TaxTMI 
TaxTMI 
2015 (8) TMI 1235
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....2.09.2002, on receipt of intelligence about duty evasion by the appellant unit, factory of M/s.DTL Unit-III, residential premises of Manager of the appellant company, various transporters and raw material suppliers were searched and the documents were seized under Panchnama. In course of investigation, inquiry was made with Shri Rajesh Maheshwari, Manager (Finance) from whose residence, a number of incriminating documents were recovered and also with Shri H.P. Gupta, Advisor in the appellant company and Shri Ravindernath Jain, Joint Managing Director of the appellant company. During inquiry it was also found that Shri Rajesh Maheshwari, was the proprietor of M/s Shree Mahakal Metal Works (SMMW) and similarly, another employee of the appellant unit, Shri Ashen Nagar was the proprietor of another trading unit, M/s. Maa Bhagwati Metals Works (MBMW) and both SMMW and MBMW appeared to be the units being fully under the control of the appellant company. After completion of the investigation, a show cause notice dated 3.8.2004 was issued to - (a) M/s. Decora Tubes Ltd., Unit No.III ( Aluminium Division) (M/s.DTL), (b) Shri M.B. Baheti, Managing Director, M/s. Decora Tubes Ltd. Unit-III ....
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....ompany is in liquidation. 2. Heard both the sides. 3 Shri L.P. Asthana, Advocate representing Shri M.B. Baheti pleaded that in terms of Section 446 of the Company Act, 1956 when a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Tribunal and subject to such terms as the Tribunal may impose, that in the present case, since a liquidation order has been passed by the Hon'ble High Court on 11.07.2005, the Commissioner could not proceed against it without the permission of the Company Law Tribunal, that since the question of penalty against the appellant under Rule 26 of the Central Excise Rules, 2002 on Shri M.B. Baheti and Shri Rajesh Maheshwari is linked with the question of duty demand against the appellant company - M/s.DTL and since the adjudication proceedings in respect of M/s.DTL are illegal, the Commissioner's order imposing penalty on Shri M.B. Baheti and Shri Rajesh Maheshwari is also contrary to the provisions of law, that in any case, the....
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.... respect of an employee of the manufacturer not having any existence independent of manufacturer. Besides this, in this regard, he also cited the judgement of the Tribunal in the case of O.P. Agarwal Vs. CC, Kandla reported in 2005 (185) ELT 387 (Tribunal-Delhi) , wherein it was held that penalty under Section 112 of the Customs Act, 1962 is not imposable on an employee of the company carrying out orders given to them as he was not the person in charge responsible for conduct of its business of the company. He, therefore, pleaded that imposition of penalty of Rs. 10 lakh on Shri Rajesh Maheshwari is not justified. 5. Shri Ranjan Khanna, ld. Departmental Representative defended the impugned order with regard to imposition of penalty imposed on both the appellants by reiterating the findings of the Commissioner. 5.1 With regard to imposition of penalty on Shri Rajesh Maheshwari, Manager (Finance) of the appellant company, he pleaded that he was not merely an employee but he was executing the procurement of unaccounted aluminium scrap in cash for manufacturing and removing the goods clandestinely and that he was also the proprietor of SMMW to whom the excisable goods cleared from M/....
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...., therefore, pleaded that penalty under Rule 26 has been correctly imposed on Shri Baheti. 6. We have considered the submissions from both the sides and perused the records. 7. The first objection of the appellant is that since in terms of the High Court's order dated11.07.2005, the company was in liquidation, the Commissioner's order dated 25.10.2005 without obtaining the necessary permission from the Company Law Tribunal is contrary to the provisions of Law, as in terms of Section 446 (1) of the Companies Act, "when a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Tribunal and subject to such terms as the Tribunal may impose". In the present case, the show cause notice had been issued not only to the appellant company M/s. DTL, Unit-II (Aluminium Division) but also to the Managing Director, Shri M.B. Baheti, Shri Ravindernath Jain, Joint Managing Director and Shri Rajesh Maheshwari, Manager (Finance). Even if the Commissioner could not adjudic....
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....ed, we find that not only the incriminating documents have been recovered from his residence, he in his statement has also admitted to have been involved in clandestine removal of the goods manufactured by DTL without payment of duty. Not only this, as recorded by the Commissioner in para-19 of the impugned order, he has also admitted that for the purpose of removing the goods without payment of duty two firms viz. M/s. SMMW, Indore under his proprietorship and another firm, M/s.MBMW, Indore under proprietorship of Shri Ashen Nagar have been floated. It is also undisputed that the goods cleared without payment of duty to M/s.SMMW, Indore whose proprietor was Shri Rajesh Maheshwari, Manager (Finance) and to M/s.MBMW, Indore, whose proprietor was Shri Ashen Nagar, another employee of M/s DTL, were being sold by these firms. Since Shri Rajesh Maheshwari, Manager (Finance) besides being an employee of M/s. DTL was also proprietor of M/s. SMMW from where the clandestinely cleared goods were being sold, he cannot be considered to be mere an employee who was acting purely on the direction of the Managing Director. Therefore Shri Rajesh Maheshwari has to be treated the person who was invol....