TaxTMI 
TaxTMI 
2009 (6) TMI 510
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....d in the manufacture of steel ingots and the appellants in appeal No. 269 & 270 of 2009 are the Directors of the said company. The appellants in appeal No. 296 & 297 of 2009 are the employees of the said company, whereas the appellants in appeal No. 319 of 2009 are the purchasers of the product manufactured by the said company. 4. Under the impugned order the appellant company has been ordered to pay the duty to the tune of Rs.56,87,671/- on the ground of clandestine removal of the steel ingots manufactured by the company during the period from October, 2004 to March, 2005 in exercise of powers under Section 11A(2) of the Central Excise Act, 1944, besides demanding interest on the said amount in terms of Section 11AB of the said Act and has also been asked to pay the penalty of the equal amount under Section 11AC of the said Act. The appellant in appeal No. 269 of 2009 has been ordered to pay penalty of Rs.55 lakhs, whereas the appellant in appeal No. 270 of 2009 has been ordered to pay penalty of Rs.50 lakhs. The appellant in appeal No. 296 of 2009 has been ordered to pay penalty of Rs.5 lakhs, whereas the appellant in appeal No. 297 of 2009 has been ordered to pay penalty of R....
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....submitted that the excuse sought to be pleaded on behalf of the employees cannot be a ground to establish their innocence in the matter. The learned DR has further submitted that the term "person" under Rule 26 would include a company or a corporate body. 7. The learned Advocates for the appellants have placed reliance in the decisions of the Tribunal in the matters of Woodmen Industries v. CCE, Patna reported in 2004 (164) E.L.T. 339 (Tri.-Kol.), Ponneri Steel Industries v. CCE, Pondichery reported in 2008 (221) E.L.T. 290 (Tri.-Chennai), Universal Radiators Ltd. v. CCE, Coimbatore reported in 2008 (223) E.L.T. 630 (Tri.-Chennai.), besides the Circular No. 207/09/2006 dated 8-9-2006. On the other hand, the learned SDR has placed reliance in the matter of Agarwal Trading Corporation and Others v. Assistant Collector of Customs, Calcutta and Others reported in 1983 (13) E.L.T. 1467 (S.C.) and Madhumilan Syntex Ltd. v. Union of India reported in 2007 (210) E.L.T. 484 (S.C.). 8. Considering the rival contentions sought to be canvassed in the matter and in the facts and circumstances of the case, following questions arise for consideration in these appeals: - (i) Whether there....
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....s relied upon by the department, the same cannot be sustained and it should be set aside and the matter should be remanded for fresh adjudication after directing the department to furnish the copies of all the relied upon documents to the appellants. 11. As regards the failure on the part of the department to return the un-relied seized documents, he submitted that the law in this regard is well settled, and even a Circular issued by the Board clearly requires the department to return seized documents without fail and in any case within 30 days from the date of receipt of the show cause notice to the addressee. In that regard, our attention was drawn to the Circular No. 207/09/2006 dated 8-9-2006. He further submitted that the fact that seized documents were not returned within said time is not in dispute. 12. As regards the rejection of the prayer for the cross examination, our attention was drawn to the letter dated 1-8-2007, wherein there was specific prayer made for grant of permission for the cross examination of the persons whose statements were recorded in order to verify the truthfulness of their statements. According to the learned Advocate, the authorities below not....
