Customs, Excise and Gold Tribunal - Delhi
Kamdeep Marketing Pvt. Ltd. And Ors. vs Cce on 31 December, 2003
Equivalent citations: 2004(91)ECC673, 2004(165)ELT206(TRI-DEL)
JUDGMENT P.G. Chacko, Member (J)
1. All these appeals are against imposition of penalties by the adjudicating authority under Rule 209-A of the erstwhile Central Excise Rules, 1944. The impugned order of the Commissioner of Central Excise has imposed the following penalties on the appellants:
Quantum of penalty On whom imposed Challenged in Appeal No. Rs. 50 lakhs M/s. Kamdeep Marketing Pvt.
ltd., Indore (Noticee No. 3) E/1997/2002 Rs. 25 lakhs Shri Keshavan Nair Authorised Signatory of the above Company (Noticee No. 6) E/1998/2002 Rs. 50,000 Shri Vishal Agarwal, Prop., Vishal Transport Service, Indore (Noticee No. 10) E/1999/2002 Rs. 50,000 Vishal Transport Service, Indore (Noticee No. 9) E/2000/2002 Rs. 50 lakhs M/s. Yash Marketing Co, Indore (Noticee No. 4) E/2458/2002 Rs. 25 lakhs Shri Paras Vora, Yash Marketing Co. Indore (Noticee No. 7) E/2459/2002 Rs. 50,000 Shri Ajit Singh bhatia, Bhatia Agencies, Indore (Noticee No, 8) E/2186/2002 Rs. 50,000 M/s. Bhatia Agencies Indore (Noticee No. 5) E/2518/2002 The finding recorded against M/s. Kamdeep Marketing Pvt. Ltd., and M/s. Yash Marketing Co. is that they "connived with Noticee No. 2 [Managing Director of M/s. Mircroplast (Indore) Pvt. Ltd.] and were responsible for fraudulent availment of Modvat credit by Noticee No. 1 (M/s. Microplast (Indore) Pvt. Ltd., hereinafter referred to as "M/s. Microplast"). The finding against M/s. Bhatia Agencies and Shri Ajit Singh Bhatia is that they dealt with the excisable goods cleared without payment of duty by M/s. Microplast and had reason to believe that the goods were liable to confiscation. As against the other appellants, the Commissioner found that they had acted in furtherance of the act of Noticee No. 2 to facilitate fraudulent availment of Modvat credit by M/s. Microplast. On the basis of these findings, the appellants were held liable to be penalized under Rule 209-A ibid. It may also be, contextually, mentioned that, under the impugned order, M/s. Microplast were denied Modvat credit on PVC resin and chemicals (inputs) (which were held not to have been received and utilized in the manufacture of final product) to the extent of over Rs. 5 crores and were also directed to pay Central Excise duty of over Rs. 13 lakhs on PVC pipes (final product) (which were held to have been clandestinely removed without invoices and without payment of duty). No appeal of M/s. Microplast is before us.
2. Heard Counsel. Shri M. Chandrasekharan, Senior Advocate, representing the appellants in Appeal Nos. 2458 and 2459, argued that a penalty under Rule 209-A could be validly imposed on any person only if it was found, on the basis of reliable evidence, that he had physically dealt with any excisable goods, knowing or believing that the goods were liable to confiscation under the Central Excise Act or Rules. In support, the learned Counsel cited the following decisions of the Tribunal:
(i) S.R. Foils Ltd. v. CCE, 2001 (76) ECC 358 (Tri-Del) : 2001 (138) ELT 719 (Tri-Del)
(ii) Godrej Boyce & Mfg. Co. Ltd. and Ors. v. CCE, 2002 (103) ECR 770 (Tri.)
(iii) A.M. Kulkarni and Ors. v. CCE, 2003 (56) RLT 573 (CEGAT-Mum.)
(iv) Siddarth Agarwal and Ors. v. CCE, 2003 (87) ECC 739 (CEGAT-Del) : 2003 (56) RLT 282 (CECAT-Del)
(v) Ram Nath Singh v. CCE, 2003 (151) ELT 451 (Tri-Del) Learned Counsel submitted that, in the instant case, there was no finding that the appellants had dealt with any excisable goods in the aforesaid manner and, therefore, any penalty was not liable to be imposed on them under Rule 209-A. Shri Paras Vora was a partner of Yash Marketing Co. The Commissioner imposed penalties on both the firm and the partner, which was not permissible in law, according to the learned Counsel, who relied on the Tribunal's decision in B.C. Sharma v. CCE, 2000 (122) ELT 158 (Tri.). Similar arguments were also advanced by the learned advocate Shri A.C. Jain who represented the appellants in appeal Nos. 2186 and 2518. He placed reliance on the following case law:
(i) J. Mtra & Co. Ltd. v. CCE, 2002 (140) ELT 524 (Tri. Del)
(ii) Standard Pencils Pvt. Ltd. v. CCE, 1996 (86) ELT 245 (Tri.)
