TMI Blog2016 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... in interpreting such provisions wherein it is held that mens rea is not to be read in statutory contraventions/offences, can be noted from some decisions. Simultaneous penalties can be imposed on the firm and the partners under the Act and more particularly under Section 112(a) of the Act. However as the Act itself stipulates, the same would be subject to the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention. - Customs Appeal No. 100, 101, 102, 103/2012 - - - Dated:- 29-1-2016 - M. S. Sanklecha, M. S. Sonak And G. S. Kulkarni, J. For the Appellants : Mr Naresh Thacker with C. Nanda Mr Chirag Shetty For the Respondents : Mr A S Rao i/b. S D Bhosale JUDGMENT ( M. S. Sanklecha, J. ) This Full Bench has been constituted on a reference made on 23rd April, 2015 by a Division Bench of this Court in Amritlakshmi Machine Works Others v/s. The Commissioner of Customs (Import) -303 ELT 161. This reference has arisen when the Division Bench in Amritlakshmi Machine Works (supra) was considering four appeals (two by the partnership firm and two by its managing part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Appellants were, inter alia, permitted to import 248 pieces of ball bearings valued approximately at ₹ 9 lacs within the overall value of ₹ 50,05,468/. It is stated that sometime in February, 1997 the Appellants discharged their export obligation and therefore, the said license became transferable. As the Appellants were not able to import any goods under the said license for the initial validity period, the Appellants requested for extension of the validity period of the said license. A part of the said license was utilized by importing two consignments vide Bill of Entry filed in January, 1997 and August, 1998, respectively. The validity of the said license was extended up to 2151999 and the value thereof was reduced by the office of the Joint Director General of Foreign Trade, Mumbai to ₹ 43,41,140/leaving an unutilized balance of ₹ 27,32,557/; 5. The information was received by officers of the Directorate of Revenue Intelligence, Mumbai Zonal Unit that several consignments of Bearings have been imported in the names of M/s. Hiral Overseas, M/s. Ankit International, M/s. Nippon Bearings Pvt. Ltd. M/s. M. M. Corporation, M/s. Nippon Bearings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability to confiscation of goods under Section 111 as to why penalty under Section 112(a) and/or 112(b) of the Customs Act, 1962 should not be imposed on each of them; 7 The show cause notice was, therefore, taken up for adjudication by the Commissioner of Customs (Adjudication), Mumbai and he confirmed the demand to the extent indicated therein. He imposed penalty under Section 112(a) of the Customs Act, 1962 on the following persons: (a) M/s. Amrit Laxmi Machine Works: ₹ 15 lacs, (b) Mr. N. Nagdutt K. Brahmachari: ₹ 5 lacs. 8 This order of adjudication of the Adjudicating Authority was challenged before the Customs, Excise Service Tax Appellate Tribunal, West Zonal Bench, Mumbai and by the impugned order dated 752012, the Appeal of the Appellant has been dismissed. 4. Being aggrieved by the impugned order dated 7th May 2012 of the Tribunal, the Appellantfirm and its partner had preferred two appeals each under Section 130 of the Act arising out of two separate show cause notices. The substantial question raised in the four appeals to this Court is the jurisdiction of the Authorities under the Act to impose simultaneous penalties both upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kar, learned Counsel appearing for the Appellant in support of the proposition that penalty cannot be imposed simultaneously upon a partnershipfirm and its partners under Section 112(a) of the Act submits as under: (a) The issue of jurisdiction under Section 112(a) of the Act to impose simultaneous penalties upon the partnershipfirm and its partners stands concluded by the decision of this Court in Jupiter Exports (supra) holding that it cannot be done. This decision is binding. Subsequent decision of this Court in Textoplast Industries (supra) ought to have followed the binding decision of this Court in Jupiter Exports (supra). The subsequent decision of this Court in Textoplast Industries (supra) has incorrectly applied the decision of the Apex Court in Standard Chartered Bank v/s. Directorate of Enforcement -197 ELT 80 which was rendered in the context of the Foreign Exchange Regulation Act, 1973 (FERA), and would have no application while interpreting Section 112(a) of the Act; (b) The scheme of the Act and FERA are entirely different. The Act unlike FERA is divided into different chapters and certain provisions/ sections of the Act, are made applicable only to a particul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partners simultaneously, submits as under: (a) The reference to a Full Bench by the Division Bench in Amritlaxmi Machine Works (supra) was not called for. This for the reason that there is only one decision holding the field in respect of imposition of simultaneous penalties upon the Partnershipfirm and its partners and that is the decision of the Division Bench in Textoplast Industries (supra). It is submitted that this Court in Jupiter Exports (supra) was not called upon to deal with the issue of simultaneous penalties upon the Partnershipfirm and the partners. Thus no referable question arises for consideration by this full Court; (b) The entire issue of simultaneous penalties upon the partners and the partnershipfirm stands concluded not only by the decision of the Apex Court in Standard Chartered (supra) but also by an earlier decision of the Apex Court in Agarwal Trading Corporation v/s. Assistant Collector of Customs -13 ELT 1467. The Supreme Court while construing the erstwhile Sea Customs Act, has held that penalty can be imposed upon the partnershipfirm and also on the partners incharge of the business of the firm. In view of the above, it is submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. CHAPTER-XIV CONFISCATION OF GOODS AND CONVEYANCES AND IMPOSITION OF PENALTIES 111:Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confiscation:- (a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods; (b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods; (c) any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port; (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Act for carrying out the purposes of that Chapter have been contravened.] 112: Penalty for improper importation of goods, etc. Any person,- (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111,shall be liable, (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods are or five thousand rupees], whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees], whichever is the greater (iii) in the case of goods in respect of which the value stated in the entry made under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at nothing contained in this subsection shall render any such person liable to such punishment provided in this Chapter if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in subsection (1), where an offence under this Chapter has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. The Foreign Exchange Regulation Act, 1973 Section 50:-Penalty- If any person contravenes any of the provisions of this Act [other than section 13, clause (a) of subsection (1) of section 18, section 18A] and clause (a) of subsection (1) of section 19] or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing repugnant in the subject or context (1):- abet , with its grammatical variations and cognate expressions, shall have the same meaning as in the Indian Penal Code. 42:- person shall include any company or association or body of individuals, whether incorporated or not. Indian Partnership Act, 1932- CHAPTER -II THE NATURE OF PARTNERSHIP Section 4:-Definition of partnership , partner , firm and firm name Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually partners and collectively a firm , and the name under which their business is carried on is called the 'firm name'. CHAPTER - IV RELATIONS OF PARTNERS TO THIRD PARTIES 25. Liability of a partner for acts of the firm - Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. 