Supreme Court of India
Baccarose Perfumes And Beauty Products … vs Central Bureau Of Investigation on 6 September, 2024
Author: Abhay S. Oka
Bench: Abhay S. Oka
2024 INSC 662
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 3216 OF 2024
BACCAROSE PERFUMES AND BEAUTY
PRODUCTS PVT. LTD …APPELLANT
VERSUS
CENTRAL BUREAU OF INVESTIGATION
& ANR. … RESPONDENTS
J U D G M E N T
AUGUSTINE GEORGE MASIH, J.
1. The Appellant (hereinafter referred to as
“Appellant-Company”) is assailing the Order
dated 15.09.2023, wherein the High Court of
Gujarat dismissed the Criminal Revision
Application No. 783 of 2017 (hereinafter referred
to as “CRA No. 783 of 2017”) moved under
Section 397 read with Section 401 of Code of
Signature Not Verified
Criminal Procedure, 1973 (hereinafter referred
Digitally signed by
ASHISH KONDLE
Date: 2024.09.06
16:18:47 IST
to as “CrPC 1973”) against the rejection of
Reason:
Criminal Appeal No. 3216 of 2024 Page 1 of 17
discharge application moved by the Appellant-
Company. The said application was dismissed
by the learned Special Judge (CBI) at
Ahmedabad (hereinafter referred to as “Special
Judge”) vide Order dated 19.07.2017.
2. It is alleged by the Central Bureau of
Investigation, being Respondent No. 01
(hereinafter referred to as “Respondent-
Agency”), that the Appellant-Company had
entered into a criminal conspiracy with Shri
Yogendra Garg, Joint Development
Commissioner, Kandla Special Economic Zone,
Kandla (hereinafter referred to as “KASEZ”), and
Shri V.N. Jahagirdar, Deputy Commissioner of
Customs, KASEZ, between the period from
March 2001 to August 2004. It is alleged that
the latter officials perverted their official
positions and allowed the Appellant-Company
to clear its goods into the Indian Market on
payment of Countervailing Duty (hereinafter
referred to as “CVD”) on the invoice value of the
concerned goods, rather than the payment of
the CVD on the Maximum Retail Price
Criminal Appeal No. 3216 of 2024 Page 2 of 17
(hereinafter referred to as “MRP”) of the said
goods, thereby causing a wrongful gain to
themselves and a corresponding wrongful loss
to the Government exchequer to the tune of INR
8,00,00,000/- (Rupees Eight Crores only).
3. Before pursuing the aftermath of the allegations
by the Respondent-Agency, it is crucial to delve
into the backdrop in which the allegations arose
against the Appellant-Company.
4. The Appellant-Company claims to be a private
limited company duly incorporated under the
Companies Act, 1956, which is engaged in
manufacturing and exporting of cosmetics and
toilet preparations and having one of its units in
KASEZ. As per the Appellant-Company, its
products get cleared from the KASEZ Unit into
the Domestic Tariff Area (hereinafter referred to
as “DTA”) in consonance with the necessary
permissions granted to it by the appropriate
authority. It is its case that it had effected the
following three kinds of clearances from its
KASEZ Unit into the DTA, being (a) Clearances
of goods weighing or containing less than 20
Criminal Appeal No. 3216 of 2024 Page 3 of 17
gram or 20 millilitre, (b) products containing
alcohol, and (c) other goods in “Wholesale
Packs”.
5. From August 2004 onwards, Officers of the
Kandla Customs (hereinafter referred as
“Revenue Authorities”) moved against the
Appellant-Company, alleging that they had
escaped payment of CVD on the aforementioned
clearances on account of non-disclosure of MRP
as per the provisions of the Standards of
Weights and Measures Act, 1976 (hereinafter
referred to as “SWM Act 1976”) as they had
declared only the invoice value of the said goods.
This was a violation of the proviso to Section 3(2)
of the Customs Tariff Act, 1975 (hereinafter
referred to as “CT Act 1975”) read with Section
4A(2) of the Central Excise Act, 1944
(hereinafter referred to as “CE Act 1944”), and
on the said ground, goods being cleared by the
Appellant-Company into the DTA were
intercepted. The Revenue Authorities issued
Show Cause Notices dated 03.11.2004,
10.11.2004, and 10.02.2005 (along with
Criminal Appeal No. 3216 of 2024 Page 4 of 17
Corrigendum dated 11.03.2005) under Section
28 of the Customs Act, 1962 (hereinafter
referred to as “CA 1962”), under Section 11A of
the CE Act 1944, and under Section 124 of CA
1962 respectively.
