BIRLA TYRES Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners have filed these petitions one under Articles 226 and 227 of the Constitution of India and the other under Section 482 of the Criminal Procedure Code, 1973 with the identical prayer in both the petitions to quash the F.I.R. dated 12-1-1996, Annexure-2 of R.C.No. 7-4 of 1998 and the investigation undertaken by the opposite parties 2 to 4 in pursuance of Annexure-2.Since the petitioners are same and prayer in both the petitions are identical, the petitions are taken up together for disposal.

(2.) The facts giving rise to these petitions are as follows :-The petitioner No. 1 is a company engaged in production of tyres in its factory established in the district of Balasore with its Head Office at Chanpur in the district of Balasore and is represented by Shri Deepak Tandon, Joint President, the petitioner No. 2. Petitioner No. 3 is the Senior Manager (Commercial) of the aforesaid company.On the allegation that the petitioners named above entered into criminal conspiracy during 1992-95 with active participation of Shri G. B. Panda, Superintendent of Central Excise and Customs, Range-1, Balssore and in furtherance of the said conspiracy Shri G. B. Panda allowed the petitioner Nos. 2 and 3 who are employees of the petitioner No. 1 to suppress the natural production figure of tyres, tubes and flaps manufactured in the factory of M/s. Birla Tyres and ultimately abated the evasion of Central Excise duty to the tune of more than rupees ten crores which the petitioner No. 1 is liable to pay to the Central Excise Department. In order to evade the Central Excise duty, the petitioner Nos. 2 and 3 maintained the basic record such as Daily Production Register and statutory record like R.G.; I in an irregular manner in violation of provisions of Central Excise Manual. It is alleged that Shri G. B. Panda was in-charge of the range under the Central Excise Department in which the petitioner No. 1 is an assessee. It is further alleged that Shri Panda failed to scrutinise the records of M/s. Birla Tyres and supervise the actual production pursuant to the said conspiracy and thereby abused his official position and showed undue favour to the petitioner No. 1 and caused wrongful loss to the State Exchequer and consequential gains to self and other petitioners. On the basis of the report of the D.S.P., C.B.I., Bhubaneswar dated 12-1-1996 containing the above allegations the aforesaid case has been registered for the offences under Sections 120-B, 420, I.P.C. and under Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988.

(3.) The case of the petitioners is that much prior to the lodging of the aforesaid F.I.R., officers of the Central Excise Department inspected the factory and scrutinised the registers maintained in the factory and found certain discrepancies. On the basis of the discrepancies the Commissioner, Central Excise served a notice to show cause (Annexure-1) on the petitioners alleging that after thorough examination and comparison of the production in report reflected in the Daily Production Register of Division-C of M/s. Birla Tyres with the production reflected in R.G.-I, it is found that M/s. Birla Tyres appears to have suppressed production of 91,663 tyres and removed the same without payment of duty from their factory premises. The total liability to pay the duty on the said quantity of tyres is Rs. 10,32,64,386/-. It is also alleged that 55 numbers of tyres which were seized from the premises maintained by M/s. Birla Tyres at Moti Tower near Remuna Golai, Balasore appears to have been removed clandestinely from the factory premises of M/s. Birla Tyres without payment of excise duty thereon. It is further alleged that 36 RT of Carbon Black a declared input under Rule 57-A was found to be stored in another unapproved godown at Sambalpur. On verification of the stock of Carbon Black in the Raw material store of the factory it was found to be short by 36 MT as against the quantity shown in R.G. 23A.I. It is also alleged that Modvat credit on the input amounting to Rs. 1,52,208 had already been availed by M/s. Birla Tyres. For removing the said Carbon Black neither any intimation was given nor any permission was obtained from the competent authority under Rule 57-F (1)(ii). It is also alleged that M/s. Birla Tyres, Balasore have been removing tyres for destructive testing without payment of duty in contravention of Rule 9(1) read with Rule 173-F of Central Excise Rules, 1944. On the basis of the discrepancies found the petitioners were noticed by the Commissioner, Central Excise and Customs, Bhubaneswar under Annexure-1 dated 29-6-1995 to show cause as to why :-(i) Central Excise duty amounting to Rs. 10,32,64,385/- as detailed in Annexure-D should not be recovered from them under Section 11A of Central Excises and Sale Act, 1944 and proviso thereto read with Rule 9(2) of the Central Excise Rules, 1944 on the ground as aforementioned.(ii) 55 Nos. of tyres and 36 MT of Carbon Black seized under Panchanama dated 6-1-1995 should not be confiscated under Rules 1730 and 209 of Central Excise Rules 1944 as the same appears to have been removed in contravention of provisions of Central Excise Rules as discussed above.(iii) Central Excise duty on 55 Nos. of tyres amounting to Rs. 1,19,900/- should not be recovered from them under Section 11A and proviso thereto of Central Excises and Salt Act, 1944 read with Rule 9(2) of the Central Excise Rules, 1944.(iv) Central Excise duty on 36 MT of Carbon Black amounting to Rs. 1,52,208/- should not be recovered from them under Section 11A and proviso thereto of Central Excises and Salt Act, 1944 read with Rule 9(2) of Central Excise Rules, 1944.(v) Penalty (ies) should not be imposed on them under Rules 9(2), 173Q and 209, 226 ibid for violation of Rule 9(1) read with Rule 173F and Rule 57F(1)(ii) and Rule 173G and/or Rule 226 of Central Excise Rules, 1944.The petitioners as per Annexure-1/A dated 19th March, 1996 furnished their reply to the aforesaid show cause notice explaining the alleged discrepancies/infraction of rules indicated in the notice to show cause. The petitioners, therefore, contend that since much prior to the registration of the case by C.B.I., the Central Excise Department took up the matter which is still under inquiry, the investigation by the C.B.I. pursuant to the F.I.R., Annexure-2 is improper and amounts to double jeopardy and is also against the constitutional provision of Article 21. The petitioners, further contend that for the same set of allegations two parallel proceedings are uncalled for. In the above context, it is also submitted that a subsequent verification by the Central Excise Department revealed that the quantum of suppression as alleged at the first instance is not correct and the same is much less than what was alleged initially. On the above basis, it is further submitted that if ultimately the inquiry conducted by the Central Excise Department goes in favour of the petitioners, the allegations brought out by the C.B.I. will not stand. It is also submitted that the facts alleged in the F.I.R. do not make out a case under Section 420, I.P.C. and for all these reasons, the F.I.R. and the investigation, if any, undertaken by the C.B.I. are liable to be quashed.