26. Liability of the firm for wrongful acts of a partner.- Where, by the wrongful act or omission of a partner acting in the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra). This was as the decision of the Apex Court in Standard Chartered(supra) was not brought to the notice of the Division Bench in Jupiter Exports(supra). Thus, even the Division Bench in Textoplast Industries (supra) proceeded on the basis that the issue for consideration before it was also a subject matter of consideration before the Court in Jupiter Exports (supra). It did not hold that the decision of the Division Bench in the Jupiter Exports (supra) with regard to imposition of simultaneous penalties were mere obiter and/or observations and therefore did not lay down the law on the issue; (b) Moreover even before the Division Bench in Amritlaxmi Machine Works (supra), the Revenue had not contended that the decision in Jupiter Exports (supra) was in the nature of obiter to the extent of its observation that simultaneous imposition of penalties upon the partner and its partnershipfirm is not permissible. The possible reason for not canvassing the aforesaid view before the Division Bench in Amritlaxmi Machine Works (supra) was that the observations of the Court in Jupiter Exports (supra) were rendered in the context of the submission made on behalf of the Revenue that the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or exporting the goods unless exemption is granted under Section 25 of the Act from the duties of Customs on the basis of the character of the person importing and/or exporting the goods. Nevertheless, the entire process of assessing the import/ export goods to duties of Customs is initiated by the person who is importing/ exporting the goods. The basic requirement for a person to import/export goods, is an allotment of ImportExport Code (IEC) number by the Director General of Foreign Trade (DGFT). On the basis of the IEC number, a person can initiate the process of filing a Bill of Entry in case of import goods and a Shipping Bill in case of export goods. In the present facts, we are concerned with imported goods. Therefore, a person who files a Bill of Entry in respect of imported goods is an importer as defined in Section 2(26) of the Act i.e. any person who has at any time between the import of goods and clearance for home consumption includes the owner of the goods or any person holding himself out to be an importer. Thus, the bill of entry is filed by the importer under Section 46 of the Act and the same is assessed to duty under Section 17 of the Act by a proper Officer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Section 112 (a) of the Act. Thus, these proceedings under Section 112(a) and (b) of the Act are in personam. The Act provides in Chapter XIV thereof that before any order in respect of confiscation of goods and/or imposition of penalty is passed, an entire adjudicatory process as provided in Sections 122 to 126 of the Act is followed. This ensures issue of appropriate show cause notice, hearing and passing of an appealable order. 17. The Act besides having provided for the above quasi judicial adjudicatory process for confiscation and penalty as a part of Chapter XIV of the Act also deals with Offences and Prosecutions under Chapter XVI of the Act. It specifies various offences to which Chapter XVI of the Act applies. Section 135(1) of the Act which is a part of Chapter XVI of the Act provides without prejudice to any other action that may be taken under the Act, for offences in case of imported goods, at the pain of imprisonment of the person concerned. In fact Section 135(1)(a) states that if any person in relation to any goods, is in any way, knowingly concerned in misdeclaration of value or fraudulent evasion of duty or of any prohibition under the Act or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act but also for prosecution in criminal proceedings in Court of law under Chapter XVI of the Act. The criminal proceedings are subject of course to satisfying the additional requirement of doing the act or omitting to do the act with knowledge of the goods becoming liable for confiscation. It should be noted that Section 127 of the Act, which is a part of Chapter XIV of the Act provides that any action taken under Chapter XIV of the Act shall not bar/affect any proceedings taken under Chapter XVI of the Act. Thus, the Act itself provides for parallel proceedings for imposition of penalty under the Act and for prosecution under the Criminal Procedure Code, 1973 in terms of Chapter XVI of the Act. This is permissible and not hit by double jeopardy as held by the Apex Court in Union of India v/s. Purshottam -2015 (3) SCC 779. This is for the reason that the concept of double jeopardy would only apply to successive punishment of criminal character. 19. It was firstly contended on behalf of the Appellant that the issue is covered by the decision of the Division Bench of this Court in Jupiter Exports (supra). The subsequent decision of this Court in Textoplast Industries (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence is that wherever the Parliament decided that the provisions of Chapter XVI of the Act is to be made applicable across all the provisions of the Act, it so specifically provided for it, as is noticed in Section 138B of the Act which is also a part of Chapter XVI of the Act. Thus, while interpreting Section 140 of the Act, meaning must be given to the words 'in this Chapter' occurring therein. It is a settled rule that while interpreting a fiscal or a penal enactment it is not open to ignore any words thereof on any assumed or supposed intention/object. (See Grasim Industires Ltd. V/s. Collector of Customs -2002(4) SCC 297). Thus though aid /guidance could be taken from the decision of the Apex Court in Standard Chartered Bank (supra), the same cannot be applied, as it is, ignoring the differences in wordings of Section 68 of FERA and Section 140 of the Act. 21. The Division Bench of this Court in Textoplast Industries (supra) had while placing reliance upon the decision of Apex Court in Standard Chartered Bank (supra), held it is applicable to the Act on the following basis: 16:-Finally, Section 68 was held only to be clarificatory in nature: Section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an adjudication leading up to the imposition of a penalty as compared to a proceeding in the nature of a criminal prosecution 22. From the above observations, we notice that the difference between Section 68 of FERA and Section 140 of the Act was noted by the Court. However, the difference was ignored on the basis that accepting the same would lead to an anomalous situation and there is no logic for the difference. It is a well settled rule of interpretation that in interpreting a fiscal and/or penal legislation, meaning must be given to each word of the statute and it cannot be ignored on the basis that it does not appear logical. The Apex Court in Martand Dairy and Farm Vs. U.O.I. -1975(4) SCC 313 had observed that Taxation consideration may stem from from administrative experience and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian interpretation must prevail. Similarly, in Azamjaha Vs. Expenditure Tax Officer -1971 (3) SCC 621, the Court has observed that logic or reason cannot be of much avail in interpreting a taxing statute. Moreover, it is clear that the Parliament had specifically provided in Section 140 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which arose for consideration in the case in the context of the questions which arose for consideration in the case in which the judgment was delivered. An obiter dictum as distinguished from a ratio decidendi is an observation by the Court on a legal question suggested in a case before it but not arising in such a manner as to require a decision. Such an obiter may not have a binding precedent as the observation was unnecessary for the decision pronounced, but even though an obiter may not have a binding effect as a precedent, but it cannot be denied that it is of considerable weight. (emphasis supplied) While as pointed out herein above the observations in regard to simultaneous penalties in Prakash Metal works(supra) are not even obiter but merely casual observation. It is a settled principle of law that A judicial decision is an authority for what it actually decides and not for what can be read into it by implication or by assigning an assumed intention to the Judges as observed by the Apex Court in Armaendra Pratap Singh v/s. Tej Balendar Prajapati -2004 (10) SCC 65. 