Nirmal Kumar Agarwal vs. Union Of INDIA Through Ashutosh Kumar Assistant Commissioner Central GST And Central Excise

Facts

Three petitioners, Nirmal Kumar Agarwal (Managing Director), Kanhiya Kejriwal (Assistant General Manager - Accounts & Finance), and S.N. Goswami (Manager - Commercial) of M/s Adhunik Alloys & Power Limited (AAPL), sought anticipatory bail. AAPL was alleged to have availed irregular CENVAT credit amounting to Rs. 2,06,00,000/- during 2011-12 to 2012-13, causing loss to government revenue. The complaint was filed by the Union of India through the Assistant Commissioner, Central GST and Central Excise Division – III, Jamshedpur. The petitioners argued that the CENVAT credit had been reversed, and appeals were pending before the CESTAT. They relied on a Supreme Court judgment concerning the bailable nature of offenses under the Central Excise Act, 1944.

Held

The Court held that offenses under the Central Excise Act, 1944, are bailable. This conclusion was based on the interpretation of Sections 9, 9A, and 20 of the Act, as discussed in the cited Supreme Court judgment (Om Prakash (Supra)). The Court noted that Section 20 of the Act mandates that an officer in charge of a police station shall admit a person forwarded under Section 19 to bail or forward them in custody to the Magistrate if bail is not provided, indicating the bailable nature of these offenses. The Court found the petitioners' argument regarding the bailable nature of the offenses to be valid. Consequently, the anticipatory bail application was disposed of with a direction for the petitioners to appear before the court below within six weeks and file a regular bail application, which the court below was directed to consider in light of the judgment holding the offenses as bailable.

Key Issues

1. Whether offenses under the Central Excise Act, 1944, are bailable in nature, as contended by the petitioners, or non-bailable, as implied by the revenue's opposition to anticipatory bail. Contentions: Petitioner: The petitioners argued that offenses under the Central Excise Act, 1944, are bailable. They relied on the Supreme Court judgment in Om Prakash (Supra), specifically paragraphs 40-47, which interpreted Sections 9, 9A, and 20 of the Central Excise Act, 1944, to conclude that offenses under the Act are bailable. They also submitted that the CENVAT credit in dispute had been reversed, and appeals were pending before the CESTAT, rendering the evasion non-existent. Revenue/State: The Union of India, through its counter-affidavit, opposed the prayer for bail. It stated that while the company might not have to pay the purported demand, interest and penalty were still due, and the petitioners were also liable for penalties as per the adjudicating authority's order dated 17.03.2015.