TaxTMI 
TaxTMI 
2014 (2) TMI 635
X X X X Extracts X X X X
X X X X Extracts X X X X
.... disposal. 2. We have heard Shri K K Anand, learned advocate appearing for the applicant and Shri M S Negi, learned DR appearing for the Revenue. The prayer in the application is to dispense with the condition of pre-deposit of Rs. 10 lakh each imposed on M/s. Suraj Medical Agencies, Shri Roshan Lal Kwatra, Director of M/s. Gold Star Pharmaceuticals Pvt. Ltd. and partner of M/s. Suraj Medical Agencies, Shri Kashmir Chand. Further, penalty of Rs. 25 lakh was imposed on Shri Ashok Kumar Kwatra, Managing Director of M/s. Gold Star Pharmaceuticals Pvt. Ltd. 3. It is seen that finding against the main noticee M/s. Gold Star Pharmaceuticals Pvt. Ltd., was as regards the under-valuation and clandestine removal of their final product. M/s. Suraj Medical Agencies was buyers of such clandestinely removed goods and the other applicants are either the partner of M/s. Suraj Medical Agencies or the Directors of M/s. Gold Star Pharmaceuticals Pvt. Ltd. 4. Learned advocate apart from arguing on merits as also on financial condition of the appellants argued on the point that penalty under Rule 26 cannot be imposed on a firm i.e. M/s. Suraj Medical Agencies inasmuch as the same can only be impose....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the writ petition." 7. Though the said decision was passed on 13.9.12, neither the learned advocate appearing for the appellant nor the learned DR appearing for the Revenue has been able to show us the final outcome of the decision before the Hon'ble High Court. As such, we are constrained to follow the same at this interim stage. Inasmuch as the Hon'ble High Court has granted interim order restricting Revenue from further effect to the proceedings of penalty imposed under Rule 26, by respectfully following the same, we grant the interim relief to the petitioner upon whom penalties stand imposed under Rule 26 of the Central Excise Rules. 8. All the stay petitions are disposed of in the above manner. (Pronounced in the open court on) Archana Wadhwa, J. Manmohan Singh, J. Suraj Medical Agencies & Others Excise Appeal Nos. 1003 and 1006 of 2012-EX(DB) PER : Manmohan Singh 9. I have gone through the stay order recorded by Learned Member (Judicial) in respect of M/s Suraj Medical Agencies, Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar. 10. The main party M/s Gold Star Pharmaceuticals Pvt. Ltd. was ordered to deposit an amount of Rs. 1.15 Crore in terms of Stay....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6 is imposable. Reference was also made to Supreme Court judgment in standard Chartered Bank & Others Vs. Directorate of Enforcement & others (2005) 275 ITR 81 in the above judgment where it is held that legislative never intended to give immunity from prosecution or penalty for grave economic crimes. It was held that company is corporate body and not a natural person. It was held that fine penalty can be imposed. 16. For ready reference, judgments are briefly discussed below: In a recent judgment Hon'ble Delhi High Court in the case of Sunil Mittal vs. CCE 2013 (829) ELT 441(Del) has held that companies can be penalized under rule 26 ibid. Relevant paras no. 9 and 10 of the judgment are as follows: 9. Learned counsel for the appellant next submitted that Natraj Plast Industries Ltd. and Tanishq Wires & Conductors Pvt. Ltd. are limited companies incorporated under Companies Act, 1956 and, therefore, no penalty can be imposed on them under Rule 26 of the Central Excise Rule, 2002. It is submitted that the said companies cannot be attributed with requisite mens rea and the requirement of the Rule is that the person should have knowledge or attributed with reason to bel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt to prosecute corporate bodies for the offence committed by them is clear and explicit and the statute never intended to exonerate them from being prosecuted. The Legislature never intended to give immunity from prosecution or penalty for grave economic crimes. In such cases it is not possible to impose penalty of imprisonment because the company is a corporate body and not a natural person but fine or cash penalty can be imposed. 17. Hon'ble High Court of Punjab & Haryana too in the case of M/s Vee Kay Enterprises Vs. C.C.E. reported in 2011 (266) E.L.T. 436 (P & H) had observed that penalty under rule 26 ibid is imposable on Dealers of Cenvetable goods when only invoices are raised to pass on illegal Cenvat Credit while no raw materials are supplied by the Dealers. The relevant para 10 is reproduced. 10. Inspite of non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....old Star Pharmaceuticals Pvt Ltd was earlier decided by this bench and pre deposit of Rs 1.15 Crores ordered vide Final Order No 55665-55669/2013 dated 10.01.2013 dated. As no compliance has been made by him nor any extension sought his stay application along with appeal stands dismissed. Therefore now I restrict my examination for the stay proceeding for the four appellants M/s Suraj Medical Agencies Sh. Roshan Lal Kwatra, Sh. Kashmir Chand and Sh. Ashok Kumar. The last three appellants are directly connected with the two concerns M/s Gold Star Pharmaceuticals Pvt Ltd and M/s Suraj Medical Agencies. While M/s Gold Star Pharmaceuticals Pvt Ltd is the main accused concerned with production and clearance of the drugs without payment of duty M/s Suraj Medical Agencies was the main conduit for the clearance of the illegally manufactured drugs in the market. Both these concerns belong to the same family. Sh. Ashok Kumar is the Managing Director and Roshan Lal Kwatra Director of M/s Gold Star Pharmaceuticals Pvt Ltd and Sh. Kashmir Chand is the father of Sh. Roshan Lal Kawtra. Sh. Roshan Lal Kwatra is also partner in M/s Suraj Medical Agencies where another partner is his father Sh. Kash....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he above noted three persons Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar and also in the account of Mrs. Richa Kwatra wife of Sh. Roshan Lal Kwatra. 22. Therefore without going into further details of the case, it is very clear that all the four noticees are directly involved in the illegal manufacturing and clearance of the medicines. In the interest of the Revenue, some terms need to be imposed upon them especially when the main accused M/s Gold Star Pharmaceuticals Pvt Ltd has defaulted in making the pre-deposit as ordered by this Bench and also considering that both M/s Gold Star Pharmaceuticals Pvt Ltd and M/s Suraj Medical Agencies are family concerns of Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar. Further on legal issue also, it has been held that there is no bar in imposition of penalty on natural person if they are part of company/corporate body etc. 23. In view of the above, I hold that penalties under rule 26 have been rightly imposed upon the appellants M/s Suraj Medical Agencies, Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar. Thus the balance of convenience is in the favour of the Revenue for imposition of penalty o....