Bombay High Court
M/S.Textoplast Industries & Anr vs Additional Commissioner Of Customs on 6 July, 2011
Author: D.Y.Chandrachud
Bench: D.Y.Chandrachud, Anoop V. Mohta
VBC 1 cuapp29.04-6.7
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O. O. C. J.
CUSTOMS APPEAL NO.29 OF 2004
M/s.Textoplast Industries & Anr. ...Appellants.
Vs.
Additional Commissioner of Customs. ...Respondent.
....
Mr.Sushanth Murthy with Mr.Vikram Nankani i/b. Mr.Naresh
S.Thacker for the Appellants.
Mr.R.V.Desai, Senior Advocate with Mr.Jitendra B.Sharma for the
Respondent.
.....
CORAM : DR.D.Y.CHANDRACHUD AND
ANOOP V. MOHTA, JJ.
July 6, 2011.
ORAL JUDGMENT (PER DR.D.Y.CHANDRACHUD, J.) :
This appeal under Section 130 of the Customs Act, 1962, arises out of an order of the Customs, Excise and Service Tax Appellate Tribunal dated 12 February 2004. The Tribunal, while confirming the findings of fact against the Appellants, reduced the penalty to an amount of Rs.25 lakhs on the First Appellant which is a partnership firm and Rs.5 lakhs on the Second Appellant, who is one of its two partners. A penalty of Rs.5 lakhs was also imposed on the second partner, who is a party to the companion Customs Appeal 30 of 2004. The appeal is admitted on the following ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 2 cuapp29.04-6.7 substantial questions of law:
A. Whether in view of the findings by the Collector of Customs, Ahmedabad, in his order dated 16/11/1989, imposition of penalty on the Appellant amounts to double jeopardy;
B. Whether imposition of a penalty on the partnership firm as well as on the partners under Section 112 of the said Act is permissible and justified.
2. The First Appellant who was registered as a hundred percent export oriented unit for the manufacture of designated polyester films imported a consignment of 37,852 kgs. between May 1985 and June 1987. It is alleged that a search on 15 October 1989 revealed a shortage of 31,042 kgs. of Polyester film which had been removed from the premises. A notice to show cause was issued to the Appellants on 7 April 1988. Upon adjudication, the Additional Collector of Central Excise, Surat, by an order dated 29 November 1991 imposed a penalty of Rs.1.25 crores on the partnership firm and a penalty of Rs.25 lakhs on the Second Appellant. In appeal, the Tribunal reduced the penalty on the firm to Rs.25 lakhs and upon the Second Appellant, its partner, to Rs.5 lakhs.
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3. The submission which has been urged before the Court is that a partnership firm has no existence in law and is not a juristic entity. Hence, there would be no occasion to levy a penalty on the firm. Alternatively, it was urged that once the firm has been penalized, there would be no occasion in law to impose a penalty upon adjudication upon a partner of the firm. In support of the submission, reliance has been placed on a judgment of a Division Bench of the Gujarat High Court in Collector of Central Excise and Customs, Surat II vs. Mohammed Farookh Mohammed Ghani,1 and a judgment of a Division Bench of this Court in Commissioner of Customs vs. Jupiter Exports.2
4. On the other hand, it has been urged on behalf of the Revenue that: (i) Both, the judgment of the Division Bench of this Court as well as the judgment of the Gujarat High Court, have not noted the decision of the Supreme Court in Standard Chartered Bank vs. Directorate of Enforcement;3 (ii) In view of the law laid down by the Supreme Court, the expression "offence" means the 1 2010(259) E.L.T. 179 (Guj) 2 2007(213) E.L.T. 641 (Bom.) 3 2006 (197) E.L.T. 18 (S.C.) ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 4 cuapp29.04-6.7 commission of an act contrary to or forbidden by law and is not confined only to the commission of a crime; (iii) There is no reason to confine the provisions of Section 140 of the Customs Act, 1962 only to a criminal prosecution and to exclude a firm from the purview of the provisions in the matter of a penalty; and (iv) Both, a partnership firm and its partners are liable to be proceeded with for the purposes of adjudication even independently under the relevant provisions of the Customs Act, 1962, including Section 112.
