Custom, Excise & Service Tax Tribunal
Shri Motilal Gupta vs Commissioner Of Central Excise, ... on 27 April, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/400 to 405 & 565/11 (Arising out of Order-in-Appeal No. SB/02/Thane-I/2011 dated 3.1.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai-I). For approval and signature: Honble Shri Raju, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== Shri Motilal Gupta Shri Gopal Joshi Mohd. Yaseen Nihal Ahmed alias Yaseen S.T. Shri Vinod Todi Shri Maheshkumar U Mour Shri Paresh Suresh Chhabra Shri Siddharth J Patani Appellants Vs. Commissioner of Central Excise, Thane-I Respondent Appearance: Shri Susanth Murthy, Advocate for Appellant Shri N.N. Prabhudesai, Supdt. (AR) for Respondent CORAM: SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 05.01.2016 Date of Decision: 27.04.2016 ORDER NO. Per: Raju
The appellants were also noticees in a case booked against Pratima Syntex, Thane. A show-cause notice demanding duty and for penalties against Pratima Syntex was issued. Notice for penalty against these appellants was also issued for their role. M/s Pratima Syntex approached Settlement Commission and Settlement Commission vide order dated 21.1.2008 finally settled the case. Later in respect of various other noticees, i.e. these appellants, the matter was adjudicated and proceedings were dropped by the original adjudicating authority on the grounds that the proceedings against the appellants cannot continue in view of the settlement of the case by the main noticee. Revenue challenged the said decision before the Commissioner (A) who reversed the order and penalties were imposed on these appellants. Aggrieved by the imposition of penalty, they are in appeal before the Tribunal.
2. Learned Counsel for the appellant argued the matter on two issues: -
(i) Once the case against main noticees is settled in Settlement Commission, he argued that, a case against all other noticees stands settled.
(ii) Since there is no confiscation of goods, no penalty under Rule 26 of the Central Excise Rules can be imposed.
2.1 Learned Counsel argued that the first issue stands settled in the Larger Benchs decision in case of S.K. Colombowala Vs. Commissioner of Customs (Import), Mumbai 2007 (220) ELT 492 (Tri-Mum). He pointed out that in the said decision, the Tribunal has held as follows: -
(c) The case against all co-noticees comes to an end once the order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission and therefore, penalty imposed upon the appellants cannot be sustained and is set aside. He further argued that the said decision has been followed in the case of Virender Bansal Vs. Commissioner of Customs (ICD), New Delhi 2015 (317) ELT 796 (Tri-Del). He also relied on the decision of the Tribunal in case of Radiant Silk Mills (P) Ltd. Vs. Commissioner of Customs & Central Excise, Jaipur 2013 (288) ELT 311 (Tri-Del), wherein it has been held as follows: -
12.?I have looked into the said decision of the Honble Supreme Court in the case of S.P. Chengalvaraya Naidu. On going through the entire judgment, I find that the same was in respect of judgment or decree obtained by fraud and without disclosing the factual position. The Honble Court observed that decree obtained by non-disclosure of the release deed amounted to fraud on Court and hence decree liable to be set aside. The facts of the said decision of the Honble Supreme Court are entirely different from the facts of the instant case or the facts available in the case of S.K. Colombowala. The proceedings are under the Central Excise Act as regards imposition of penalty in terms of Rule 26 of Central Excise Rules. The question of obtaining any decree or order by mis-representing the facts of the case or by fraudulently representing the case, as was the case before the Honble Supreme Court, are not involved in the present appeal. While delivering the majority judgment, the majority Members have relied upon the decision of the Honble Supreme Court as also of the Tribunal, which were pari materia on facts and in law and analysed the provisions of Section 127. As such, it cannot be said that majority order, which stand passed in precedent decision involving identical facts and law is not required to be followed as the same has not taken into consideration the Supreme Court judgment in the case of S.P. Chengalvaraya Naidu. The said judgment of the Honble Supreme Court was in altogether different facts and circumstances and under different provisions of law. He argued that there are plethora of judgments in which the decision of the Tribunal in the case of S.K. Colombowala (supra) was followed in similar circumstances. He further argued that there was no confiscation order and therefore, question of imposing penalty under rule 26 does not arise. For this purpose, he relied on the decision of the Tribunal in the case of Sharda Synthetics Ltd. Vs. Commissioner of Central Excise, Raigad 2014 (314) ELT 411.