24. It was then contended by the Revenue, de hors the decision of the Division Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act while restricting its application to an offence under Chapter XVI of the Act, does not restrict its application only to prosecutions in criminal Court. Thus Section 140 of the Act could be read into adjudication proceedings resulting in penalty under Section 112(a) of the Act provided the act or omission on the part of any person in making the goods liable to confiscation is also an offence under Section 135(1) (a) of the Act. Section 112(a) of the Act to the extent it covers a person who abets the doing or omitting the doing of any act as plainly read would also be an offence under Section 135(1)(a) of the Act also. This is so as the requirement of knowledge is found only in case of abetment and not in other cases listed in Section 112(a) of the Act. The word abetment is not defined in the Act, therefore the meaning assigned to it in Section 3(1) of the General Clauses Act, 1897 which is as given under Section 107 of the Indian Penal Code. An abetment would include by definition intentional aiding when covered by Explanation 2 read with third category listed in Section 107 of the Indian Penal Code. (See Supreme Court decision in Shree Ram v. State of U.P. -1975 AIR(SC) 175 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was launched against the respondent no.1 and other office bearers of the Cooperative Society. In the above facts, the Court had to consider whether there was a breach of Section 5 of the Imports and Exports (Control) Act, 1947 and it answered the same in the affirmative. The defence of respondent no.1 before the Court was that in the absence of the Cooperative Society being a made party, no proceedings could be taken against the office bearers. This was on the basis that at the highest the office bearers would have only abetted the offence and in the absence of knowledge, the charge of abetment against the office bearers could not stand. The Court relied upon the General Clauses Act and the definition given in the Indian Penal Code of the word abetment . The Court in particular relied upon Section 3 of the General Clauses Act, which states that unless there is anything repugnant in the subject or context, the definition given therein would apply to all Central Acts. The Court held that section 5 of the Imports and Exports (Control) Act, 1947 makes no reference to mens rea. The abetment referred to therein must also to be treated on the same footing and, therefore, offence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for penalty is strict without any reference to mens rea / knowledge. Therefore the attribute of knowledge, necessary for being an offence under Section 135(1) (a) of the Act, cannot be read into Section 112(a) of the Act for the purposes of imposing penalty [except in cases of abetment]. Therefore for purposes for imposition of penalty under Section 112(a) of the Act unlike Section 112(b) of the Act mens rea / knowledge is irrelevant(save cases of abetment). Therefore where the notice under Section 112(a) of the Act against the firm is of abetment then it also is an offence under Section 135(1)(a) of the Act, making Section 140 of the Act applicable. 28. However, the Appellant contend that offences under Chapter XVI of the Act cannot be read into penalty proceedings under Section 112(a) of the Act by reading the words criminal as a prefix to the words offence under this Chapter as found in Section 140 of the Act. We find that above addition of the words criminal to the word offence in Section 140 of the Act as sought to be done by the appellant, inexplicable. Much emphasis was laid on the title of Chapter XVI of the Act to emphasize that it applies only to offences and pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished accordingly. The proviso, no doubt, indicates that a person liable to punishment could prove that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. SubSection (2) again speaks only of a contravention of the provisions of the Act and the persons referred to in that subsection are also to be deemed to be guilty of the contravention liable to be proceeded against and punished accordingly. The word 'offence' is not defined in the Act. According to Concise Oxford English Dictionary, it means, 'an act or instance of offending'. Offend means, 'commit an illegal act' and illegal means, 'contrary to or forbidden by law'. According to New Shorter Oxford English Dictionary, an offence is a breach of law, rules, duty, propriety, etiquette, an illegal act, a transgression, sin, wrong, misdemeanour, misdeed, fault. Thus, an offence only means the commission of an act contrary to or forbidden by law. It is not confined to the commission of a crime alone. It is an act committed against law or omitted where the law requires it and punishable by it. In its legal signification, an offence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both is the contravention of the provisions of the Act. A company is liable to be proceeded against under both the provisions. Section 68 is only a provision indicating who all in addition can be proceeded against when the contravention is by a company or who all should or can be roped in, in a contravention by a company. Section 68 only clarifies the nature and mode of proceeding when the contravention of any of the provisions of the Act is by a company, whether it be by way of adjudication to impose a penalty or by way of prosecution leading to imprisonment and a fine. (emphasis supplied) 29. Thus it is not open to restrict the meaning of the word offence by prefixing the word criminal to it. In any case addition of words to a fiscal statute and/or penal section is against the basic canons of interpretation. One more feature to be noted is that both abetment under Section 112 of the Act and offences listed out in Section 135(1) (a) of the Act postulate contravention of the Act with knowledge. 30. However, the question posed to us is specific viz. whether simultaneous penalties upon the firm and its partners can be imposed under Section 112(a) of the Act. Thus, we a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the requirements of Section 135(1)(a) of the Act. It is only then that Section 140 of the Act can be invoked for purposes of imposition of penalty under Section 112(a) of the Act both upon the partner as well as the firm. In the second class of cases i.e. abetment under Section 112(a) of the Act a specific case of abetment against the partner would have to be made for a separate penalty upon him. The notice issued by the Revenue should make out a case of the partner having acted and/or omitted to act with knowledge in his individual capacity that such act and/or omission to act on the part of the firm would render the goods liable to confiscation. It has nothing to do with Sections 135 and 140 of the Act. However, penalty cannot be imposed on the partner merely because penalty is being imposed upon the firm. The burden is upon the Revenue in the show cause notice to make out a case that penalty is imposable under Section 112 of the Act upon the partner for abetment of the offence by the firm. This is so, as otherwise, a penalty imposed upon the firm would be a penalty imposed upon all the partners of the firm as this has nothing to do with the knowledge of the breach rendering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership a firm has no legal existence apart from its partners and it is merely a compendious name to describe its partners But under the Income Tax Act the position is somewhat different. A firm can also be charged as a distinct assessable entity different from its partners who can also be taxed separately. Under the Act, undisputedly a Partnership firm is not given a status of a separate legal entity in the absence of Section 140 of the Act. Thus, in the absence of invoking Section 140 of the Act, no separate penalties under Section 112 of the Act would be imposed simultaneously on firm and its partners. 