5. Chapter XIV of the Customs Act, 1962 makes provisions for confiscation of goods and for the imposition of penalties.
Section 111 provides for confiscation of goods brought from a place outside India, in any of the eventualities which are specified in clauses (a) to (p). In the present case, the notice to show cause was for confiscation under Clauses (d), (j), (o) and (p) of Section 111.
The contravention in clauses (d), (j), (o) and (p) is thus:
"(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission;::: Downloaded on - 09/06/2013 17:27:27 :::
VBC 5 cuapp29.04-6.7
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;
(p) any notified goods in relation to which any provisions of Chapter IV-A or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened."
Section 112 provides for a penalty upon any person, who, in relation to any goods, does or omits to do any act which act would render such goods liable to confiscation under Section 111 or abets the doing or omission of such an act, or who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111.
Section 113 provides for confiscation of export goods in certain eventualities, while Section 114 provides for a penalty upon any person who, does or omits to do any act which would render the goods liable to confiscation under Section 113. Under Section ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 6 cuapp29.04-6.7 114A, a penalty can be levied for short-levy or non-levy of duty in certain cases. The penalty under Section 114A is imposed on the person who is liable to pay the duty or interest, as the case may be.
Under section 114AA a penalty is imposed for the use of false and incorrect material. A penalty is provided in Section 116 for not accounting for goods. Section 117 provides for a penalty upon any person who contravenes any provision of the Act or abets any such contravention or who fails to comply with any provision of the Act which it was his duty to comply, where no express penalty is elsewhere provided for such contravention.
6. Chapter XIV enunciates penalties in respect of specific contraventions, on the one hand. On the other, a residuary provision is made in Section 117 by which a penalty can be imposed for the contravention of any other provision of the Act upon a person who is under an obligation for compliance, where no penalty is expressly provided in the Act. The emphasis in all these provisions is upon a contravention of the Act, whether it be a provision which is specifically adverted to as in the case of Sections 112, 114, 114A, 114AA or 116 or of any other provisions in which ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 7 cuapp29.04-6.7 there is an obligation for compliance. A breach of the obligation to comply attracts a penalty. The penalty is imposed for contravention. The provisions of the Act relating to the imposition of a penalty provide in each case, the person upon whom a penalty can be imposed. For instance, in Section 112, a penalty can be imposed on any person - such a person being one who has committed a contravention as set out in clauses (a) and (b). Clause
(a) relates to the commission of an act or an omission to do something in relation to the goods which renders them liable for confiscation. Clause (b) deals with acquiring possession of or being concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling, purchasing or dealing in any manner with goods which a person knows or has reason to believe are liable to confiscation under Section 111. In Section 114A, a penalty for short levy or non-levy of duty is imposed on a person who is liable to pay duty or interest.
7. The Act provides for an adjudicatory mechanism before an order of confiscation or penalty can be passed. The adjudicatory mechanism inter alia enunciates the authorities who ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 8 cuapp29.04-6.7 can adjudicate under Section 122, a procedure for adjudication in Section 122A consistent with the principles of natural justice, the burden of proof in Section 123 and for the issuance of a notice to show cause and a reasonable opportunity of being heard in Section
124. Section 124 which provides for the issuance of a notice to show cause, directs the adjudicating officer to grant an opportunity to the owner of the goods or such person. The adjudicatory mechanism is not confined only to a proceeding against the owner of the goods, but extends to other persons upon whom an obligation of compliance is imposed by the provisions of the Act and who are accountable for a breach or infraction of the provisions.