2. Learned AR relies on the impugned order. He argued that the decision of the Tribunal in case of S.K. Colombowala (supra) has not considered the decision of Hon'ble Supreme Court in the case of S.P. Chengalvaraya Naidu Vs. Jagannath 1994 (1) SCC (1). For this purpose, he relied on the decision of the tribunal in case of K I International 2012 (282) E.L.T. 67 (Tri. - Chennai). He however conceded that the said decision of the Tribunal has been stayed by the Hon'ble Bombay High Court. He further argued that the provisions of KVS scheme are similar to the provisions of Settlement Commission, in so far as the finality of the proceedings is concerned. He pointed out that the Section 90(3) of the Finance Act, 1998 (No. 2) in which the KVS Scheme was introduced reads as under: -
(3). Every order passed under sub-section (1), determining the sum payable under this Scheme, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceedings under the direct tax enactment or indirect tax enactment or under any other law for the time being in force. He pointed out that section 32M of the Central Excise Act is the same as reads as under: -
SECTION 32M.?Order of settlement to be conclusive. Every order of settlement passed under sub-section [(5)] of section 32F shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. He argued that in the case of Yogesh Korani Vs Union of India 2003 (159) ELT 3 (Bom), while examining similar issue under KVSS, the Hon'ble Bombay High Court has observed as follows: -
11. As regards the first submission, we entirely agree with Mr. Bulchandani that ordinarily when a declaration made by the main noticee, under K.V.S.S. is accepted, the proceeding against all the co-noticees will abate. But the question that arises for our consideration in the present case is, when the order in original is a composite order and the liability fastened upon the principal noticee and the co-noticees are based on separate, distinct and independent causes of action and the principle noticee settles only part of the tax arrears arising out of composite order, then whether the benefit of K.V.S.S. granted to the principal noticee will be available to the co-noticee ? In other words, the question to be considered is in a composite order, where the liability of the main noticee and the co-noticee arise under two independent causes of action and the main noticee settles the dispute under one cause of action, then whether the co-noticee, who is penalised for the other cause of action for which there is no settlement of tax arrears can claim immunity on the basis of declaration made by the main noticee ? He argued that the decision of Hon'ble Bombay High Court has been upheld by the Hon'ble Supreme Court as reported in 2004 (163) ELT A50 (SC). He argued that the decision of the Tribunal in case of S.K. Colombowala (supra) has not considered the decision of Hon'ble High Court in the case of Yogesh Korani (supra). He further argued that penalty can be imposed even in case where there is no confiscation. In this regard, he relied on the following decision: -
(i) Amex Alloys Pvt. Ltd. Vs. Commissioner of Central Excise 2013 (296) ELT 229 (Tri-Chennai)
(ii) Sanjay Vimalbhai Deora Vs. CESTAT 2014 (306) ELT 533 (Guj).
(iii) Commissioner of Central Excise, Ahmedabad Vs. Navneet Agarwal 2012 (276) ELT 515 (Tri-Ahmd).
4. I have considered the rival submissions. I find that learned Counsel for the appellants has primarily relied on the decisions of S.K. Colombowala (supra). In the said decision, there was a difference of opinion between Member (Judicial) and Member (Technical) and the matter was referred to third Member. The following questions were referred to the third Member: -
13. Whether the provisions relating to Settlement of cases under the Customs Act can be considered to be identical to Kar Vivadh Samadhan Scheme justifying invocation of case laws under the Kar Vivadh Samadhan Scheme?
14. Whether M/s. Amrit Laxmi Machine Works and its Director played main role in the fraud or the others, namely, Shri Manharlal H. Vora, Mr. Ashwin Shantilal Mehta, Nippon Bearing Pvt. Ltd., Shalin Bearings Corporation are the main persons in the crime?
15. Whether treating the appellants as mere co-noticees waiver of penalty should be granted on the ground that M/s. Amrit Laxmi Machine Works and its Director have obtained immunity from penalty by the order of the Settlement Commission.
