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34. The point as to whether the provisions made for imposition of penalty is mandatory or not came for consideration before the Apex Court in the case of Union of India Vs. Dharmendra Textile Processors reported in 2008 (231) ELT 3 and therein while referring to the earlier decision of the Apex Court in the case of Chairman, SEBI Vs. Shriram Mutual Fund reported in 2006 (5) SCC 361 and it was held in the said case that the penalty was mandatory and it was pointed out that the nature of obligation in relation to the breach of the duty pertaining to the demand of duty is of civil nature and is different from the criminal liability. It was specifically recorded that the mens-rea is not an essential part for breach of civil obligation. While holding so, the Apex Court has reiterated its views expressed on this aspect in its earlier decision in the matter of Director of Enforcement Vs. M/s MCTM Corporation Pvt. Ltd. and Others reported in AIR 1996 SC 1100, (1996) 2 SCC 471, wherein it was held thus: -

35. The Apex Court in Dharmendra Textiles Processors case has also referred to its earlier decision in J.K. Industries Ltd. Vs. Chief Inspector of Factories and Boilers, wherein it was held as under: -

42. The offences under the Act are not a part of general penal law but arise from the breach of a duty provided in a special beneficial social defence legislation, which creates absolute or strict liability without proof of any mens-rea. The offences are strict statutory offences for which establishment of mens-rea is not an essential ingredient. The omission or commission of the statutory breach is itself the offence. Similar type of offences based on the principle of strict liability, which means liability without fault or mens-rea, exist in many statutes relating to economic crimes as well as in laws concerning the industry, food adulteration, prevention of pollution, etc. in India and abroad. Absolute offences are not criminal offences in any real sense but acts which are prohibited in the interest of welfare of the public and the prohibition is backed by sanction of penalty.

36. The decision in Dharmendra Textiles Processors case was further reiterated and explained in recent decision in the matter of Union of India Vs. Rajasthan Spinning & Weaving Mills reported in 2009 (238) ELT 3 (SC).

37. The Section 2(42) of the General Clauses Act, 1897, the term person is defined as inclusive of any company or association or body of individuals whether incorporated or not. Section 9AA(1) of the Central Excise Act, 1944 provides that where an offence under this Act has been committed by 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 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; provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.