8. A bill of entry for home consumption has to be filed under Section 46 by the importer of goods. The expression "importer" is defined in Section 2(26) in relation to any goods at any time between their importation and the time when they are cleared for home consumption, to include any owner or any person holding himself out to be the importer. Under sub-section (4), such an importer while presenting a bill of entry has to subscribe ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 9 cuapp29.04-6.7 to a declaration as to the truth of the contents of the bill of entry.
Clearance of the goods for home consumption is envisaged in sub-
section (1) of Section 47 where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under the Act. A partnership firm, when it holds itself out to be the owner or is reflected in the documents of title to be the owner lodges a bill of entry for home consumption. As the importer, it seeks the benefit of clearance for home consumption. Being the owner, or in any event, holding itself out as owner, it is under an obligation to comply with the obligations imposed by the Act.
9. The Act in its diverse provisions imposes an obligation for compliance. A breach or contravention of its provisions would lead to a situation in which the adjudicatory procedure can be set in motion for the imposition of a penalty. The Act provides not only for the imposition of penalties as part of an adjudicatory mechanism, but also envisages the initiation of criminal prosecutions for breach of its provisions. But what is significant is ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 10 cuapp29.04-6.7 that essentially both in matters relating to the imposition of a penalty as well as in the initiation and pursuit of a criminal prosecution, it is the breach or the contravention of the provisions of the Act which attracts the adjudicatory mechanism on the one hand and a criminal prosecution on the other. Chapter XVI of the Act deals with offences and prosecutions. Section 135 stipulates that without prejudice to any action that may be taken under the Act, if any person is involved in an activity of the description falling in clauses (a) to (d), he shall be punished in the manner that is indicated therein. Clauses (a) to (d) of sub-section (1) of Section 135 are as follows :
"(1) Without prejudice to any action that may be taken under this Act, if any person -
(a) is in relation to any goods in any way knowingly concerned in misdeclaration of value or in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the time being imposed under this Act or any other law for the time being in force with respect to such goods; or
(b) acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 or section 113, as the case may be; or ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 11 cuapp29.04-6.7
(c) attempts to export any goods which he knows or has reason to believe are liable to confiscation under section 113; or
(d) fraudulently avails of or attempts to avail of drawback or any exemption from duty provided under this Act in connection with export of goods."
Section 140 provides for offences by Companies and is to the following effect:
"140. Offences by companies, - (1) If the person committing an offence under this Chapter is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub- section shall render any such person liable to such punishment provided in this Chapter if he proves that the offence was committed without his knowledge or he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Chapter has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 12 cuapp29.04-6.7 punished accordingly.
Explanation.- For the purposes of this section,-
(a) "company" means a body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm."
Sub-section (1) of Section 140 creates a deeming fiction by which, where a person committing an offence under the Chapter is a Company, every person who, at the time of the commission of the offence was in charge of, and was responsible to the Company for the conduct of the business of the Company, as well as the Company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. However, by the proviso, a locus is granted to the person concerned to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. Under sub-section (2), which is prefaced by a non-
obstante clause, it has been enunciated that where an offence under the Chapter has been committed by a Company and it is proved that it has been committed with the consent or connivance ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 13 cuapp29.04-6.7 of, or is attributable to any negligence on the part of any one of the officers named therein, such other person shall be deemed to be guilty of the offence. The explanation to Section 140 has further expanded the scope of the provision by bringing within the purview of the expression "Company", a firm or an association of individuals. Similarly, the ambit of the expression "director" has been expanded to mean in relation to a firm, a partner of the firm.
10. The submission, however, that has been urged on behalf of the Appellants is that the deeming provision of Section 140 is available in respect of an offence under the Chapter and cannot be utilized in adjudication proceedings under the Act. In support of the submission, Counsel relied upon the words "if the person committing an offence under this Chapter is a Company" as well as the expression "shall be liable to be proceeded against and punished accordingly". On the other hand, on behalf of the Revenue reliance has been placed on the judgment of the Supreme Court in Standard Chartered Bank vs. Directorate of Enforcement (supra).