6. Thereafter, pursuant to the said allegation
based on source information to Respondent-
Agency, First Information Report bearing
number RC-6(A)/2005-GNR under Section
120B read with Section 420 of the Indian Penal
Code, 1860 (hereinafter referred to as “IPC
1860”) and Section 13(1)(d) of the Prevention of
Corruption Act, 1998 (hereinafter referred to as
“PCA 1998”) was registered on 04.04.2005 at
Gandhinagar branch of Respondent-Agency
(hereinafter referred to as “the FIR”). A raid is
also claimed to have been conducted on the
KASEZ Unit of the Appellant-Company by the
Respondent-Agency.
7. Eventually, Assessment Orders were passed
observing the non-declaration of MRP on the
concerned goods by the Appellant-Company.
These Assessment Orders were assailed by the
Criminal Appeal No. 3216 of 2024 Page 5 of 17
Appellant-Company before the Commissioner of
Customs (Appeals), Kandla by filing of appeals,
which resulted in the passing of Orders dated
09.05.2005 and 30.06.2005. The Commissioner
of Customs (Appeals), Kandla observed that the
concerned goods were ought to be assessed
under Section 3(2) of the CT Act 1975 as
opposed to the proviso to the said provision.
Furthermore, declaration of MRP is necessary
on packages intended for retail sale and not for
bigger packages for wholesale trade. The
Revenue Authorities were directed to consider
the case of the concerned goods of the
Appellant-Company afresh in light of the
observations made in the said Orders.
8. In the meanwhile, a clarification was sought
from the Office of the Collector of Legal
Metrology and Director of Consumer Affairs by
the Appellant-Company in the said regard and
it was responded vide Letter dated 04.01.2006
wherein, the view taken by the Appellant-
Company by placing reliance on Rule 29 of the
Standards of Weights and Measures (Packaged
Criminal Appeal No. 3216 of 2024 Page 6 of 17
Commodities) Rules, 1977 (hereinafter referred
to as “Packaged Commodities Rules 1977”) was
affirmed.
9. Placing reliance on the Letter dated 04.01.2006
and other materials on record, the Appellant-
Company moved three applications before the
Settlement Commission and immunity was
granted to it under the CE Act 1944, CA 1962,
and IPC 1860 vide Common Order No.
248/Final Order/CEX/KNA/2007 dated
21.08.2007.
10. The Investigation Officer, thereafter, was
pleased to move a Closure Report dated
05.03.2008 before the learned Special Judge.
The Court, however, rejected the said Closure
Report vide order dated 01.06.2010, and
instead directed for registration of a Special
Case against the accused persons, including
the Appellant-Company. This case came to be
registered as CBI Special Case No. 48 of 2010.
11. The Appellant-Company moved the High Court
of Gujarat by filing a Special Criminal
Criminal Appeal No. 3216 of 2024 Page 7 of 17
Application challenging the above Order which
was dismissed on 12.12.2011. Aggrieved, the
Appellant-Company moved this Court through
filing of Special Leave Petition (Criminal) No.
14430 of 2013. This Court was pleased to
condone the delay in filing, but while
dismissing the petition vide Order dated
26.07.2013 observed that only cognizance had
been taken by the learned Special Judge and
directed issuance of summons to the
Appellant-Company, and thereby, it was not an
appropriate stage to interfere. However, liberty
was granted to the Appellant-Company to
pursue and plead for discharge at the time of
hearing of charges.
