TaxTMI 
TaxTMI 
2024 (5) TMI 1333
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....ows. M/s. Turbo Micro Systems was a partnership firm having four partners and the appellant herein is also one of them. The said partnership firm was dealing in resale of computer and its parts. The shares of the partners were as under:- (i) Shri Prashant M. Golwala - -33% (ii) Shri Anand Sorte -33% (iii) Rakesh Jagdish Mehta -25% [Appellant herein] (iv) Jagdish M. Mehta -9% [Appellant's father] 3. Jagdish M. Mehta and Rakesh Jagdish Mehta (appellant herein) are father & son. Since the department found certain discrepancies/illegality in the invoices/bills etc. of M/s. Turbo Micro Systems, therefore a show cause notice dated 4.3.1994 was issued to the firm as well as its partners for recovery of Central Excise duty amount of Rs.5,67,673/- and the same was culminated in the adjudicating order dated 24.2.1998 confirming the duty demand of Rs.5,67,673/- alongwith interest and equal penalty on the partnership firm and also imposing personal penalty of Rs.1,50,000/- on each of the partners of the firm including the appellant and his father. Although the appellant and his father had filed the appeal against the adjudication order but since that was ....
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....nal, the break-up of which is as follows:- i) Rs. 2,83,837/- through challan dated 26.12.2012 ii) Rs. 1,58,082/- through challan dated 21.01.2015 iii) Rs. 2,44,099/- through challan dated 23.04.2015 According to learned counsel the duty amount confirmed on M/s. Turbo Micro System is Rs.5,67,673/- and the appellant being the partner of 25% , his share comes out to be Rs.1,41,198/- and similarly out of the equal penalty imposed on the firm, the share of the appellant could be Rs.1,41,198/- and adding 1,50,000/- personal penalty in the said amount, the total liability of the appellant comes to Rs.4,33,836/-[emphasis supplied]. So far as the father of the Appellant is concerned who was partner of 9%, his duty liability comes to Rs.51,091/- and equal penalty share Rs.51,091/- and adding personal penalty of Rs.1,50,000/- the total liability of appellant's father Mr. Jagdish M. Mehta comes to Rs.2,52,181/-[emphasis supplied]. Adding both the aforesaid amounts together, the total liability of the father & son duo comes out to Rs. 6,86,018/- which has already been paid. According to learned counsel, the other two partners of M/s. Turbo Micro System who are 66% ....
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....ernment recovery as they were not concerned with M/s. Turbo Micro System or its affairs nor there was any charge against either of brothers of the appellant but the Learned Commissioner rejected the submissions of the appellant by holding that government recoveries of the statutory dues are first charge on defaulter's properties. 8. The order of attachment of immovable property has been done under the Rules of 1995, which were made in exercise of the powers conferred by Section 156 r/w. Section 142 of the Customs Act, 1962. Rule 2(vi) of the said Rules of 1995 defined 'defaulter' as any person from whom Government dues are recoverable under the Act. Chapter II of the said Rules deals with the procedure for the attachment of property. The issuance of certificate under rule 3 of chapter II is for the dues not paid by the defaulter to the government and the amounts specified as the amounts due from 'such person'. Such person can only be the 'defaulter' as defined u/r. 2(vi) and no one else. Rule 10 is very relevant for the situation herein as it stipulates that "where the property to be attached consists of the share or interest of the defaulter in property belonging to him and ano....
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....ing firm or their activities. In the absence of any specific provision under the Rules for recovery of the dues by attaching the personal property of some other partnership in which the majority of the shareholders have nothing to do with the recovery of the government dues, the notice of attachment of said property is bad in law. 10. As discussed earlier the entire duty amount alongwith equal penalty has been paid by the appellant herein alongwith personal penalty on him as well as on his father. Now the issue is about the interest imposed on the duty amount, by the adjudicating authority in Order-in-Original dated 24.02.1998 which has attained finality. The interest has been imposed under section 11AB of Central Excise Act, 1944. Here it is interesting to note that duty demand has been made and confirmed for the goods cleared during the year 1993 and the show-cause notice was issued on 04.03.1994. Admittedly during the period Section 11AB ibid was not brought into force by the legislature as the same has been introduced w.e.f. 28.09.1996. That's why there is no whisper about charging of interest u/s 11AB ibid in the show-cause notice. Not only that, sub-section (2) of interest....