16. Whether order proposed by ld. Member (Judicial) or Member (Technical) should be endorsed?
The said questions were answered in following manner: -
26. The points of difference are therefore, are answered as under : -
(a) While the provisions of KVS Scheme and those relating to settlement of cases under the Customs Act are not completely identical, the underlying objective in both the scheme is similar and it is for this reason that the case laws in respect of cases under KVSS including in the case of Onkar S. Kanwar do not become entirely irrelevant.
(b) The question as to who played the main role is irrelevant for the reason that once the case is settled by the Settlement Commission, it is settled in its entirety and such a case then cannot be adjudicated qua other co-noticees.
(c) The case against all co-noticees comes to an end once the order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission and therefore, penalty imposed upon the appellants cannot be sustained and is set aside.
(d)?The order proposed by the ld. Member (Judicial) is endorsed. 4.1 The learned Counsel has relied on sub-para (c) of para 26, wherein it has been held that once the order of Settlement Commission is passed in respect of person entitled to file an application before the Settlement Commission, the case against all other noticees come to an end. It is seen that the decision was given relying on the decision of Honble Supreme Court in the UOI of India v. Onkar S. Kanwar [2002 (145) E.L.T. 266 (S.C.)] which was passed in the case of KVSS scheme. However the bench was not appraised of the order of the Hon High Court of Mumbai in the case of Yogesh Korani Vs Union of India 2003 (159) ELT 3 (Bom) which has been upheld by Hon Supreme Court as reported in 2004 (163) ELT A50 (SC).
4.2 The Larger Bench of Tribunal in case of S.K. Colombowala (supra) has held that the
(a) While the provisions of KVS Scheme and those relating to settlement of cases under the Customs Act are not completely identical, the underlying objective in both the scheme is similar and it is for this reason that the case laws in respect of cases under KVSS including in the case of Onkar S. Kanwar do not become entirely irrelevant.
It is seen that Section 90(3) of the Finance Act, 1998 (No. 2) in which the KVS Scheme was introduced reads as under: -
(3). Every order passed under sub-section (1), determining the sum payable under this Scheme, shall be conclusive as to the matters stated therein and no matter covered by such order shall be reopened in any other proceedings under the direct tax enactment or indirect tax enactment or under any other law for the time being in force. Section 127J, which is the provision in Customs Act dealing reads as follows: -
Section 127J. Order of settlement to be conclusive. - Every order of settlement passed under sub-section (7) of section 127C shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. The provisions regarding conclusion of proceedings in the KVSS scheme are almost identical to those for Settlement. In the case of S.K. Colombowala (supra) it is seen that the decision was given relying on the decision of Honble Supreme Court in the UOI of India v. Onkar S. Kanwar [2002 (145) E.L.T. 266 (S.C.)] which was given in reference to KVSS scheme. Thus it is reasonable to place reliance on the case of Yogesh Korani (supra) which was also passed in the case of KVSS scheme. However it is seen that the Tribunal at the time of passing the aforesaid decision did not consider the decision of Hon'ble High Court in the case of Yogesh Korani (supra) which was upheld by Hon Supreme Court as reported in 2004 (163) ELT A50 (SC). The issue being dealt with in the said case, like in case of Onkar S. Kanwar (Supra), was interpretation of the provision of the KVSS scheme regarding conclusion of proceedings.
4.3 The decision of Hon Supreme Court in case of Yogesh Korani (supra) has been given after considering the decision of Hon Supreme Court in case of Onkar S. Kanwar (Supra). In the case of Yogesh Korani (supra) Hon High Court has observed as under.
11. As regards the first submission, we entirely agree with Mr. Bulchandani that ordinarily when a declaration made by the main noticee, under K.V.S.S. is accepted, the proceeding against all the co-noticees will abate. But the question that arises for our consideration in the present case is, when the order in original is a composite order and the liability fastened upon the principal noticee and the co-noticees are based on separate, distinct and independent causes of action and the principle noticee settles only part of the tax arrears arising out of composite order, then whether the benefit of K.V.S.S. granted to the principal noticee will be available to the co-noticee ? In other words, the question to be considered is in a composite order, where the liability of the main noticee and the co-noticee arise under two independent causes of action and the main noticee settles the dispute under one cause of action, then whether the co-noticee, who is penalised for the other cause of action for which there is no settlement of tax arrears can claim immunity on the basis of declaration made by the main noticee ?
