Introduction: In a recent ruling, the Supreme Court addressed the quashing of prosecution under Sections 9 and 9-AA of the Central Excise Act, 1944. The impugned order had relied on a stay granted by the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru (CESTAT) on tax and penalty recovery. This article delves into the Supreme Court’s decision and its implications.
Detailed Analysis: The impugned order, dated 10.01.2019, had quashed criminal prosecution against Kavveri Telecom Products Limited. The basis for the quashing was the CESTAT’s stay on tax and penalty recovery. However, the Supreme Court found that the appeal before the CESTAT was still pending and had not been adjudicated.
The CESTAT’s stay order required Kavveri Telecom Products Limited to make a pre-deposit of Rs.15 lakhs. Notably, the stay did not provide exoneration or findings on the merits of the criminal complaints. The Supreme Court emphasized that the High Court’s decision to quash prosecution solely based on the stay was incorrect.
As a result, the Supreme Court allowed the appeal, setting aside the impugned order and reinstating criminal complaint C. C. No. 332 of 2011. The respondents were given the option to file applications for exemption from personal appearance and under Section 309 of the Code of Criminal Procedure, 1973. The Court requested CESTAT to expedite the appeal filed by the respondents.
Conclusion: The Supreme Court’s decision highlights the importance of a thorough examination of the grounds for quashing prosecution. Emphasizing the pending nature of the appeal before CESTAT and the lack of findings on merits, the Court overturned the earlier order. This ruling serves as a reminder that stays on recovery do not automatically translate to exoneration from criminal prosecution, and each aspect must be considered independently.
The impugned order quashes prosecution under Sections 9 and 9-AA of the Central Excise Act, 1944 on the ground that the Customs, Excise and Service Tax Appellate Tribunal, Bengaluru (the ‘CESTAT’) has granted stay on the recovery of the tax and penalty amount.
It is an accepted and admitted case that the appeal preferred by the respondents is pending before the CESTAT and has not been adjudicated and decided. We also examined the stay order which directs the appellant therein, namely, M/s Kavveri Telecom Products Limited, to make pre-deposit of Rs.15 lakhs. Therefore, there is no exoneration or finding on merits by the CESTAT on the subject matter of the criminal complaints. In the said facts, the High Court was incorrect and wrong in quashing the criminal prosecution only on the ground that the tribunal has granted stay, subject to condition of pre-deposit, of the recovery of the tax and the penalty amount.
For the aforesaid reasons, we allow the present appeal and set aside the impugned order dated 10.01.2019 passed in Criminal Petition No. 5212 of 2012 titled ”M/s Kavveri Telecom Products Limited & Anr. vs. Additional Commissioner of Central Excise (Legal), Bangalore” quashing the criminal complaint in C. C. No. 332 of 2011.
We, however, clarify that it will be open to the respondents to file an application seeking exemption from personal appearance as well as under Section 309 of the Code of Criminal Procedure, 1973. If any, such applications are filed, the same would be considered and decided in accordance with the law. We have not made any comments in that regard. We also request the CESTAT to take the appeal preferred by the respondents expeditiously.
Pending application, if any, are also disposed of.
The appeal is allowed in terms of the signed order. Pending application(s), if any, stand disposed of.