33. Nevertheless the Revenue places strong reliance upon the decision of the Supreme Court in Agarwal Trading Company(supra) wherein it has held that the firm though not a legal entity, still is considered to be a person under the provisions of the Sea Customs Act. The Apex Court upheld the penalty upon partnershipfirm as well as the partner who was the officer in charge of the firm for contravention of the Foreign Exchange Regulation Act, 1947 (FERA 1947). However, the same seems to have proceeded on the basis that Section 23C of the FERA, 1947 which was similar to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of the Delhi High Court in the case of Madan Lamba v/s. CIT -134 ITR 849 is misconceived. The issue therein was imposition a penalty upon the partner of the firm for late filing of his personal return of income. The explanation for late filing by the partner of his individual return was only on account of delay in finalization of the firm's account. It was not a case of penalty upon the partner in his capacity as a partner for late filing of return by the firm. Therefore the issue being completely different therein, we do not deal with the same. 36. It was next contended by the Appellant that in any event imposing penalty upon the partnership firm and the partner amounts to double penalty for the same offence and therefore hit by Article 20(2) of the Constitution of India. We are unable to understand how Article 20(2) of the Constitution is applicable. This is not a case of prosecution but one of adjudication proceedings. Further as pointed out herein above in cases where Section 140 of the Act can be invoked while issuing notices under Section 112(a) of the Act on the partner, no question of double penalty arises as the same are being imposed on two separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a separate case of abetment on his part. This abetment should be in respect of the act and/or the omission to act on the part of the firm which has rendered the good liable for confiscation under Section 111 of the Act or where the allegation on the firm is of abetment and / or mens rea, then Section 135(1)(a) and 140 of the Act is applicable and simultaneous penalty is imposable. It is made clear that in all other cases falling under Section 112 (a) of the Act simultaneous penalties upon the firm and its partner cannot be imposed. It is made clear that no penalty can be imposed upon the partner ipso facto merely on account of the fact that penalty is being imposed on partnershipfirm. Question (b)- the decision in Textoplast Industries (supra), arrived at on first principle is the correct view only to the following extent: (a) where the show cause notice makes out a case under Section 112(a) of the Act read with Section 135 of the Act then alone on application of Section 140 of the Act simultaneous penalties are imposable upon the firm and its managing partner; or (b) where the show cause notice makes out an independent case of abetment upon the partner for the act or om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facto merely on account of the fact that penalty is being imposed on partnership firm. (ii) As regards 'Question b':-Only where the show cause notice makes out a case under Section 112(a) of the Act read with Section 135 of the Act then alone on application of Section 140 of the Act simultaneous penalties are imposable upon the firm and its managing partners; Section 112(a) provides for a civil obligation of payment of a penalty as a result of a departmental adjudicatory process. Penalty may be imposed for an act of commission or omission and/or abetment thereof which amounts to contravention of the provisions by the Act leading to confiscation of goods. Section 112(a) does not require any mens rea and thus application of provisions of Section 135(1)(a) of the Act which is a provision dealing with an offence is not a sine qua non for the application of Section 112(a) of the Act. Section 112(a) and Section 135 stand independent of each other. I am also unable to subscribe to the conclusion of my learned brother that the decision of the Division Bench of this Court in Textoplast Industries Vs. Additional Commissioner of Customs, (2011(272) E.L.T. 513 (Bom.) to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Supreme Court in the case of Standard Chartered Bank V. Directorate of Enforcement, (2006(1997) ELT 18(S.C.) , which the Division Bench relies, was rendered in the context of Foreign Exchange Regulation Act,1973 (for short FERA ) and thus, the principles as laid down in interpreting the provisions of the FERA could not have been applied by the Division Bench to interpret Section 112 of the Act, to hold that simultaneous penalties can be imposed on the firm and the partners. He submits that the Division Bench thus ought not to have applied the deeming fiction created by Section 140 of the Act to Section 112(a) of the Act. In this context it is urged that Section 140 of the Act falls under Chapter XVI which prescribes 'Offences and Prosecution', whereas Section 112(a) falls under Chapter XIV which provides for 'Confiscation of Improper Imported Goods and Penalties'. It is, therefore, submitted that scheme of FERA which does not chapterize the provisions cannot be borrowed to interpret the Act. Learned Counsel for the appellant has also drawn the attention of the Court to the provisions of Section 138B(2) and 138C(4) of the Act to submit that wherever the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent of proceedings contemplated under Section 112 and the two cannot be said to be overlapping. 48. On the other hand, learned Counsel for the Revenue would submit that the decision of the Division Bench in Textoplast Industries' (supra) concludes the issue that simultaneous penalties can be imposed on the firm and the partners. He submits that in the case of Commissioner of Customs (E.P.) Vs. Jupiter Exports the Division Bench was not dealing with the issue of imposition of simultaneous penalties on the firm and the partners and the observations as made in paragraph 19 is only an obiter. Learned Counsel for the Revenue submits that in Textoplast Industries' (supra) the Division Bench was called upon to decide the issue as to whether penalties can be simultaneously imposed on the partnership and the partners as can be seen from the question (B) in para 1 of the judgment. It is submitted that the Division Bench in Textoplast Industries' (supra) has rightly applied the principles of Law as laid down in the decision of the Supreme Court in the Standard Chartered Bank V. Directorate of Enforcement (supra) and thus there is no conflict between the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on the partners and partnership firm was not the issue for consideration before the Division Bench and the observations at paragraph 19 (supra) is a reiteration of the submissions made on behalf of the Assessee relying on the decision of the Tribunal in the case of Swem Industries vs Commissioner of C. Ex. Cus., (2003(154) E.L.T. 417 (Trib)), wherein the Tribunal had made some passing observations as under:- ... . It has been a consistent view taken, in accordance with the long decisions of the Tribunal, that penalty upon the partner of a firm cannot be imposed in addition to the penalty on the firm. We therefore, set aside the penalty of ₹ 1.00 lakh imposed on Fahod Safi Motiwala. 