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TAXAP/432/2008 12/ 12 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 432 of 2008
WITH
TAX
APPEAL No. 434 of 2008
======================================
THE
COMMISSIONER OF CENTRAL EXCISE - Appellant
Versus
JATINDER
SINGH AUJLA EXECUTIVE DIRECTOR - Opponent
======================================
Appearance
:
MR
RJ OZA for Appellant.
MR SN THAKKAR for
Opponent.
======================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 24/02/2010
COMMON ORAL ORDER
(Per
: HONOURABLE MR.JUSTICE K.A.PUJ)
The
Commissioner of Central Excise, Vapi has filed these appeals under
Section 35-G of the Central Excise Act, 1944 proposing to formulate
the following substantial questions of law for the determination and
consideration of this Court :-
Tax
Appeal No. 432 of 2008
Whether
in the facts and circumstances of the present case, the Tribunal is
justified in rejecting the appeal of the Revenue and confirming the
order of the Commissioner (Appeals), setting aside the mandatory
penalty levied and imposed under Section 11AC of the Central Excise
Act, 1944 read with Rule 173Q (1) of the Central Excise Rules, 1944,
upholding the demand of the revenue on the ground of fraud committed
by the respondent Company, resulting into short payment of central
excise duty ?
This
Court has initially issued notice on 04.02.2009 and thereafter on
04.03.2009 and lastly on 20.06.2009. though direct service was
prayed for and it was granted, till this date the respondent is not
served. In any case, at the time of hearing of another cognate
matter i.e. Tax Appeal No.434 of 2008 wherein Mr. S. N. Thakkar is
appearing states that he has an instruction to appear in this matter
and hence, it is also taken up for hearing.
At
the time of hearing of this appeal, Mr. Oza has re-framed the
following substantial questions of law which are as under :-
Whether
the impugned order made by the Tribunal can be said to be an order
made in accordance with law ?
Whether
in the facts and circumstances of the case, the Tribunal has
committed substantial error of law in rejecting the appeal of the
Revenue and thereby confirming the order of the Appellate
Commissioner setting aside the penalty of Rs.1,00,000/- imposed on
the respondent by the adjudicating authority under Rule 209A of the
Central Excise Rules, 1944 ?
Heard
Mr. R. J. Oza, learned Standing Counsel appearing for the appellant
in Tax Appeal No.432 of 2008 and Mr. Gaurang H. Bhatt, learned
Standing Counsel appearing for the appellant in Tax Appeal No.434 of
2008 and Mr. S. N. Thakkar, learned advocate appearing for the
respondents and perused the orders passed by the authorities below.
The
facts of the case are that the adjudicating authority has passed the
order on 31.08.2001 raising the demand of Rs.15,66,000/- leviable on
finished goods cleared during February 1999 to August 1999 under
proviso to Sub-section (1) of Section 11A of the Central Excise Act,
1944 and confirming the central excise duty to the tune of
Rs.1,80,000/- paid by the Company through TR-6 Challan dated
07.12.1999 under proviso to Sub-section (1) of Section 11A of the
Act. The Adjudicating Authority has also levied penalty of
Rs.17,46,000/- under Section 11AC of the Act read with Rule 173Q of
the Central Excise Rules, 1944 and charged interest on delayed
payment of duty under the provisions of Section 11AB of the Act on
the Company. The Adjudicating Authority has also imposed personal
penalty of Rs.1 Lacs on the respondent assessee of Tax Appeal
No.432 of 2008 and Rs.50,000/- on the respondent assessee of Tax
Appeal No.434 of 2008.
Being
aggrieved by the said order, the Company as well as both the
respondent assessees have filed appeals before the Commissioner
(Appeals) who vide his order dated 17.06.2003 set aside the impugned
order imposing penalty on the respondent Company as well as on the
assessees. While setting aside the penalty on the Company as well
as assessees, the Commissioner (Appeals) has observed that the fraud
was committed by Shri Rathod of his own and the Company or no other
employee of the Company including Shri J. M. Sharma or Shri Jatinder
Singh Aujla is involved in the commission of fraud. Since the
Company has been handing over full amount to their employee Shri
Rathod, the goods were cleared from their factory without payment of
duty, but under the impression that the duty has been paid. The
Company has admitted that the Company is liable for payment of
differential amount of duty and the interest thereon to the
Government.
This
order was challenged by the Revenue before the Tribunal and the
Tribunal while confirming the order of the Commissioner (Appeals)
held that the reasoning adopted by the appellate authority for
setting aside the penalty has not been shown as inappropriate nor
any evidence to the contrary was shown to the Tribunal. The
Tribunal, therefore, held that there was no infirmity in the order
of the Commissioner of setting aside the penalty and hence, the
appeals filed by the Revenue were dismissed.
