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TAXAP/1576/2007 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1576 of 2007
=========================================
COMMISSIONER
OF CENTRAL EXCISE& CUSTOMS, SURAT-I - Appellant(s)
Versus
P
S SINGHVI - Opponent(s)
=========================================
Appearance :
MR
YN RAVANI for
Appellant(s) : 1,
RULE SERVED for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MS.JUSTICE HARSHA DEVANI
and
HONOURABLE
MR.JUSTICE H.B.ANTANI
Date
: 23/12/2010
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE HARSHA DEVANI)
While
admitting this appeal under section 35G of the Central Excise Act,
1944 (the Act), this Court had formulated the following substantial
question of law :
“Whether,
in the facts and circumstances of the case, the Tribunal is
justified in setting aside the penalty imposed on the Director on
the ground that no provision, section or rule of law was specified
in the order of the Joint Commissioner though the notice and the
order clearly and specifically mentions that the penalty is leviable
under Rule 26 of the Central Excise Rules, 2002?”
Despite
service of notice of admission, there is no appearance on behalf of
the respondent.
The
facts of the case stated briefly are that a show cause notice dated
13.4.2005 came to be issued by the adjudicating authority to M/s
Sagar Dyeing & Printing Mills (P) Ltd. as well as to the
respondent herein, viz., Shri Prakashchandra Sohanlal Singhvi,
Director of M/s Sagar Dyeing & Printing Mills (P) Ltd., inter
alia,
calling upon them to show cause as to why the penalties should not
be imposed on each of them separately under rule 26 of the Central
Excise Rules, 2002 (the Rules). The show cause notice culminated
into an Order in-Original dated 28.12.2005, whereby a penalty of
Rs.1,50,000/- came to be imposed on the respondent. The respondent
carried the matter in appeal before the Commissioner (Appeals) who
vide order dated 30.11.2006, dismissed the appeal. The preferred
second appeal before the Tribunal, who found that there was no
justifiable reason to impose separate penalty upon the Director
especially when no provisions/ section/rule of law under which
penalties had been imposed upon the Director stood specified in the
impugned order of the Joint Commissioner and accordingly set aside
the penalty imposed on the respondent.
Mr.
Y.N. Ravani, learned Senior Standing Counsel appearing on behalf of
the appellant has invited attention to the order made by the
adjudicating authority and more particularly, paragraph 23 thereof,
wherein the adjudicating authority has discussed the role of the
respondent herein and has held that the respondent is liable for
penalty under rule 26 of the Rules. It is submitted that in the
circumstances, merely because in the operative part of the order,
there is no reference of the rule under which the penalty has been
imposed on the respondent, the Tribunal was not justified in holding
that the order of the adjudicating authority does not refer to any
provision, section, rule of law under which the penalty had been
imposed upon the Director.
As
can be seen from the order made by the adjudicating authority, the
adjudicating authority has recorded a categorical finding of fact to
the effect that the respondent is the active Director who is looking
after the day to day working of the Unit and has admitted in his
statements that the goods were cleared illicitly without payment of
duty and was knowingly involved in the evasion of central excise
duty. The adjudicating authority, therefore, held that the
respondent is liable for penalty under rule 26 of the Rules. The
contention raised on behalf of the respondent that the penalty on
the Director cannot be imposed has been turned down by the
adjudicating authority on the ground that in this case, the evasion
of duty was masterminded and actively executed by the respondent.
The
appellate authority has concurred with the findings recorded by the
adjudicating authority and has found that the respondent was
actively involved in the activities of clandestine removals and was
accordingly of the view that the penalty imposed on the Director was
justified, and upheld the same.
The
Tribunal, in the impugned order, has not recorded any findings as
regards the involvement of the respondent in the clandestine
removal. Nothing has been discussed as to why the findings recorded
by the Commissioner (Appeals) are not justified and as to why the
Tribunal is required to take a different view. The Tribunal has
merely recorded that it does not find any justifiable reason to
impose the penalty upon the Director. While holding so, what has
weighed upon the Tribunal is that no provision, section or rule of
law under which the penalty has been imposed upon the Director, has
been specified in the impugned order of the Joint Commissioner.
These observations of the Tribunal overlook the fact that in the
body of the Order in-Original, and more specifically in paragraph 23
thereof, the Adjudicating Authority has in fact, while considering
the case against the respondent, held that the respondent is liable
to penalty under rule 26 of the Central Excise Rules, 2002. In the
circumstances, merely because there is no mention of rule 26 in the
operative part of the order, it cannot be understood to mean that
the adjudicating authority has not specified the provisions under
which the penalty has been imposed upon the Director.
It
is settled legal position that an order has to be read as a whole.
When the order made by the Adjudicating Authority is read as a
whole, it becomes apparent that the penalty has been imposed on the
respondent under rule 26 of the Rules. In the circumstances, the
approach adopted by the Tribunal as well as the conclusion arrived
at by the Tribunal cannot be said to be reasonable. The impugned
order of the Tribunal is clearly contrary to the record, and as
such, cannot be sustained.
In
the light of the aforesaid discussion, the question is answered in
the negative. The Tribunal was not justified in setting aside the
penalty imposed on the Director. The appeal is accordingly allowed
by setting aside the impugned order of the Tribunal, to the extent
it relates to the respondent herein. There shall be no order as to
costs.
[HARSHA
DEVANI, J.]
[H.B.ANTANI,
J.]
parmar*
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