51. Further in Textoplast Industries, the issue of simultaneous penalties on the firm and the partners squarely fell for consideration of the Division Bench, which held that simultaneous penalties can be imposed on the partnership firm and its partners for breach of the provisions of the Customs Act inter alia on first principles and also applying the principles of law laid down by the Supreme Court in the case of Standard Chartered Bank (supra) . In answering the question a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,- in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees], whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees], whichever is greater; [(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereinafter in this section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater; (iv) in the case of goods fallin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salutary book on the subject Principles of Statutory Interpretation - by Justice G.P.Singh, 13th Edition,:- We are always trying to find the intention of the Legislature. Where taking into account the surrounding circumstances and the likely consequences of the various possible constructions there can be at all any doubt about the intention, we must, where penalties are involved, require that the intention shall clearly appear from the words of the enactment construed in the light of those matters. But if we can say that those matters show that a particular result must certainly have been intended , we would, I think, be stultifying the underlying principle if we required more than that the statutory provisions are reasonably capable of an interpretation carrying out that intention. In an earlier case, LORD REID explained that the rule of restrictive interpretation of penal provisions only applies where after full enquiry and consideration one is left in real doubt. It is not enough that the provision is ambiguous in the sense that it is capable of having two meanings. , for the imprecision of language is such that it is `difficult to draft any provision which is not ambigu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act and which need to be noted are the definitions of dutiable goods defined under Section 2(14) and prohibited goods defined under Section 2(33) of the Act. They read as under:- 2(14) dutiable goods means any goods which are chargeable to duty and on which duty has not been paid; 2(33) prohibited goods means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with; 57. The Scheme of the Act, shows that the Act in itself is a complete Code, which provides for search, seizure, confiscation of goods and conveyances, imposition of penalties, settlement of cases, appeals, offences and prosecution. 58. A partnership firm can be an importer. If the goods imported by the partnership firm are rendered liable for confiscation, then whether by virtue of Section 112 (a) of the Act penalty can be separately imposed on the firm and its partners or whether the intention is of a levy only on either of them and as a fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal position that a firm would be a distinct entity from its partners in the context of certain enactments is also supported from the authoritative pronouncement of the Supreme Court in the following decisions. 61. The Supreme Court in Y.Narayana Chetty Anr. Vs. ITO Nellore, (AIR 1959 SC 213) was considering the following definition of assessee under Section 2 clause (2) of the Income Tax Act as it stood prior to the amendment of 1953:- a person by whom income tax is clearly payable. It was held that the word person in the above provision would obviously include a firm under Section 3(39) of the General Clauses Act, which provides that a person includes 'any company or association or body of individuals whether incorporated or not'. It was observed that it would not be correct to say that an assessee under Section 2 subsection (2) of the Act necessarily means an individual partner and does not include a firm. 62. The Constitution Bench of the Supreme Court in the case of Commissioner of Income Tax, Madras and Another Vs. S. V. Angidi Chettiar (AIR 1962 SC 970) in dealing with a case pertaining to imposition of penalty on a registered firm, under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty for any acts or omissions which result in contravention of the provisions of the Act. To this extent the appellants too agree on the above legal position. 66. Now as regards the question whether partners can also be liable under Section 112(a) of the Act for payment of a penalty apart from the firm, so as to independently fall within the meaning of the word any person as used in Section 112 (a) of the Act. As regards inclusion of the partner as a person, for such acts of contravention, it may be observed that the definition of a person under Section 3(42) of the General Clauses Act is an inclusive definition, and thus apart from what it provides namely that a person shall include any company or association or body of individuals, whether incorporated or not , that is a firm it would also include within its ambit 'natural persons'. This would be adopting the literal meaning of the word 'person'. The word person has been described in the Webster Dictionary as under:- person: 1. a human being, whether man, woman, or child: . . 3. Social, an individual human being, esp. with reference to his social relationships and behavioral patterns as condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such case can a partner say that though he is involved in the act of contravention, nonetheless only the firm be penalised. Of course it cannot be said that in every case all the partners become liable for a penalty for such acts of contravention of the provisions of the Act. It may vary from case to case depending on the degree and the nature of involvement. 69. To examine this issue and in the present context, it would be useful to refer to the 'Statement of Objects and Reasons' dated 8th June,1962 to the Act and the Notes on Clause 112 which read as under:- The Sea Customs Act which lays down the basic law relating to customs was enacted more than 80 years ago. It has been amended from time to time and some important amendments were made by the Sea Customs (Amendment) Act,1955. General and comprehensive revision of the Act has not so far been undertaken. Several provisions of the Act have become obsolete. Difficulties have also been experienced in the implementation of certain other provisions. The trade has been pressing for certain changes and facilities. Smuggling, consequent to controlled economy, has presented new problems. To meet these requirement, it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Section 112 was to provide for personal penalty on the concerned persons for every contravention specified in Section 111 and that it would also include personal penalty not only on the persons who are actually concerned in the contravention but on those who abet such contravention would also become liable to a personal penalty. That is those persons who are directly and principally involved or persons in the first degree as also those who are indirectly involved in the contravention, whose acts are to aid and assist and/or who abet such contravention. The involvement of such persons would depends on the facts of each case. The notes on Clause 112 also gives an illustration that a financier who finances smuggling or a dealer who helps in the disposal of smuggled goods will also be liable to a personal penalty as these acts are in the nature of abetment. These persons may not necessarily be part of the Company or a firm importing the goods. Thus what is significant to be noted from the notes on Clause 112 as appended to the Statement of Objects and Reasons is that every 'contravention' as mentioned under Section 111 of the Act will become liable for a personal penalty, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contemplated by the said provisions, wherein full opportunity can be availed by the person to prove that there is no liability on such person as a owner or otherwise to suffer confiscation or a penalty. It is thus not a case, that where the acts of contraventions and/ or omissions which lead to confiscation if are by a partnership firm and its