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11. In order to appreciate the rival submissions, it would be necessary to turn to the judgment of the Supreme Court in Standard Chartered Bank. The Supreme Court in the course of its judgment had to construe the provisions of the legislative scheme under the Foreign Exchange Regulation Act, 1973. The appeal emanated from a judgment of this Court in which a Division Bench had held that the deeming fiction which was created by Section 68 was available only in respect of offences by a Company and that the provisions could not be invoked for the levy of a penalty in pursuance of adjudicating proceedings. A Division Bench of this Court had taken the view that Section 68 spoke of the officer being proceeded against and punished and this, according to the Court, indicated that it was intended to apply only in respect of a prosecution against a Company and it was only in the case of a prosecution for an offence of a Company that the person indicated therein was liable to be proceeded against and punished.
12. Section 50 of the FERA as it stood at the material time, provided for the imposition of a penalty. Section 56 made provisions for offences and prosecutions. Section 68 provided for ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 15 cuapp29.04-6.7 offences by a Company. Sub-section (1) of Section 68 stipulated that where a person committing a contravention of any of the provisions of the Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and responsible to the company for the conduct of its business as well as the Company would be deemed to be guilty of the contravention and would be liable to be proceeded against and punished. The proviso to sub-
section (1) of Section 68 corresponded to the proviso to sub-section (1) of Section 140 of the Customs Act, 1962. Sub-section (2) of Section 68 of the FERA corresponded to sub-section (2) of Section 140 of the Customs Act, 1962. Section 68 contained an explanation similar to that which is to be found in Section 140 of the Customs Act, 1962. The Supreme Court reversed the view which was taken by the Division Bench of this Court that the deeming fiction which is enunciated by Section 68 of FERA would be available only in respect of a prosecution for an offence and not for the purposes of an adjudication resulting in a penalty.
13. The first important principle which has been laid down ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 16 cuapp29.04-6.7 by the Supreme Court in Standard Chartered is that the essential element both in the case of a criminal prosecution and an adjudication proceeding leading up to the imposition of a penalty is a contravention of the provisions of the Act:
"Both, Section 50 providing for imposition of penalty and Section 56 providing for prosecution, speak of contravention of the provisions of the Act. Contravention is the basic element. The contravention makes a person liable both for penalty and for prosecution. Even though the heading to Section 56 refers to offences and prosecutions, what is made punishable by the Section is the contravention of the provisions of the Act and the prosecution is without prejudice to any award of penalty.
... Section 68 relating to offences by companies, by sub- section (1) introduces a deeming provision that the person who was in charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty along with the company of the contravention of the provisions of the Act and liable to be proceeded against and punished accordingly."
14. The second important principle which emerges from the judgment of the Supreme Court in Standard Chartered is that the expression "offence" is not confined to a criminal wrong doing :
"The proviso, no doubt, indicates that a person liable to punishment could prove that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. Sub-section (2)again speaks only of a contravention of the provisions ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 17 cuapp29.04-6.7 of the Act and the persons referred to in that sub-section are also to be deemed to be guilty of the contravention liable to be proceeded against and punished accordingly.
The word 'offence' is not defined in the Act. According to Concise Oxford English Dictionary, it means, 'an act or instance of offending'. Offend means, 'commit an illegal act' and illegal means, 'contrary to or forbidden by law'. According to New Shorter Oxford English Dictionary, an offence is "a breach of law, rules, duty, propriety, etiquette, an illegal act, a transgression, sin, wrong, misdemeanour, misdeed, fault". Thus, an offence only means the commission of an act contrary to or forbidden by law. It is not confined to the commission of a crime alone. It is an act committed against law or omitted where the law requires it and punishable by it."