The decision of Hon'ble Bombay High Court in the case of Yogesh Korani (supra) has been maintained in Hon Supreme Court as reported in 2004 (163) E.L.T. A50 (S.C.) 4.4 It is seen that in the case of MODEST SHIPPING (AGENCY) PVT. LTD 2004 (167) E.L.T. 25 (Bom.) the Hon High Court of Mumbai had the occasion to examine a case after considering the law laid down in both the earlier decisions
i) Yogesh Korani v. U.O.I. 2003 (159) E.L.T. 3 (Bom.) which was approved by Hon Supreme Court on 21.7.2003
ii) U.O.I. v. Onkar S. Kanwar 2002 (145) E.L.T. 266 (S.C.) The facts of the case in Modest Shipping were as follows
2.?The facts relevant to the present case are that some time in February, 1989, a rig ED-HOLT imported by M/s. Jindals arrived at Bombay. The said rig was imported by M/s. Jindals pursuant to a contract awarded to them by ONGC for charter of a Jack up rig called ED-HOLT. On arrival of the rig, the petitioners, as agents of M/s. Jindals filed Import General Manifest (IGM for short) on 2nd February, 1989. In the IGM, the rig was not declared as goods and the declaration made by them was as follows :-
M.V. Nand Cauveri on tow ED-HOLT for Bombay High.
As a result of the above declaration, the rig was allowed to be cleared without payment of customs duty. However, on 27th June, 1989 the petitioners on instructions from M/s. Jindals amended the IGM by adding an additional entry and thereupon a Bill of Entry was filed seeking clearance of the rig.
3.?On 27th January, 1994 a show cause notice was issued to M/s. Jindals by the Customs authorities calling upon them to show cause as to why the rig should not be confiscated and penalty imposed. On 7th March, 1994 a corrigendum was issued to the said show cause notice increasing the amount of duty payable by M/s. Jindals. On 27th June, 1994 an addendum to the show cause notice was served upon the petitioners for the first time asking them to submit their reply. Accordingly, petitioners filed a preliminary reply to the said show cause notice.
4.?By a common order dated 31st August, 1994, the Customs Department imposed penalty under Section 112(a) and (b) of the Customs Act, 1962, levying penalty of Rs. 20 crores on M/s. Jindals in addition to payment of duty of Rs. 35,92,14,466/-. By the said order, penalty of Rs. 5 crores was levied upon the petitioners. The petitioners as well as M/s. Jindals filed appeals against the said order-in-original, but the same were dismissed by CEGAT on 4th December, 1998 [2001 (138) E.L.T. 1335 (Tri.)]. The petitioners thereupon filed Civil Appeal before the Honble Supreme Court against the order passed by the CEGAT. During the pendency of the Civil Appeal filed before the Supreme Court, it was noticed that the importers namely M/s. Jindals had filed a declaration under KVSS and the same has been accepted by the Customs authorities. In view of the acceptance of the declaration by M/s. Jindals, the appeal filed by the petitioners were allowed to be withdrawn with liberty to the petitioners to make representation before the appropriate authorities. Accordingly, petitioners on 14th February, 2000 made a representation to the Customs authorities stating that in view of the acceptance of the declaration filed by M/s. Jindals, immunity be granted to the petitioners from payment of penalty. The representation made by the petitioners was rejected by the Deputy Commissioner of Customs on 12th March, 2000. Hence the present petition.
5.?Mr. Rebello, learned Counsel for the petitioners submitted that in the present case the petitioners were acting as agents of M/s. Jindals and had filed the IGM as per the instructions given to them by M/s. Jindals. Subsequently, at the instance of M/s. Jindals, the IGM was amended. Misdeclaration, if any, in the IGM was at the instance of M/s. Jindals. By a common order dated 31st August, 1994, penalty was levied upon the petitioners as well as M/s. Jindals under Section 112(a) and (b) of the Customs Act, 1962. It was submitted that M/s. Jindals were the main noticee under the show cause notice and the petitioners were co-noticees. It was submitted that if the penalty levied upon the principal noticee namely, M/s. Jindal is accepted under KVSS, the petitioners being co-noticees are absolved of all the liabilities fastened upon the petitioners under the common order dated 31st August, 1994. The Counsel for petitioners relied upon the judgment of the Apex Court in the case of Union of India & Ors. v. Onkar S. Kanwar & Ors. reported in [2002 (145) E.L.T. 266 (S.C.) = 258 I.T.R. 761 S.C.] and submitted that in view of the said decision which is squarely applicable to the present case, no penalty can be recovered from the petitioners.