partners, in every such case, penalty is required to be simultaneously imposed on the firm or its partners, it would depend on the facts of each case. The above provisions create an adequate safeguard to give full opportunity to each of the category of persons to prove that they are not liable for imposing of a penalty. It depends on the facts of each case as to what is the role which can be said to be attributed to such persons in contravening the provisions of the Act. The persons can be the principal persons or persons in the first degree who contravene the provisions of the Act. The others may be in a category who aid and assist the contravention and thus can be the persons of the second degree in effecting the contravention who can be said to be have abetted the contravention, who also become liable for a penalty under Section 112 (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Legislature is thus explicit to treat the nature of the contravention as listed in clauses (a) to (p) of Section 111 of the Act liable for penalty when the acts and omissions can be attributed to persons indulging in such contravention. The intention of the provision obviously is two fold, firstly it is the interest of protection of the revenue that is the economic aspect, and secondly it should be a deterrent to the persons indulging into such acts or omissions amounting to contravention of the provisions of the Act. Thus on its purposive interpretation it cannot be said that section 112(a) of the Act precludes, in a given case, to impose simultaneous penalties on the firm and its partners. As the firm and its partners are required to be considered distinct from each other, for the purposes of Section 112(a) of the Act, the submission on behalf of the appellant that a simultaneous penalty would amount to double jeopardy cannot be accepted. 73. I am in complete agreement with the submission of as made on behalf of the Revenue that the above position that simultaneous penalties can be imposed on the firm and its partners also stands concluded in view of the authoritat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xported from the Union of Burma contrary to such prohibition or restriction, or if any attempt be made so to import or export any such goods, or if any such goods he found in any package produced to any officer of Customs as containing no such goods, or if any such goods, or any dutiable goods, be found either before or after landing or shipment to have been concealed in any manner on board of any vessel within the limits of any port in the Union of Burma, or if any goods, the exportation of which is prohibited or restricted as aforesaid, be brought to any wharf in order to be put on hoard of any vessel for exportation contrary to such prohibition or restriction. 18 19 such goods shall be liable to confiscation ; any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. 37 -If it be found, when any goods are entered at, or brought to be passed through, a custom-house, either for importation or exportation, that tai the packages in which they are contained differ widely from the description given in the bill of entry or app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. For the purposes of this section,- (a) company means any body corporate and includes a firm or other association of individuals; and (b) director in relation to a firm, means a partner in the firm. Section 23C of the FERA,1947 thus creates a deeming fiction by which, where a person committing a contravention is a company, every person who, at the time the contravention was committed was incharge and was responsible to the company as well as the Company shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly. The explanation to this section expanded the scope of the provision so as to bring within the ambit of the expression company a firm or an association of individuals , and for the expression director' a partner of the firm. It can be noted that Section 167 of the Sea Customs Act 1878, did not have an explanation as provided under Section 23C of the FERA,1947. In interpreting the above provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 or 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 existence, as such clauses (3), (8) and (37) of Section 167 of the Sea Customs Act are inapplicable to the appellant firm. In our view, the explanation to S.23C clearly negatives this contention, in that a company for the purposes of that section is defined to mean any body corporate and includes a firm or other association of individuals and a Director in relation to a firm means a partner in the firm. The High Court was clearly right in holding that once it is found that there has been a contravention of any of the provisions of the Foreign Exchange Regulation Act read with Sea Customs Act by a firm, the partners of it who are incharge of its business or are responsible for the conduct of the same, cannot escape liability, unless it is proved by them that the contravention took place without their knowledge or they exercised all du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The result is that any attempt to contravene a provision of the Foreign Exchange Regulation Act is punishable under the relevant provisions of Section 167 of the Sea Customs Act. Besides under Section 167 clause 8 of the Sea Customs Act an attempt made to export any goods the exportation of which is prohibited or restricted by or under Chapter IV of the Act, which includes Section 19, renders the goods liable to confiscation and any person concerned in any such offence liable to a penalty not exceeding three times the value of the goods or not exceeding one thousand rupees. If the word ' goods in the above is substituted by Indian Currency under the Foreign Exchange Regulation Act an attempt to export Indian Currency Notes can be dealt with under the Sea. Customs Act. 22. On the facts of this case, I find myself unable to come to the conclusion that there was no evidence before the Customs officer to lead to the conclusion that the firm including its members were guilty of contravention of law. according to the Customs authority its cashier at the relevant time all prima facie indicate that it was the firm which was attempting to export Indian curre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Section. 76. Apart from the above clear position as noticed in the decision in M/s.Agrawal Trading Corporation (supra), on behalf of the Revenue it is contended that the Division Bench in Textoplast Industries (supra) has rightly applied the deeming fiction under Section 140 of the Act to come to a conclusion that simultaneous penalties can be imposed on the partnership firm and the partners under Section 112(a) of the Act, in applying the principles as laid down by the Supreme Court in the Standard Chartered Bank vs. Directorate of Enforcement (supra). To appreciate the submissions it would be appropriate to extract Section 140 of the Act which reads thus:- 140. Offences by companies.- (1) If the person committing an offence under this Chapter is a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of 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 subsection shall render any such person liable to such punishment prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is therefore, clear that under Section 140, a partnership firm as also the partners would become liable to be punished simultaneously. It can be instantly seen that the provision is similar to Section 23C of the FERA 1947 (supra) which also incorporated a similar deeming fiction. 77. The question is whether the deeming fiction created under Section 140 can be made applicable to Section 112(a) of the Act as held by the Division Bench in Textoplast Industries (supra). It is well settled that an order imposing penalty is a result of quasi criminal proceedings. In the Commissioner of Income Tax, West Bengal Vs. Anwar Ali, (AIR 1970 SC 1782) , the Supreme Court considered as to what is the nature of penalty proceedings. In referring to the decision of the Supreme Court in the case C. A. Abraham vs. The Income Tax Officer, Kottayam and another, (AIR 1961 SC 609) , it was observed that it is settled by now that the order imposing penalty is the result of a quasi criminal proceedings. It was observed that in England also it has never been doubted that such proceedings are penal in character [Fattorini (Thomas) (Lanchashire) (Ltd., v. Inland Revenue Commissioner), 1943 (11) I.T.