15. The third principle which emerges from the judgment in Standard Chartered is that the deeming fiction is not confined to a criminal prosecution but will also extend to an adjudication proceeding as well:
"It is significant to notice that Section 68, both in sub- section (1) and in sub-section (2) uses the expression, shall be liable to be proceeded against and punished accordingly. There does not appear to be any reason to confine the operation of Section 68 only to a prosecution and to exclude its operation from a penalty proceeding under Section 50 of the Act, since the essential ingredient of both is the contravention of the provisions of the Act. A company is liable to be proceeded against under both the provisions. Section 68 is only a provision indicating who all in addition can be proceeded against when the contravention is by a company or who all should or can be roped in, in a contravention by a ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 18 cuapp29.04-6.7 company."
16. Finally, Section 68 was held only to be clarificatory in nature :
"Section 68 only clarifies the nature and mode of proceeding when the contravention of any of the provisions of the Act is by a company, whether it be by way of adjudication to impose a penalty or by way of prosecution leading to imprisonment and a fine."
(emphasis supplied).ig The ratio of the decision of the Supreme Court would indicate the following principles: (i) Both, in the matter of a criminal prosecution and in the imposition of a penalty, following a process of adjudication, the essential basis for the proceeding is a contravention of the provisions of the Act; (ii) The expression "offence" cannot be narrowly confined to a commission of a crime alone, but would comprehend within its purview, the commission of an act which is prohibited by law; (iii) The deeming fiction which is created in the case of an offence by a Company so as to bring within its purview, a person in charge of or responsible for the affairs of the Company as well as its stated officers would apply ::: Downloaded on - 09/06/2013 17:27:27 ::: VBC 19 cuapp29.04-6.7 not only to a criminal prosecution, but to an adjudication as well.
This would in our view necessarily extend to a situation where in terms of the explanation, the 'Company' as defined is a partnership firm. In the case of a partnership firm, the expression 'Director' is extended by the explanation to mean a partner of a firm. The principles which have been enunciated by the Supreme Court were sought to be distinguished, however, on the ground that unlike in the case of the FERA, the Customs Act, 1962 contains a separate Chapter on offences and prosecutions and that hence, the deeming fiction can only be confined for the purposes of prosecutions under the Chapter. Hence, it was urged that where an adjudication proceeding is commenced against a partnership firm, it would not be permissible to impose a penalty both upon a firm and its partner. The submission cannot be accepted. Acceptance of this submission would lead an anomalous situation where, for the purposes of a criminal prosecution, a partner of a partnership firm as well as a person who was in charge of and was responsible for the conduct of the business would be held responsible whereas a much narrower construction would have to be imposed while construing who could be proceeded with for the purposes of an ::: Downloaded on - 09/06/2013 17:27:28 ::: VBC 20 cuapp29.04-6.7 adjudication. There is no logical reason why Parliament would intend to make a stricter provision in the matter of an adjudication leading up to the imposition of a penalty as compared to a proceeding in the nature of a criminal prosecution. Secondly, even as a matter of first principle, we have already analysed the provisions of Chapter XIV of the Customs Act, 1962 dealing with the imposition of a penalty and we see no reason or justification to confine the imposition of a penalty only upon a partnership or its partner. The Customs Act, 1962 is inter alia intended to regulate the levy of the duty of Customs. Obligations for exacting compliance in revenue legislation are cast upon diverse sets of persons or entities. For the purposes of revenue legislation, it is open to the Legislature to cast an obligation for compliance upon, as in this case, an importer or other person. An importer includes a person who is the owner or one who holds himself out as the importer of the goods. As a matter of first principle, there is no reason to exclude the exercise of power by the enacting Legislature to penalise a partnership, particularly when it is consistent with the overall scheme and object of the Act. Moreover, every person who was in charge of and was responsible to the firm for the conduct of ::: Downloaded on - 09/06/2013 17:27:28 ::: VBC 21 cuapp29.04-6.7 the business of the firm, as well as the firm can be proceeded against. Where the contravention has been committed with the consent of or connivance of or is attributable to the negligence of the partner of a partnership firm, such partner can also be proceed against. This legal position emerges from the overall scheme of the Act. Section 140 only constitutes a statutory recognition of the position and is claificatory. For these reasons, we are of the view that the submission which has been sought to be urged on behalf of the Appellants in the present appeal cannot be accepted.