12. In pursuance of the said liberty, the Appellant-
Company moved an application for discharge
before the learned Special Judge. One of the
grounds was that the Appellant-Company had
been granted immunity under the CE Act
1944, CA 1962, and IPC 1860 through Order
dated 20.08.2007 passed by the competent
authority, i.e., the Settlement Commission and
Criminal Appeal No. 3216 of 2024 Page 8 of 17
pressed into service the observations made by
this Court in General Officer Commanding,
Rashtriya Rifles v. CBI1 and Another,
Jamuna Singh and Others v. Bhadai Shah2,
and Devarapalli Lakshminarayana Reddy
and Others v. V. Narayana Reddy and
Others3 to the effect that mere filing of FIR with
the police, which is subsequently forwarded to
the Court, does not amount to institution of
prosecution. Furthermore, that the Appellant-
Company is not a “public servant” vis-à-vis
Section 13(1)(b) read with Section 13(2) of the
PCA 1998. Besides this, the Court had already
refused to accept contentions of the
Respondent-Agency against Shri Yogendra
Garg for sanction under Section 197 of the
CrPC 1973, and henceforth, the Appellant-
Company cannot be prosecuted alone for the
charge under Section 120B of IPC 1860, and it
finally put forth that the offences under Section
1 (2012) 6 SCC 228
2 1963 SCC OnLine SC 263
3 (1976) 3 SCC 252
Criminal Appeal No. 3216 of 2024 Page 9 of 17
420 read with Section 120B of IPC 1860 are not
made out as against the Appellant.
13. The learned Special Judge, however, disagreed
Company and dismissed the said application
vide Order dated 19.07.2017. To substantiate
its dismissal, the Court with reference to the
CE Act 1944, observed that as per Section
4A(1), it transpires that the retail price of the
concerned goods is to be declared, which
through reliance on Circular dated 01.03.2001
and the concerned provisions of law, is
interpreted as declaration of MRP.
14. It is against the said Order dated 19.07.2017
that the Appellant-Company had moved the
High Court of Gujarat in CRA No. 783 of 2017
which eventually led to the passing of the
Impugned Order dated 15.09.2023. During the
pendency of the CRA No. 783 of 2017, the High
Court of Gujarat stayed further proceedings
before the Special Judge while issuing notice to
the Respondent-Agency vide Order dated
18.08.2017. It was brought to the attention of
the High Court that the Appellant-Company
Criminal Appeal No. 3216 of 2024 Page 10 of 17
had paid a total of INR 1,51,45,378/- (Rupees
One Crore Fifty One Lakhs Forty Five
Thousand Three Hundred and Seventy Eight
only) during the investigation by the Revenue
Authorities and admittedly, in light of the
Orders dated 09.05.2005 and 30.06.2005, the
Appellant-Company had become entitled to a
refund instead.
15. While passing the Impugned Order dated
15.09.2023, the High Court of Gujarat
disagreed with the contentions of the
Appellant-Company, and affirmed the
contentions of the Respondent-Agency.
16. It is in this backdrop that the Appellant-
Company moved this Court in Special Leave
Petition (Civil) No. 13422 of 2023 by reiterating
its earlier contentions. On the first date of
hearing, our attention was drawn to the Order
dated 09.05.2005 of the Office of
Commissioner of Customs (Appeals) which had
directed that the matter be remanded to the
assessing authority for fresh assessment. No
further development is there in the case of the
Criminal Appeal No. 3216 of 2024 Page 11 of 17
Appellant-Company. Accordingly, vide Order
dated 16.10.2023, proceedings before the Trial
Court were stayed. The Respondent-Agency,
too, filed their contentions as part of its
Counter Affidavit dated 19.04.2024.
17. Having heard the counsels for both the parties
at length, it is pertinent to consider the
concerned provisions of law before we delve
into the legal and factual facet.
18. Predominantly, the argument of the Appellant-
Company pertained to having been granted
immunity by Settlement Commission vide
Order dated 20.08.2007 as per Section 32K of
the CE Act 1944. A perusal of the powers of the
Settlement Commission leads us to equivalent
provision under the CA 1962 through Section
127H. Both the provisions are pari materia to
each other and bear the same text. These
sections provide for an explicit bar from
prosecution on grant of immunity in cases
where the proceedings for any offence have
been instituted subsequent to the date of
Criminal Appeal No. 3216 of 2024 Page 12 of 17
receipt of the application seeking such
immunity under the relevant law.
19. A perusal of the scheme of the CrPC 1973
allows us to infer that mere registration of FIR
cannot be interpreted to mean that it
constitutes the initiation of such proceedings.
A registration of FIR necessitates an
investigation by a competent officer as per the
detailed process outlined in Sections 155 to
176. It is only after a Final Report (or as
referred in the common parlance, a Challan or
a Chargesheet) is submitted as per the
compliance of Section 173(2) of CrPC 1973,
cognizance for the offence(s) concerned is
taken. However, undoubtedly, the Court is not
bound by the said report.