This
order of the Tribunal was challenged by the Revenue against the
Company as well as two individuals in Tax Appeal Nos.432, 433 &
434 of 2008. Tax Appeal No.433 of 2008 filed against the Company
and Tax Appeal No.434 of 2008 filed against Shri J. M. Sharma were
admitted on 17.03.2009 and the common question regarding levy of
penalty under Section 11AC was framed which is as under :-
Whether in
the facts and circumstances of the present case, the Tribunal is
justified in rejecting the appeal of the Revenue and confirming the
order of the Commissioner (Appeals), setting aside the mandatory
penalty levied and imposed under Section 11AC of the Central Excise
Act, 1944 read with Rule 173Q (1) of the Central Excise Rules, 1944,
upholding the demand of the revenue on the ground of fraud committed
by the respondent, resulting into short payment of central excise
duty ?
However,
the question regarding 11AC does not arise so far as the appeal
filed against the individual is concerned. Hence, Mr. Gaurang H.
Bhatt, learned Standing Counsel appearing for the Revenue has
proposed the following two questions for the determination and
consideration of this Court in Tax Appeal No.434 of 2008 :-
Whether in
the facts and circumstances of the case, the Tribunal is justified
in the eye of law in setting aside the penalty imposed, upon the
said Authorized Signatory of the said unit under Rule 209 A of the
Central Excise Rules, 1944 ?
Whether in the
facts and the circumstances of the case, the Tribunal is justified
in the eye of law in holding that though the internal fraud within
the said Unit has been proved, the penalty imposed upon the said
Authorized Signatory of the said Unit under Rule 209 A of the
Central Excise Rules, 1944, is not sustainable, irrespective of the
short-payment of the duty ?
Mr.
Oza as well as Mr. Bhatt have submitted that Mr. J. S. Aujla is the
Executive Director of the Company and Mr. J. M. Sharma is the Works
Manager-cum-Authorized Signatory of the Company. They are in charge
of the supervision over the works allotted to Shri S. R. Rathod and
it was their duty to see that the amount paid to Shri Rathod was
actually deposited in the Bank by way of Resolution with the Bank
records. The respondents had put a blind faith on Shri Rathod and
had given a loose rope to handle the huge amount of cash to be
deposited in the Bank towards central excise duty. It is on record
that Shri Sharma had signed the copies of T-12 Return for August,
1999 which were submitted to the Central Excise Range Law wherein he
had given a false declaration regarding genuineness of documents
submitted along with T-12 Return and thereby mis-stated the facts,
in as much as certain TR-6 challans for the said month were also
tampered and credited in PLA were wrongly taken in excess of the
amount actually deposited in the Bank. Thus, Shri Sharma was
equally responsible for the contravention of the Act and the Rules
framed thereunder and has rendered himself liable for penal action
under Rule 209-A of the Rules. They have, therefore, submitted that
substantial question of law as re-framed by the Revenue are required
to be formulated for consideration and determination of this Court
and both the appeals are required to be admitted and allowed.
Mr.
S. N. Thakkar, learned advocate appearing for the respondent, on the
other hand, has submitted that the provisions of Rule 209A has no
application in the facts of the present case. Rule says that 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 Rs.5,000/-
whichever is greater. From the finding recorded by both the
appellate authorities, it is clear that the respondent assessees are
no way connected with the fraud committed by Mr. Rathod. There is
nothing on record which indicates that the respondent assessee knew
or they had reason to believe that the goods are liable to
confiscation under the Act. Reliance is placed on the decision of
the Ahmedabad Tribunal in the case of Dhanlaxmi Garments V/s. CCE,
Surat-I, 2009 (235) ELT 523 wherein it is held that since the
appellant was not dealing with goods physically, Rule 209A of
Erstwhile Rules is not attracted. Reliance is also placed on the
decision of this Court in the case of CCE V/s. Keshavan Gokulan,
2009 (236) ELT 461 (Guj.) wherein it is held that the Tribunal
has recorded that the requirement of Rule 209A of the Rules to show
and bring on record that the Officer had knowledge, is absent and
there is a categorical finding that the Officers were not aware
about the provisions to be followed, had no knowledge of Central
Excise Law and upon being pointed out, had reversed the entry /
debited the amount. The Court, therefore, took the view that in
absence of any question of law as proposed or otherwise, much less,
a substantial question of law, the appeal stands dismissed.
Reliance
is also placed on the decision of this Court in the case of
Commissioner of Central Excise and Customs, Surat 1 V/s.
Govind Agarwal, 2009 (238) ELT 745 (Guj.) wherein it is held
that the order passed by the Tribunal deleting the personal penalty
imposed on the proprietor under Rule 209A, does not warrant
interference, the order being perfectly legal and in accordance with
the requirement of law and, therefore, took the view that the appeal
stands dismissed in absence of any question of law as proposed or
otherwise, much less a substantial question of law.
In
view of the above settled legal position and in view of the fact
that two appellate authorities have given concurrent finding to the
effect that the respondent assessees are not involved and that
everything was done by Mr. Rathod, there is no question of admitting
and/or allowing these appeals and in absence of any question of law,
much less any substantial question of law, both the appeals deserve
to be dismissed and are accordingly dismissed.
Sd/-
[K. A. PUJ, J.]
Sd/-
[RAJESH
H. SHUKLA, J.]
Savariya
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