17. While concluding, it would be necessary to advert to a judgment of a Division Bench of this Court in Commissioner of Customs vs. Jupiter Exports.4 In that case, a notice to show cause was issued by the Commissioner of Customs on an allegation of the misuse of the DEEC Scheme by adopting fraudulent means to obtain a higher entitlement in respect of duty free import. The Commissioner of Customs confirmed the duty demanded and imposed penalties on the main partners, who had actively participated in the business of the firm. In appeal, the Tribunal 4 2007 (213) E.L.T. 641 (Bom.) ::: Downloaded on - 09/06/2013 17:27:28 ::: VBC 22 cuapp29.04-6.7 held that the firm was liable to pay duty only to the extent of goods actually imported by it quantified in the amount of Rs. 1.38 lakhs.
As the bulk of the imports were made by bona fide transferees of the licenses obtained and sold by the Petitioner, the Tribunal held that the Petitioner could not be considered to be the importer for the recovery of the duty. An appeal was filed by the Revenue while a Petition was filed by the firm seeking enforcement of the order of the Tribunal. This Court, in the course of its judgment held that "no fault can be found with the view taken by the Tribunal" since "it is now well settled that when partnership is penalized, separate penalties cannot be imposed on the partners". Evidently, the judgment of the Supreme Court in Standard Chartered Bank vs. Directorate of Enforcement,5 was not drawn to the attention of the Court. The observation in regard to the 'well settled position' is with respect contrary to the law laid down by the Supreme Court in the Standard Chartered Bank case. The judgment of the Supreme Court binds us and we hence have followed the position enunciated therein. Similarly, in the case of Collector of Excise and Customs, Surat-II vs. Mohammned Farookh Mohammed Ghani,6 5 2006 (197) E.L.T. 18 (S.C.) 6 2010(259) E.L.T. 179 (Guj.) ::: Downloaded on - 09/06/2013 17:27:28 ::: VBC 23 cuapp29.04-6.7 the Division Bench of the Gujarat High Court relied upon the general principle in the law of partnership that a firm has no legal existence apart from its partners and held that once a penalty was levied on the firm, it amounted to a levy on the partners and hence, there would be no question of penalizing the partners separately. The Gujarat High Court held that the explanation in Section 140 was for the purposes of liability in respect of commission of offences under the Act whereas there was no such corresponding provision in relation to the imposition of a penalty under the Act. The Gujarat High Court has also not considered the principle enunciated by the Supreme Court in the Standard Chartered Bank case. As a matter of fact, in a judgment of the Supreme Court in Prakash Metal Works vs. Collector of Central Excise,7 Hon'ble Mr.Justice S.H.Kapadia (as the Learned Chief Justice then was) speaking for the Supreme Court upheld an order of the Tribunal imposing a penalty on partners of a firm as well as on the partnership firm.
18. For these reasons, we dispose of the appeal by holding 7 2007 (216) E.L.T. 660 (S.C.) ::: Downloaded on - 09/06/2013 17:27:28 ::: VBC 24 cuapp29.04-6.7 that for the purpose of imposing a penalty, the adjudicating authority under the Customs Act, 1962 may in an appropriate case impose a penalty both upon a partnership firm as well as on its partners. Whether the facts and circumstances of a case warrant the imposition of a penalty both on a firm and its partners should be decided upon the facts of each case. On this factual issue, we would remand the proceedings back to the Tribunal for a fresh determination. The appeal shall accordingly stand disposed of in the aforesaid terms. There shall be no order as to costs.
( Dr.D.Y.Chandrachud, J.) ( Anoop V. Mohta, J.) ::: Downloaded on - 09/06/2013 17:27:28 :::