld the demand
confirmed by the adjudicating authority. However, the
adjudicating authority permitted the accused to adjust benefit of
CENVAT (Central Value Added Tax) credit of about Rs.96.00
lakhs. Permitting the CENVAT credit does not reduce the
demand but gives the accused a choice to pay part of the duty
demanded by utilizing the credit. However, the total demand of
duty and confiscation were upheld by the Tribunal but reduced
the penalties.
11. Though, CESTAT had decided the issue, ultimately it has
reduced the penalties and when the amounts payable are
concerned, Accused No.1-Company is liable to pay Rs.
17,74,021/- towards BED and Rs.1,98,848/- towards AED
totaling to Rs. 19,72,869/-. Ex.D6 which is a confidential
circular enhancing the monetary limit for launching
prosecutions to Rs.25 lakhs is not disputed. The said
enhancement of monetary limit was prospective in nature and
squarely applicable to the benefit of the appellant in the present
facts and circumstances as discussed above.
12. The Hon'ble Supreme Court in the case of
Radhakrishna Nagesh v. State of Andhra Pradesh1 held that
under the Indian criminal jurisprudence, the accused has
two fundamental protections available to him in a criminal
trial or investigation. Firstly, he is presumed to be innocent
till proved guilty and secondly that he is entitled to a fair
(2013) 11 supreme court Cases 688
trial and investigation. Both these facets attain even
greater significance where the accused has a judgment of
acquittal in his favour. A judgment of acquittal enhances
the presumption of innocence of the accused and in some
cases, it may even indicate a false implication. But then,
this has to be established on record of the Court.
13. This Court does not find any illegality in the orders of the
learned Sessions Judge for relying upon Exs.D6, D7 and also D8
and finding that the benefit ought to have been extended to the
appellants, the same cannot be held to be improper or not based
on record.
14. Accordingly, the Criminal Appeal fails and dismissed.
As a sequel thereto, miscellaneous applications pending, if
any, shall stand closed.
__________________
K.SURENDER, J
Date: 01.11.2022
Note: LR copy to be marked
B/o.tk
THE HON'BLE SRI JUSTICE K.SURENDER
CRIMINAL APPEAL NO. 325 OF 2010
Dt. 01.11.2022
tk