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....e notice but seized. He also requested for legible copies of Annexure to the Mahazar dated 10-3-2005 and documents mentioned in Annexure C-I running from Sr. No. C-1(8) to C-1(10) as the documents supplied according to him were not legible at all. He requested for cross-examination of Shri Pawan Sharma, Administrative Officer of M/s. Twenty First Century Wire Rods Ltd. Shri Shravan Garg, Director of Ellenabad Steel Pvt. Ltd., Shri Abhishek Lohia, Manager and authorized signatory of M/s. Shirdi Steel Rollers Pvt. Ltd., Shri Vijay Kashyap, Director of Kundil Ispat Ltd., Shri Minaz Baig, Proprietor of M/s. MB Scrap, Sawantwado, Shri Shabiir Ahmed Ankalgi, proprietor of M/s. Ankalgo Scrap Merchants, Shri Bajarang Jindal, Scrap Merchant and Shri Noor Ahmed, Killedar, Proprietor of M/s. M.K. Enterprises Belgaum. As the charges are leveled in the notice on the basis of the statements of above persons, to enable them to verify the authenticity and ellicite the truth, permission for cross-examination of the above persons was sought. 2 Noticees' Counsel vide letter dated 13-10-2007 intimated that the legible copies of documents requested vide their earlier letter dated 1-8-2007 have no....
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....ould depose during the investigation the total amount and quantity of unaccounted sale of steel ingots and how much cash was given to his client as the cash received did not tally with W entries. 13 Vide this office letter dated 27-3-2008, above request was acceded to and PH was fixed on 31-3-2008. 14 PH was conducted on 31-3-2008. Noticees' Counsel argued that statements of Shri Shravan Garg and Shri A.bhishek Sinha contained incomplete details and it was necessary to ascertain as to whether further statements of these persons were recorded so as to identify the exact quantum of clandestine clearances alleged in the notice and cash paid by them to the notice No. 1. He submitted that no legible copies of documents were provided. 15 Vide this office letter dated 9-4-2008 Noticees' Counsel was intimated that copies of documents could be taken on 12th to 14th May, 2008. 16 Vide letter dated 11-4-2008 DGCEI was requested to return non-relied upon documents to the noticees, by this office. 17 DGCEI vide their letter 29.4.2008 intimated that copies of relied upon documents listed in Annexure A, B and C-1 Duty calculation sheets in annexure D-1 to D-5 have be....
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....orking day with prior intimation. 15. The events as recorded and reproduced hereinabove undoubtedly disclose enough opportunity for personal hearing having been granted to the appellants. It also discloses and refers to correspondence regarding the fixation of the personal hearing as also about the demand by the appellants for the copies and for cross-examination, as also the letters written by the department in answer thereof, grievances made by the appellants regarding non-supply of copies and intimation to the appellants for collecting the copies etc. 16. The question as to whether there has been denial of fair opportunity and/or whether there is failure to comply with the principles of natural justice is essentially a question of fact to be decided depending upon the facts of each case. There cannot be a general proposition of law that moment there is failure to give certain copies of the relied upon documents to the assessee that it would result in violation of principles of natural justice. It would depend upon the relevancy of the documents in relation to the matter which is sought to be decided as well as the prejudice that may be caused to the assessees on account of....
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....l also be justified in contending that mere refusal of cross-examination of certain persons could not be a ground to contend that no fair opportunity was given to the appellants, unless it is established by the appellants that it was on the basis of those statements that the authorities have decided the liability of the appellants. The impugned order does not disclose that the authorities having given much credence to the statements of the various persons, but rather has decided the matter on the basis of other evidence collected in the course of the investigation by the Department. 19. The impugned order also refers certain relevant facts and paras 4.4 and 4.5 in that regard are worth reproducing. The same read as under: - "4.4 The quantity of scrap and sponge iron purchased was accounted on a day to day basis in the private records in the form of small books numbered [72, 73 and 74 listed at Annexure C-(20 to the SCN)] containing the details of vehicle number, name of the suppliers (in some cases the slip issued to the suppliers by the M/s. TFCWRL showing the details of the quantities received in the factory vide the respective vehicle number), grade of the scrap and the qu....