(iii) Chandrakant H. Sanghvi v. CC, 2000 (121) ELT 788 (Tri.)
(iv) Harish Dye & Ptg. Works v. CCE, 2001 (138) ELT 772 (Tri-Mum) The learned Advocate Shri A.R. Madhav Rao, who appeared for the appellants in appeal Nos. 1997-2000, adopted all the arguments of the Senior Advocate and further submitted that natural justice was denied to his clients by the adjudicating authority inasmuch as it passed the impugned order without giving them any opportunity of being personally heard. The SDR reiterated the findings of the adjudicating authority.
3.1 In appeal Nos. 1997-2000, we note that there is a challenge to the Commissioner's order on the ground of violation of natural justice. It has been stated that, before the appellants could reply to the show-cause notice, the Commissioner passed the order without giving them any hearing. The Commissioner noted in his order that the appellants had neither replied to the show-cause notice nor appeared for personal hearing on 29.10.2001 and 30.10.2001. He also noted that the appellants had not in any way responded to the hearing-notice sent from his office. We find that these observations of the adjudicating authority have not been contested in these appeals and, therefore, the plea of violation of natural justice is not sustainable. No such plea has been raised in the other appeals.
3.2 What remains to be considered in all these appeals is whether the penalties imposed on the appellants are sustainable or not. The penalties are under Rule 209-A which reads:
"Penalty for certain offences:-- Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater."
The sine qua non for a penalty on any person under the above rule is that either he has acquired possession of any excisable goods with the knowledge or belief that the goods are liable to confiscation under the Central Excise Act or Rules or he has been in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or has in any other manner dealt with any excisable goods with such knowledge or belief. Acquisition of possession of goods is, indisputably, a physical act, and so is each of the various ways of dealing with goods, specifically mentioned in the rule. The expression "any other manner" should be understood in accordance with the principle of ejusdem generis and would, then, mean "any other mode of physically dealing with the goods." This position has been recognized in Godrej Boyce & Mfg. Co. (supra) which has been followed in A.M. Kulkarni (supra). The decision in Ram Nath Singh (supra) is also to the same effect. Any person to be penalized under the above rule should also be shown to have been concerned in physically dealing with excisable goods with the knowledge or belief that the goods are liable to confiscation under the Act/Rules. He should have done the act with means rea. We have held so in S.R. Foils (supra) and J. Mitra & Co. (supra). The decision in Standard Pencils (supra) is also to the same effect. In the instant case, neither of the essential ingredients of offence under Rule 209A has been shown to exist. We have already noted [vide para (1) of this order] the Commissioner's findings against these appellants. The findings are contained in para 82 of the impugned order, which is reproduced below:
"From above it is also evident that the Noticee No. 2, Shri B.K. Bhattar, Managing Director of the unit had knowingly and wilfully engaged himself in the clandestine manufacture, clearance of the goods, falsification of accounts and fraudulent availment of Modvat credit, hence, a different penalty is warranted against him. The Noticee No. 3 and 4 are Registered Dealers. They had connived with the Noticee No. 2 and were responsible for fraudulent availment of Modvat credit by the Noticee No. 1. The Noticee No. 5 and 8 had dealt with the excisable goods cleared by the Noticee No. 1 without payment of duty. They had reason to believe that the goods are liable for confiscation. The Noticee No. 6, 7, 9 and 10 had also acted in manner of furtherance of the act of Noticee No. 2 to facilitate the Noticee No. 1 in fraudulent availment of Modvat credit, therefore all the Noticee No. 2 to 10 have rendered themselves liable for penal action under Rule 209A of the Central Excise Rules, 1944."
The above findings of the learned Commissioner do not come anywhere near satisfying the essential requisites for penalty under Rule 209A. There is no finding that the appellants had dealt with any excisable goods in any manner specified or contemplated under Rule 209A, let alone any finding of mens rea.
3.3 As regards the penalties imposed on Paras Vora and Ajit Singh Bhatia as partners of the respective firms, these penalties were imposed in addition to the like penalties imposed on the firm and hence, cannot be sustained in view of the settled law on the point vide B.C. Sharma (supra), Chandrakant Sanghvi (supra) and Harish Dye & Ptg. Works (supra). The same is the case with the penalty imposed on Vishal Agarwal in addition to that imposed on his proprietorship viz, Vishal Transport Service.
4. In the light of our findings, we set aside the penalties imposed on the appellants and allow these appeals.