The Hon High court distinguished the facts of the case from the facts in the case of Yogesh Korani (supra) on following grounds
10.?The decision of the Apex Court in the case of Onkar S. Kanwar (supra) is squarely applicable to the present case and in view of the acceptance of the declaration of M/s. Jindals, no penalty can be recovered from the petitioners. The decision of this Court in the case of Yogesh Korani (supra) is distinguishable on facts as in that the main noticee had not paid tax arrears payable in respect of clove bud oil and that the liability of the co-noticee arose from different act than that of the principal noticee. In the present case, we have held that the liability of the principal noticee (M/s. Jindals) and the co-noticee (petitioners) flow from the same act and hence the decision of the Apex Court in the case of Onkar S. Kanwar (supra) squarely applies to the facts of the present case.
It can be seen that the Hon High court has clearly held that if the liability of the co-noticees arise from same act they will get immunity from further proceeding in terms of the decision in case of Onkar S. Kanwar (supra), however, if the liability of the co-noticees arise from different act they will not get immunity from further proceeding in terms of decision in case of Yogesh Korani (supra).
4.5 In the case of Onkar S. Kanwar (supra), the notice was issued to the company and its directors and officers. Thus the directors and officers were granted immunity after the company succeeded under KVSS. In case of Yogesh Korani (supra) the notices were issued to the company and the buyers of the licence, who happened to be outsiders. In case of Modest Shipping (Supra) the co-noticee was the agent of the importer and they filed the wrong declaration in order to clear the goods. It is seen that where a co-noticee acts as an employee of agent of the main notice, he gets the immunity but if he acts on his own he does not get the immunity.
4.6 In the instant notice the facts are similar to those in case of Yogesh Korani Vs Union of India 2003 (159) ELT 3 (Bom). (supra) in so far as duty has been demanded from the manufacturer but penalty is sought to be imposed on the brokers involved in sale of impugned goods. The facts of the case of Yogesh Korani Vs Union of India 2003 (159) ELT 3 (Bom) were similar to the current case. In the said case the facts are as follows: -
4. M/s. Choice Laboratories, a Partnership firm had obtained two advance licences from the Licensing authority which permitted them to import specified quantity of raw materials duty free with the corresponding export obligation. The said licences were with actual user conditions and could not be sold to third parties and the duty free goods imported under the said licences were required to be used in the manufacture of export items. Investigations carried out by the Customs Authorities revealed that M/s. Choice Laboratories had illegally sold glycerine and Sodium Lauryl Sulphate (SLS) imported and cleared without payment of duty under the aforesaid advance licences in the open market, to various parties. The investigation carried out by the Customs Authorities further revealed that one such advance licence obtained by M/s. Choice Laboratories was sold to the Petitioner on 25% premium and thereafter 1998 kgs of peppermint oil was cleared duty free on the basis of the aforesaid advance licence and sold to third parties. It was also noticed that the Petitioner had sold the said advance licence to M/s. Ratilal Hemraj for a premium of 35% and a consignment of 2.22 M.Ts. of Clove Bud oil was cleared duty free on the basis of the said advance licence and sold to M/s. Colgate Palmolive Ltd. During the course of investigation, statement of various persons, including the Petitioner were recorded u/s. 108 of the Customs Act, 1962 (Act for short) and all the aforesaid goods cleared duty free were seized in the hands of the respective parties.
5. Thereafter, a show cause notice dated 14th February, 1984 was issued against M/s. Choice Laboratories and several others, including the Petitioner herein, calling upon them to show cause as to why :
(i) Seized 108 MT. of glycerene and 7.2 M.Ts. of S.L.S. sold by M/s. Choice Laboratories to different parties in the open marked should not be confiscated.
(ii) Seized 13 drums of peppermint oil, weighing 1998 kgs. and Clove Bud Oil, weighing 2.220 MT. imported and cleared duty free on the basis of fabricated documents should not be confiscated.
