TMI Blog1999 (7) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Officers of Satara intercepted one Rickshaw trailer loaded with 8 packages of Cast Nylon products manufactured by M/s. Nihal Cast Nylon Pvt. Ltd. (hereinafter referred to as NCNPL). However, the driver produced three delivery challans of M/s. Garware Synthetics Pvt. Ltd. (hereinafter referred to as GSPL). The goods were not accompanied with any Central Excise gate pass. This led to search of the factory and office premises of NCNPL, some fully manufactured and allegedly unaccounted goods and documents were seized and statements of Various persons were recorded under Section 14 of the Central Excise Act. After issuing show cause notice dated 14-12-1988 to 16 parties and affording personal hearing, the Collector passed the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d order that both M/s. NCNPL and M/s. GSPLs are one and the same unit; that this is evident from paragraphs 7 and 9 of the findings in the impugned order; that in para 9 the Collector had given his findings to the effect that the allegations in the show cause notice are proved.... He also referred to paras 2 and 3.2 of the findings wherein it was mentioned that NCNPL has been set up deliberately by GSPL to avoid taxes and that NCNPL is a floated unit of GSPL and services of Shri L.G. Joshi and Shri A.R. Bedekar, both Directors of NCNPL, were used to create the mirage of its independent character. He, therefore, contended that in such a situation two penalties cannot be imposed on one and the same unit; that the penalty imposed on NCNPL ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tors on whom the penalty has been imposed; that the Appellants were not even in the know of what was going on a day to day basis in NCNPL; that the Department ought to show that these appellants were responsible for carrying on business and were during the relevant time in charge of the business. 6. Countering the arguments, Shri H.K. Jain, learned SDR, submitted that the Collector, in the impugned order, did not hold that NCNPLs was a dummy unit; that he had only given his findings that NCNPL was floated by G.S.P.L.; and that the dealings between these two units were clearly marked with a mutuality of interest and as such separate penalty is imposable on M/s. GSPL. Regarding the penalties imposed on other appellants, being Directors, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pleading that the penalty cannot be imposed on GSPL as NCNPL and GSPL have been treated as one in the impugned order. The learned Advocate, however, could not substantiate his plea that both M/s. GSPL NCNPL have been treated as one unit in the impugned order. The Collector, in the impugned order has clearly come to the conclusion that NCNPL was floated by GSPL; that there existed a financial nexus, beyond the scope of a relationship on principal to principal basis which constitutes a mutuality of interest between them. The Collector had discussed a number of reasons on the basis of which he came to the conclusion that both the units had mutuality of interest in the business of each other. He also gave his findings after weighing the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility on director, the department has to show as to how and to what extent a particular director is liable. The Tribunal in the case of Bihar Extrusion Co. (P) Ltd. v. C.C.E ., 1991 (56) E.L.T. 139 (T), held that in order to fasten liability of penalty on director, there must be some finding to show that he was the person liable for acts of the appellants' company and unless such specific finding is arrived against him personally, the imposition of penalty on the Director is not in accordance with law. We observe that the Collector had only mentioned in findings, in the impugned order, that 6 individuals (this did not include the name of Shri P.J. Saldhana, one of the appellants) were actively and mainly concerned in illegal activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who was incharge of and was responsible to the company for the conduct of the business was required to be determined. Furthermore, language of the proviso of this deeming provision is such that it is required to be examined where the burden of proof lies and when the onus shifts. In view of these provisions it was necessary for the adjudicating authority to examine the facts w.r.t. these provisions in greater details but his order regarding the liability of penalty on the Directors is virtually a non-speaking order. It is therefore required to be set aside but the matter is required to be remanded for passing an appropriate order after giving opportunity to the appellants to be heard in the matter. 11. Therefore, while I agree with my ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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