The cardinal principle that investigation and
taking of cognizance operate in parallel
channels, without an intermingling, and in
different areas was also laid down by this Court
in H.N. Rishbud v. State (Delhi Admn.)4 and
4 (1954) 2 SCC 934
Criminal Appeal No. 3216 of 2024 Page 13 of 17
further elaborated and reiterated in
Abhinandan Jha and Others v. Dinesh
Mishra5 and State of Orissa v. Habibullah
Khan6.
20. In Hira Lal Hari Lal Bhagwati v. CBI, New
Delhi7, even though the subject matter of the
dispute pertained to Kar Vivad Samadhan
Scheme, 1998 (hereinafter referred to as “KVSS
1998”), the observations of this Court came to
the rescue of the Assessee-Company therein.
As per the said factual matrix, the case of the
Assessee-Company therein was settled under
the KVSS 1998 on 10.02.1999 by the
Designated Authority and as per the terms of
the settlement, the Assessee-Company therein
withdrew the appeal before this Court on
16.03.1999 and a certificate for full and final
settlement was issued on 19.07.1999. Despite
that, on 06.01.1999, a case was registered as
against the Appellant therein in capacity as the
office bearer of the Assessee-Company. It was
5 1967 SCC OnLine SC 107
6 2003 SCC OnLine SC 1411
7 (2003) 5 SCC 257
Criminal Appeal No. 3216 of 2024 Page 14 of 17
held by this Court that continuation of such a
prosecution would be inconsistent with the
intent and provisions of the law. The Appellant
therein was also obliged to withdraw the appeal
before this Court, which might have had also
impacted the merits of the criminal
proceedings as against them.
21. The above ratio, as laid down by this Court,
would be fully applicable to the case-at-hand,
especially when it is not in dispute that the
Commissioner of Customs (Appeals), Kandla
returned a finding that the Appellant-Company
was not required to pay the CVD on the basis
of MRP, but as per the invoice value. This is in
consonance with the submission of the
Appellant-Company.
On remand to the Assessing Authority for
decision afresh on the liability, it had observed
that the Appellant-Company was entitled to a
refund of INR 1.39 Crores out of the INR
1,51,45,378/- (Rupees One Crore Fifty One
Lakhs Forty Five Thousand and Three
Hundred Seventy Eight only) paid by it to the
Criminal Appeal No. 3216 of 2024 Page 15 of 17
Revenue Authorities as per the demand made
earlier for the purpose of clearance of the
concerned goods. This position is also admitted
by the Respondent-Agency in its Counter
Affidavit dated 19.04.2024. Moreover, the said
Order was never challenged by the Revenue
Authorities, and has, thus, attained finality.
22. Furthermore, the Appellant-Company had
successfully claimed immunity from
prosecution under the CA 1962, CE Act 1944,
and IPC 1860 vide Order dated 21.08.2007. In
such a circumstance, there was no fiscal
liability on the Appellant-Company, and
accordingly, the Order dated 01.08.2010
passed by learned Special Judge, taking
cognizance against the Appellant-Company,
ought not to have sustained. As the very basis
of the allegation of offence against the
Appellant-Company was found to be non-
existent, it would have amounted to misuse
rather abuse of the process of law. It may be
added here that the prosecution sanction as
sought against the officials of KASEZ, who were
Criminal Appeal No. 3216 of 2024 Page 16 of 17
said to have committed the offences under PCA
1988, stood declined. In the light of this
additional fact, the application for discharge,
as moved by the Appellant-Company, ought to
have been accepted by the learned Special
Judge.
23. In light of the above, the present Appeal is
allowed. The proceedings against the
Appellant-Company are quashed by setting
aside the Impugned Order dated 15.09.2023
passed by the High Court of Gujarat in CRA No.
783 of 2017 and the Order dated 01.06.2010
passed by the Special Judge in RC6(A)/2005.
24. Pending applications, if any, stand disposed of.
….………………………………. J.
(ABHAY S. OKA)
……………………………………J.
(AUGUSTINE GEORGE MASIH)
NEW DELHI;
SEPTEMBER 06, 2024.
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