Central excise penalty for unaccounted goods upheld against a licensed company acting through its directors

A licensed company is liable under Rule 173Q of the Central Excise Rules, 1944 for contraventions committed through its directors in the course of business. Where excisable goods were not accounted for in the prescribed register and duplicate numbers were issued, those unchallenged findings supported confiscation and penalty. In the absence of any statutory provision imposing separate personal liability on directors under the Central Excise law, the firm could not avoid responsibility by attributing the irregularities to one director. The penalty on the firm was therefore upheld.

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Issues: Whether the firm, being the licence-holder, could be penalised under the Central Excise Rules for the acts and omissions of its directors and for failure to account for excisable goods.

Analysis: The licence stood in the name of the company, and its business had to be carried on through its directors. The findings that excisable goods were not accounted for in the prescribed register and that duplicate numbers had been issued were not challenged. Rule 173Q(1) of the Central Excise Rules, 1944 authorises confiscation and penalty where a manufacturer or licence-holder removes goods in contravention of the rules or fails to account for excisable goods. In the absence of any statutory provision placing personal liability on directors under the Central Excise law, the firm could not avoid responsibility by attributing the irregularities to one director.

Conclusion: The penalty on the firm was validly imposed and the challenge to it failed.

Ratio Decidendi: A licensed company is liable under Rule 173Q of the Central Excise Rules, 1944 for contraventions committed in the course of its business through its directors, and responsibility cannot be escaped by shifting blame to an individual director in the absence of a specific provision imposing separate director liability.

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