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (supra). The Supreme Court, in considering the penalty provisions as contained in Section 50 of the Foreign Exchange Regulation Act,1973 (for short FERA ) has held that the deeming fiction which is created by Section 68 which is a provision dealing with offences by Companies, to bring within its purview the person incharge of and responsible for the affairs of the company as well as the company would become squarely applicable to the penalty proceedings. The explanation to Section 68 of the FERA is similar to the explanation under Section 140 of the Act by virtue of which a Company would mean a firm and the Directors in relation to a firm would mean partners of a firm. As to what would be meant by contravention and whether an offence can be said to be a contravention or only a criminal act for the purposes of such legislations are the issues considered by the Supreme Court in this decision. It is thus necessary to note the following observations of the Supreme Court:- 27. Both, Section 50 providing for imposition of penalty and Section 56 providing for prosecution, speak of contravention of the provisions of the Act. Contravention is the basic element. The contravention m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of a crime alone. It is an act committed against law or omitted where the law requires it and punishable by it. In its legal signification, an offence is the transgression of a law; a breach of the laws established for the protection of the public as distinguished from an infringement of mere private rights; a punishable violation of law, a crime, the doing that which a penal law forbids to be done or omitting to do what it commands (see P. Ramanatha Aiyar's Advanced Law Lexicon, 3rd Edn, 2005 page 3302). This Court in Depot Manager, Andhra Pradesh State Road Transport Corporation Vs. Mohd. Yousuf Miya [(1997) 2 SCC 699] stated that the word 'offence' generally implies infringement of a public duty, as distinguished from mere private rights punishable under criminal law. In Brown v. Allweather Mechanical co. [(1954) 2 QB 443], it was described as a failure to do something prescribed by a statute may be described as an offence, though no criminal sanction is imposed but merely a pecuniary sanction recoverable as a civil debt. The expression 'offence' as defined in Section 3(38) of the General Clauses Act means an act or omission made punishable by any law f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the Act which confines the expression 'punished' only to a punishment for a criminal prosecution. An imposition of a penalty can also be a punishment. The second part of the reasoning appears to be selfcontradictory. If a person includes a company, there is no reason to confine Section 68 to a prosecution only, because the company as a person is liable to be proceeded against under Section 50 and Section 56 of the Act, though in a criminal prosecution the punishment by way of imprisonment can be imposed only on the officer or officers of the company referred to in Section 68 of the Act. Section 68 only indicates the manner in which a contravention by a company can be dealt with and it does not show that it is confined in its operation only to prosecutions against a company. It is a general provision relating to a contravening company, which is to be proceeded against whether it be under Section 50 or under Section 56 of the Act. The fact that a fine alone can be imposed on a company in a prosecution under Section 56 of the Act, cannot enable us to confine the operation of Section 68 to criminal prosecutions alone under the Act. We see no reason to whittle down the sco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt (supra) the unequivocal conclusion which can be derived is that the partners and the partnership firm can both be simultaneously liable for imposition of penalty, this is for the reason that in imposing of a penalty as also in a criminal prosecution as would fall in the Act, the basic ingredient to initiate such actions is the breach/contravention of the provisions of the Act. The Supreme Court has held that the term 'offence' as in the present context appearing in Section 140 cannot be confined to a criminal act but in the context of the Act would include within its ambit such acts or omissions which amount to contravention of the provisions of the Act, which includes contraventions as contemplated in Section 111 of the Act. The deeming fiction created under Section 140 would thus become applicable even to penalty proceedings and enable the authorities to impose a penalty on the firm and its partners separately. 81. A contention is urged on behalf of the appellant that the decision in Standard Chartered Bank (supra ) was rendered in the context of the FERA 1973, in which the scheme of the Act was not the same as in the Customs Act. It is further urged that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation of the law as laid down in the decision of the Supreme Court in M/s.Agarwal Trading Corporation and others Vs. The Assistant Collector of Customs (supra) and Standard Chartered Bank vs. Directorate of Enforcement (supra) clearly go to show that the partners and the partnership firm can simultaneously become liable for imposition of a penalty. 83. There is one more facet which needs to be noted as argued on behalf of the appellant namely that the act or omissions of the firm are acts or omissions of the partners for the reason that the partnership firm is not distinct from its partners under the Indian Partnership Act 1932 and thus simultaneous penalties cannot be imposed on the partnership firm and the partners. I do not agree. For the purpose of application of Section 112(a) of the Customs Act, the above discussion clearly shows that the legislative intent is obviously to treat the firm and its partners separately for the purpose of considering the levy of penalty. Section 3(42) of the General Clauses Act gives the firm a legal status. A firm being given such a legal status is well recognized. (See: Dena Bank v. Bhikhabhai Prabhudas Parekh Co., (2000) 5 SCC 694. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vention. Section 52A was couched in the following language: Any vessel constructed, adapted, altered or fitted for the purpose of concealing goods shall not enter within the limits or any port in India or the Indian Customs waters. The contravention of Section 52A was punishable with confiscation of the vessel under Section 167(12A) of the Sea Customs Act. The Supreme Court held that in order to establish contravention of Section 52A of the Sea Customs Act mens rea need not be proved, the knowledge of owners or even of the master was, in the context of Section 52A was entirely irrelevant. What was relevant was a vessel answering the description prescribed by the Section, entered within the limits of an Indian Port, and when it is found that certain construction, adaptation or alteration have been carried out in a ship for the purpose of concealing goods, the mere fact that the master or the owners of the vessel were not shown to have been privy to such alternation etc. would not be sufficient to exclude the operation of Section 52A. The Supreme Court observed thus: 22. On the other hand, the scheme of S.67 supports the contention of the Additional SolicitorGeneral th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonably possible one of which leads to the anomaly just indicated, while the other does not and helps the effectuation of the intention of the legislature, it would be the duty of the Court to accept the latter construction. 