(iii) Penalty should not be imposed on each of them.
6. After hearing the parties, the order in original was passed by the Commissioner of Customs on 11th September, 1995 ordering the confiscation of seized 108 M.Ts. of glycerine, 7.2 M.Ts. S.L.S., 2.2 M.Ts. of Clove Bud Oil and 1998 kgs. of pepperment oil. The Commissioner of Customs further ordered recovery of customs duty on those confiscated goods. The Commissioner of Customs also levied penalty of Rs. 5,00,000/- on M/s. Choice Laboratories, Rs. 1,00,000/- on M/s. Fresh Laboratories, Rs. 1,00,000/- towards fine in lieu of confiscation and penalty of Rs. 1,00,000/- on M/s. Ratilal Hemraj. The Commissioner of Customs also imposed heavy penalty of Rs. 15,00,000/- on the Petitioner u/s. 112(a) & (b) of the Customs Act considering the fact that the Petitioners was the central figure in all these transactions and that he was concerned with import of goods valued at approximately Twenty-five lakhs on the basis of fraudulent documents.
7. Being aggrieved by the aforesaid order, all the four parties, namely; M/s. Choice Laboratories, M/s. Fresh Laboratories, M/s. Ratilal Hemraj and the Petitioner herein filed appeals before CEGAT, Mumbai. During the pendency of said appeal before CEGAT, M/s. Choice Laboratories filed declaration under Kar Vivad Samadhan Scheme, 1998 (K.V.S.S. in short) admitting their liability only in respect of confiscated glycerine, S.L.S. and peppermint oil (but not on Clove Bud Oil) and paid customs duty thereof, as contemplated under K.V.S.S. The said declaration was accepted by the authorities and requisite certificate was issued in favour of M/s. Choice Laboratories under K.V.S.S.
8. When all the aforesaid four appeals were taken up for final hearing by CEGAT, M/s. Choice Laboratories produced the aforesaid certificate issued under K.V.S.S. and on the basis of the said certificate, the Tribunal by its common order dated 11th March, 2002 dismissed the appeal of M/s. Choice Laboratories as withdrawn. By the said order dated 11th March, 2002, CEGAT confirmed the liability of the customs duty on Clove Bud Oil and also redemption fine and personal penalty levied on M/s. Ratilal Hemraj. By the said order, appeal filed by the Petitioner was also dismissed by holding that the benefit of K.V.S.S. granted to M/s. Choice Laboratories will not be available to the Petitioner, as his role continued even after the role of M/s. Choice Laboratories stopped. Challenging the said order, this petition has been filed. It is seen that in the said case before Hon'ble High Court, the facts are similar to the instant case. There was main importer against whom duty was demanded. There was also three other noticees, who were involved in disposal of goods, against whom penalty was sought to be imposed. In the said case, the Hon'ble High Court held that settlement of a case under KVSS by M/s Choice Laboratory does not prevent Revenue from proceedings the case against the other noticees, against whom only penalties were imposed as the cause of action in the two cases are different. Different cause of action can be determined from the purpose of transaction. If the co-noticee gain personally from the transaction of if they are merely assisting the main noticee to benefit. In case of the Onkar S. Kanwar (supra), the co-noticees being directors and officers of main notice were working for the benefit of the company. Thus the directors and officers were granted immunity after the company succeeded under KVSS. In case of Yogesh Korani (supra) the co-noticees were the buyers of the licence, who happened to be involved in the case for personal benefit and not that of the main Noticee. In case of Modest Shipping (Supra) the agent was assisting/working for the benefit of the main noticee. In the instant case all the appellants were personal beneficiaries of the transaction and were not engaged in merely assisting the main noticee. They were acting as intermediaries for sale of the goods cleared without payment of duty independently of the main noticee.
4.7 Furthermore the decision of tribunal in case of S.K. Colombowala (Supra) seems to consider the term case include all proceedings initiated by a notice. If a notice demands duty from two different noticees, then according to the decision of tribunal in case of S.K. Colombowala (Supra) if one of the noticee settles the case the other notice from whom duty is demanded would also get immunity. It cannot be the intention of the legislature.
