Case Note & Summary
The appellant, Baccarose Perfumes and Beauty Products Pvt. Ltd., a company engaged in manufacturing and exporting cosmetics from a unit in Kandla Special Economic Zone (KASEZ), was alleged to have entered into a criminal conspiracy with public officials between March 2001 and August 2004. The allegation was that the company cleared goods into the Domestic Tariff Area (DTA) by paying Countervailing Duty (CVD) on invoice value instead of Maximum Retail Price (MRP), causing a wrongful loss of INR 8 crores to the government. Revenue authorities issued show cause notices under the Customs Act, 1962 and Central Excise Act, 1944. The Commissioner of Customs (Appeals) later held that the goods should be assessed under Section 3(2) of the Customs Tariff Act, 1975 and that MRP declaration was not required for wholesale packs. The company sought clarification from the Office of the Collector of Legal Metrology, which affirmed its view. Based on this, the company approached the Settlement Commission and was granted immunity under the Central Excise Act, 1944, Customs Act, 1962, and IPC, 1860 vide order dated 20.08.2007. Meanwhile, the CBI registered an FIR under Section 120B read with Section 420 IPC and Section 13(1)(d) of the Prevention of Corruption Act, 1998. The investigating officer filed a closure report, but the Special Judge rejected it and directed registration of a special case. The company's discharge application was dismissed by the Special Judge and the High Court. The Supreme Court allowed the appeal, holding that the immunity granted by the Settlement Commission bars criminal prosecution for the same subject matter. The Court also noted that the co-accused public servant was not granted sanction under Section 197 CrPC, and therefore the charge of conspiracy under Section 120B IPC cannot stand against the company alone. The Court set aside the impugned orders and discharged the appellant-company from all charges.
Headnote
A) Criminal Law - Settlement Commission Immunity - Section 32K Central Excise Act, 1944 and Section 127H Customs Act, 1962 - Bar on Prosecution - The appellant-company was granted immunity by the Settlement Commission under Section 32K of the Central Excise Act, 1944 and Section 127H of the Customs Act, 1962 in respect of the same subject matter. The Supreme Court held that such immunity extends to criminal proceedings under the IPC and PC Act, and the company cannot be prosecuted for the same acts. (Paras 18-22) B) Criminal Conspiracy - Section 120B IPC - Requirement of Two Persons - The charge of criminal conspiracy under Section 120B IPC requires at least two persons. Since the co-accused public servant was not granted sanction under Section 197 CrPC, the appellant-company cannot be prosecuted alone for conspiracy. (Paras 23-24) C) Criminal Procedure - Discharge Application - Section 227 CrPC - Consideration on Merits - The Supreme Court held that the trial court must consider the discharge application on its merits, and the earlier order taking cognizance does not preclude the court from discharging the accused if no prima facie case is made out. (Para 25)
Issue of Consideration
Whether the appellant-company, having been granted immunity by the Settlement Commission under the Central Excise Act, 1944 and the Customs Act, 1962, can be prosecuted for criminal conspiracy and corruption in respect of the same subject matter.
Final Decision
The Supreme Court allowed the appeal, set aside the impugned orders of the High Court and Special Judge, and discharged the appellant-company from all charges in CBI Special Case No. 48 of 2010.
Law Points
- Settlement Commission immunity under Section 32K of Central Excise Act
- 1944 and Section 127H of Customs Act
- 1962 bars criminal prosecution for the same subject matter
- Criminal conspiracy under Section 120B IPC requires at least two persons
- Company cannot be prosecuted alone if co-accused public servant not sanctioned
- Discharge application must be considered on merits despite cognizance order