24. The intention of the legislature in providing for the prohibition prescribed by S.52A is, inter alia, to put an end to illegal smuggling which has the effect of disturbing very rudely the national economy of the country. It is wellknown, for example, that smuggling,of gold has become a serious problem in this country and operations of smuggling are conducted by operators who work on an international basis. The persons who actually carry out the physical part of smuggling gold by one means or another are generally no more than agents and presumably, behind them stands a wellknit Organisation which, for motives of profit making, undertakes this activity. That is why S.52A makes an absolute prohibition against the entry of a vessel which contains, inter alia any alteration made for the purpose of concealing goods. Entry of contraband gold with the help of ships has thus become a serious problem and is intended to be checked by this absolute prohibition. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in this context made the following observations:- 40. In keeping with the aim and object of the Act which is essentially to safeguard the interests of workers, stop their exploitation, and take care of their safety, hygiene and welfare at their place of work, numerous restrictions have been enacted in public interest in the Act. Providing restrictions in a statute would be a meaningless formality unless the statute also contains a provision for penalty for the breach of the same. No restriction can be effective unless there is some sanction compelling its observance and a provision for imposition of penalty for breach of the obligations under the Act or the rules made thereunder is a concomitant and necessary incidence of the restrictions. Such a provision is contained in Section 92 of the Act, which contains a general provision for penalties for offences under the Act for which no express provision has been made elsewhere and seeks to lay down uniform penalty for all or any of the offences committed under the Act. The offences under the Act consist of contravention of (1) any provision of the Act; (2) any rules framed thereunder; and (3) any order in writing made thereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for proper implementation of the provisions of the Act and it would, therefore, be harsh and unreasonable to hold any director of the company, who may be wholly innocent, liable for the contraventions committed under the Act etc. when he may be totally ignorant of what was going on in the factory, having vested the control of the affairs of the factory to such an officer or employee, by ignoring the liability of that officer or employee. The argument is emotional and attractive but not sound. 42. The offences under the Act are not a part of general penal law but arise from the breach of a duty provided in a special beneficial social defence legislation, which creates absolute or strict liability without proof of any mens rea. The offences are strict statutory offences for which establishment of mens rea is not an essential ingredient. The omission or commission of the statutory breach is itself the offence. Similar type of offences based on the principle of strict liability, which means liability without fault or mens rea, exist in many statutes relating to economic crimes as well as in laws concerning the industry, food adulteration, prevention of pollution etc. in India an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot add the words knowingly or willfully before the words bringing or brought into India, as was done in some other provisions of the Sea Customs Act, for example as in Sections 167 (14) and 167 (61). Does this indicate that the legislature did not want to introduce knowledge and intention as an essential element of the offence? Can it be said that one does not bring anything or nothing can be brought by him unless he knowingly or willfully does so, I do not think that the sweep of the meaning of the word bring or brought can be so narrow as that. One may bring infection of a disease in his family without ever intending to carry the same and may also bring misfortune upon himself without knowing or intending so to do. Thus, although the prohibited goods may have been carried in the vessel without the knowledge of petitioner no.1, the fact that they arrived in India by the vessel from a place outside, stamp upon the goods the character of imported goods. This is so even though the person or persons responsible for the importation was or were other than the petitioners. If the goods were imported goods as I hold they were then their inclusion in the import manifest was oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ul Aziz, (AIR 1962 Bom 243) in construing Section 5 of the Imports and Exports (Control) Act,1947, read with the provisions of Section 3(1) of the General Clauses Act it was held that abetment does not require any mens rea. The Division Bench observed as under:- ... . . It is sufficient to note that abetment has not been defined in the Imports and Exports (Control) Act of 1947. That being the case, we will have to take into account the definition of the term contained in Section 3(1) of the General Clause Act,1897. Subsection (1) provides: Abet, with its grammatical variations . shall have the same meaning as in the Indian Penal Code. All the definitions contained in Section 3 of the Act, however, are subject to the qualification, which is laid down in that section to the following effect: In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant to the subject or context .. Although, therefore, the definition contained in section 107, Indian Penal Code, will be applicable, it is necessary to find out as to whether there is anything repugnant in the subject or context. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In regard to the main issue relating to the levy of simultaneous penalties a useful reference can also be made to a decision of the Division Bench of Kerala High Court in India Sea Foods Vs. Collector of Customs and Central Excise, Cochin reported in 1984(16) ELT 243 (DB) (Writ Appeal No.321 of 1975 dated 25 May 1978). In dealing with the case of imposition of penalty on the firm as well as the managing partners it was held to be legal and valid. The Division Bench has made the following observations:- We do not see, and are unable to understand, why the firm and the partners thereof cannot both be adjudged guilty of contravention, or be subjected to a penalty, under the provisions of the Act. It is possible to find, as in this case, the firm guilty of an act or omission which renders the goods liable to confiscation, and at the same time to find the partners thereof guilty of abetment in the doing or omission of such act. It seems possible again to find the legal entity of a partnership liable for the act or contravention, and at the same time to hold the human agency through which it acts, also responsible for the same. 91. As regards the issue of application of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the appropriate safeguards, and evaluation. In my opinion, a judicial interpretation which would further the intention of the legislature is to be adopted, if so, then an interpretation to read Section 135(i)(a) in Section 112(a) can never be contemplated as these are independent provisions having different objects. The former speaks of a criminal offence requiring the offence to be proved beyond reasonable doubt and the latter deals with a monetary penalty, to be imposed in departmental adjudication proceedings. 92. The sequel to the above discussion is that the first question is required to be answered in the affirmative, that is simultaneous penalties can be imposed on the firm and the partners under the Act and more particularly under Section 112(a) of the Act. However as the Act itself stipulates, the same would be subject to the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention. 93. As regards the second question, the decision of the Division Bench of this Court in Textoplast Industries Vs. Additional Commissioner of Customs reported in 2011(272) E.L.T. 513 (Bom. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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