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....ellaneous payments made were entered on the right side pages of the said books." 21. Perusal of the above paras apparently discloses that the most relevant documents, which were taken into consideration to ascertain and quantify the duty liability of the appellants, are Books No. 72, 73, 74, 75, 76, 77, 79 & 80. It is pertinent to note that under letter dated 10-10-2008, the appellants had specifically brought to the notice of the concerned authorities that they were not furnished with the copies of the various pages of the books namely Book No. 72, 73, 74, 75, 79 and 80. As already seen above, the relevant documents which, the authorities have sought to rely upon, comprise of the documents regarding which grievance was made by the appellants about non-receipt of copies of certain pages of such documents. 22. Undoubtedly, there is finding regarding the cash amount, and the records disclose that they were required by the appellants in relation to certain products manufactured by the appellants and clandestinely removed. It cannot be disputed that the duty liability has to be fixed on the basis of the entire documentary evidence collected in the course of investigation, includi....
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.... the "person" under the Rule 26 of the said Central Excise Rules, 2002. 28. The said Rule reads thus:- "26. Penalty for certain offences. - 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 the duty on such goods or rupees ten thousand, whichever is greater." 29. The contention is that the term "person" under the said rules does not include corporate body or any non-living person. According to learned Advocate for the appellants, it only refers to the natural person. The contention sought to be made good by referring to the decisions of the Tribunal in the matter of Woodmen Industries (supra), Ponneri Steel Industries (supra) and Universal Radiators Ltd. (supra). In fact both the latter decisions are essentially based on the decision of the Tribunal in the case of Woodmen Industries. It is also sought to be pointed out that the decisions in Woodmen Industries case was sought to be cha....
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....e said Rules. Being so, merely because the appeal carried to the Supreme Court did not succeed, it cannot be concluded that therein the word "person" under Rule 26 has been interpreted to refer to only living persons and not to any corporate body or the company. 32. The Apex Court in the case of Agarwal Trading Corporation (supra), while dealing with the matter under Foreign Exchange Regulation Act and referring to Section 2(42) of General Clauses Act, 1897, had held as under:- "The second contention that because the firm is not a legal entity, it cannot be a person within the meaning of Section 8 of the Foreign Exchange Regulation Act or of Section 167(3), (8) and (37) of the Sea Customs Act, is equally untenable. There is of course, no definition of 'person' in either of these Acts but the definition in Section 2(42) of the General Clauses Act, 1897, or Section 2(3) of the Act of 1868 would be applicable to the said Acts in both of which 'person' has been defined as including any company or association of body of individuals whether incorporated or not. It is of course contended that this definition does not apply to a firm which is not a natural person and has no legal exi....
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..... M/s. MCTM Corporation Pvt. Ltd. and Others reported in AIR 1996 SC 1100, (1996) 2 SCC 471, wherein it was held thus:- "It is thus the breach of a "civil obligation" which attracts "penalty" under Section 23(1)(a) FERA, 1947 and a finding that the delinquent has contravened the provisions of Section 10, FERA, 1947 would immediately attract the levy of "penalty" under Section 23, irrespective of the fact whether the contravention was made by the defaulter with any "guilty intention" or not. Therefore, unlike in a criminal case, where it is essential for the "prosecution" to establish that the "accused" had the necessary guilty intention or in other words the requisite "mens rea" to commit the alleged offence with which he is charged before recording his conviction, the obligation on the part of the Directorate of Enforcement, in cases of contravention of the provisions of Section 10 of FERA, would be discharged where it is shown that the "blameworthy conduct" of the delinquent had been established by willful contravention by him of the provisions of Section 10, FERA, 1947. It is the delinquency of the defaulter itself which establishes his "blameworthy conduct", attracting the p....
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....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." 38. Undoubtedly, the provision comprised under Section 9AA(1) is regarding criminal liability of the company but it discloses the intention of the legislature that the company is also liable for it's each of the offences, which was committed by the said body. This discloses that a company is also liable for any illegality committed in the name of the company. The decision of the Apex Court referred to above and the provisions of law, therefore, apparently disclose that the term "person" as is found under Rule 26 does not merely relate to living person but every tax payer comes within its net including the corporate body or the company. Once the Apex Court has clearly ruled in the case of Director of Enforcement (supra), in no uncertain ter....