4.8 It is seen that earlier in the case of K.I. INTERNATIONAL LTD. 2012 (282) E.L.T. 67 (Tri. - Chennai) had differed from the decision of the tribunal in case of S.K. Colombowala (Supra) and therefore the matter was referred to the President for constitution of a larger bench. The said reference was not answered by the larger bench in the said case of Rajesh Vs CC 2013-TIOL-1770-Cestat-Mad-LB was denied on the grounds that the decision in case of K.I. INTERNATIONAL LTD (Supra) was challenged before Hon HC of Chennai and the matter was pending there. However in the instant case the decision of Hon HC of Mumbai in the case of Yogesh Korani (supra), which was approved by Hon SC, has not been considered by the tribunal in case of S.K. Colombowala (Supra). A decision in which a particular matter is not discussed upon is said to be passed sub silentio in respect of that particular matter and cannot be relied as a precedent for that specific matter which is not discussed upon. Hon Supreme court has in the case of Municipal Corporation of Delhi v. Gurnam Kaur - (1989) 1 SCC observed as under: -
Pronouncements of law, which are not part of the ratio decidendi are classed as obiter dicta and are not authoritative. With all respect to the learned Judge who passed the order in Jamna Das' case and to the learned Judge who agreed with him, we cannot concede that this Court is bound to follow it. It was delivered without argument, without reference to the relevant provisions of the Act conferring express power on the Municipal Corporation to direct removal of encroachments from any public place like pavement or public streets, and without any citation of authority. Accordingly, we do not propose to uphold the decision of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute. So far as the order shows, no argument was addressed to the Court on the question or not whether any direction could properly be made compelling the Municipal Corporation to construct a stall at the pitching site of a PG NO 939 pavement squatter. Professor P.J. Fitzgerald, editor of the Salmond on Jurisprudence, 12th edn. explains the concept of sub silentio at p. 153 in these words:
"A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The Court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio.
In Gerard v. Worth of Paris Ltd. (k)., [1936] 2 All E.R. 905 (C.A.), the only point argued was on the question of priority of the claimant's debt, and, on this argument being heard, the Court granted the order. No consideration was given to the question whether a garnishee order could properly be made on an account standing in the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith, Ltd., [1941] 1 KB 675. the Court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. We went on to say that the point had to be decided by the earlier court before it could make the order which it did; nevertheless, since it was decided "without argument, without reference to the crucial words of the rule, and without any citation of authority", it was not binding and would not be followed. Precedents sub silentio and without argument are of no moment. This rule has ever since been followed. One of the chief reasons for the doctrine of precedent is that a matter that has once been fully argued and decided should not be allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a Judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority.
5. In view of the above, I am of the opinion that the decision of Hon'ble High Court in case of Yogesh Korani (supra) which has been approved by the Hon Supreme Court, is squarely applicable to the present case. The decision of larger bench in case of S.K. Colombowala (Supra) has not considered the decision of Hon'ble High Court in case of Yogesh Korani (supra) and is sub silentio.
6 The next assertion of the appellants is that no penalty can be imposed unless there is confiscation of goods. It is noticed that in the instant case there was a proposal for confiscation of goods and the matter was settled by the settlement Commission. Thus it is recognized that an offence was committed which required invocation of provisions for confiscation of goods. However, since the matter was settled there was no confiscation of goods as the applicants before the Settlement Commission were granted immunity from fine and penalty. The appellants have relied on the decision in the case of SHARDA SYNTHETICS LTD (2014 (314) E.L.T. 411), where in para 11 following has been observed:-
11.?We further find that under Rule 26 of Central Excise Rules, 2002, penalty can be imposed on a person who has dealt with offending goods, which he believes or knows, are liable for confiscation. Admittedly in this case the adjudicating authority has not held the goods are liable for confiscation. When the goods are not for confiscation, penalty under Rule 26 is also not imposable. Therefore, penalty on Shri Ashok Khetan imposed by way of impugned order is also set aside.
This decision is distinguishable on facts as in this case there was no offence found to confiscate goods. In the instant case the provisions of law for confiscation were invoked, the offence has been admitted before the Settlement Commission by the main party and settled. Thus it cannot be said that no offence meriting confiscation of goods was committed.
7 In view of above the appeals are dismissed (Pronounced in Court on 27.04.2016) (Raju) Member (Technical) Sinha 15 Appeal No. E/400-405 & 565/11