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M/s Amritlakshmi Machines Work, Mr. N.K. Bramchari, Managing Partner, M/s. Amritlakshmi Machine Works Versus Commissioner of Customs (Import)

2016 (2) TMI 57 - BOMBAY HIGH COURT

Levy of simultaneous penalties on both the Partner and Partnership firm in adjudication proceedings under the Customs Act. - Penalty for abeting - abets the doing or omission of such an act - Penalty u/s 112 of the Customs Act, 1962 - Held that:- A plain reading of Section 112(a) clearly indicates that there is no requirement of a mens rea for imposing a penalty for an act of abetment. Abetment in this context would be abetment to contravene the provisions of the Act. This can be noted from the .....

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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 contraventi .....

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erence 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 partner) under Section 130 of the Customs Act, 1962 (the Act) from a common order dated 7th May 2012 of the Customs, Excise Service Tax Appellate Tribunal (Tribunal). All the four appeals raised the following substantial question of law: "Whether the Tribunal has erred in imposing simultaneous penalties on both partners and partner .....

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bove question in the affirmative i.e. in favour of the Appellant-Assessee. 2. In view of the above conflict, the following questions have been referred to us for our opinion: "(a) Whether under the Customs Act, 1962 and particularly in exercise of the powers conferred by Section 112(a) thereof, simultaneous penalties on both the Partner and Partnership firm can be imposed? (b) Whether, the judgment in the case of Commissioner of Customs (E.P.) v/s. Jupiter Exports reported in 2007 (213) E.L .....

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n Bench in Amritlaxmi Machine Works (supra) are set out in its order. The order of the Division Bench referred to the facts emanating from one of the two show cause notices (both of which are identical) leading to four appeals (two by the firm and two by the partner) and are reproduced in verbatim as under: "4:-The facts necessary to appreciate this question are that the Appellants are, inter alia, engaged in the manufacture of textile machines. The Appellants applied for and were granted V .....

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ellants 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 .....

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. 0111434 dated 22-11-1999 issued in the name of M/s. Amrit Laxmi Machine Works and transferred in the names of these firms and that this duplicate advance license was issued against the original license No. 03014593 dated 28-11-1996. The limits of this license and terms thereof are referred to and it is alleged that in the light of information received, the bills of entry were collected, documents were scrutinized and which reveal details of the transaction. The details of good covered by anoth .....

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which were not used in the export product and made misrepresentation in obtaining duplicate copy of the license. But, for the said license being obtained in the manner in which it has been so obtained fraudulently, based on misrepresentation/ false documents, the clearance of goods free of duty would not have been considered and allowed by the Customs. They have thereby abetted the doing or omitted the doing of such acts which have been rendered the goods covered by this notice liable to confisc .....

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Foreign Trade (Development & Regulation) Act, 1992 and under Section 111(m) of the Customs Act, 1962; and without prejudice to above for the reasons of liability 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 th .....

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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 the partnershipfirm and its managing partner under Section 112(a) of the Act. 5. Before the Division Bench, the Appellant contended that in view of the decisio .....

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ered after considering the decision in Jupiter Exports (supra), simultaneous penalties are imposable upon both the partnership firm and its partner under Section 112(a) of the Act. 6. The Division Bench in Amritlakshmi Machine Works (supra) observing the apparent conflict between the decisions rendered by the two Division Benches in Jupiter Exports (supra) and Textoplast Industries(supra) referred the above questions to the Hon'ble the Chief Justice. This for constituting a larger Bench of t .....

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f opining on question no.1, we would have to consider the two decisions of this Court in Jupiter Exports (supra) and Textoplast Industries (supra) and in that context also decide whether they are reconcilable and if not, which of the two views is the correct view or is there a third view in the context of Section 112(a) of the Act. Thus, inherent in answering Question No.1, we would have to necessarily answer Question No.2. In the circumstances no separate submissions were made in respect of eac .....

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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 Standar .....

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he provisions/ sections of FERA are not restricted in its application. Thus though Section 140 of the Act appears to be identical to Section 68 of FERA, it is not. This is so as the width of application of Section 140 of the Act is restricted. Evident from the fact that Section 140 of the Act is applicable only to offences under Chapter XVI of the Act which when contrasted with Section 138B of the Act, which is also a part of Chapter XVI is made applicable across the Act. Thus, the provisions of .....

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lty is simultaneously imposable upon the partnershipfirm and its partners. The penalty under Section 112(a) of the Act is imposable upon a person also who does or omits to do any act which renders the imported goods liable to confiscation. A person not being defined under the Act, has to be understood as defined in the General Clauses Act and would include a partnershipfirm. However, a firm is not distinct from its partners. A firm name is merely a compendious name to describe all the partners. .....

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s submitted that such imposition of double penalty is not sustainable in the face of Article 20(2) of the Constitution of India. 10. Per contra, Mr. Rao, learned Counsel appearing for the Revenue in support of its contention that penalty under Section 112(a) of the Act is imposable on the Partnershipfirm and 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 .....

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es 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 .....

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897. A partner of the Partnershipfirm can be visited with penalty along with the firm under the Act. This is so as a partner is a person different from the importer i.e. the partnershipfirm. Section 112 of the Act does not restrict the number of persons on whom penalty can be imposed; and (d) The application of the decision of the Apex Court in Standard Chartered (supra) while dealing with Section 68 of the FERA is apposite while considering Section 140 of the Act. This is so as in fact, there i .....

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the provisions of Section 140 of the Act could be read into Section 112(a) of the Act while invoking the same for the purpose of imposition of penalty upon the partners as well as the firm. 11. For proper appreciation of the submissions made by the Counsel before us, it would be necessary to extract the relevant provisions of the Act, FERA, Partnership Act and General Clauses Act, which are as under: Customs Act: CHAPTER I "Section 2 Definitions - In this Act, unless the context otherwise .....

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e 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 o .....

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y to any prohibition imposed by or under this Act or any other law for the time being in force; (e) any dutiable or prohibited goods found concealed in any manner in any conveyance; (f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned; (g) any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently unloaded but .....

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e terms of such permission; (k) any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein; (l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77; (m) .....

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hapter VIII; (o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the nonobservance of the condition was sanctioned by the proper officer; (p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.] 112: .....

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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 c .....

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ing the value of the goods or the difference between the declared value and the value thereof or five thousand rupees],whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest]." CHAPTER - XVI OFFENCES AND PROSECUTIONS 135: Evasion of duty or prohibitions -(1) Without .....

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ing, 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 or section 113, as the case may be; or (c) and (d) …. …. …. …. …. 138B: -Relevancy of statements under certain circumstances - (1) …. …. …. …. …. …. 2 The provisions of subsection (1) shall, so far as may be, apply in relation to any proceeding under this Act, othe .....

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that 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 attributab .....

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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 contravention or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to a .....

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, - (i) …. …. …. …. (ii) …. …. …. …. (2) to 6 …. …. …." "68:-Offences by companies - (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of the contravention was committed, was in charge of, and was responsible to, the company for the conduct of business of the company as well as the co .....

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irection or order made thereunder has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect 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 the contravention and shall be liable to be proceeded against and punished accordingly." General Clauses Act, 1897 GENERAL DEFINITIONS .....

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TNERSHIP "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 ' .....

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ny third party, or any penalty is incurred, the firm is liable therefor to the same extent as the partner." 12. At the very outset, Mr. Rao, learned Counsel appearing for the Revenue contends that the entire basis for referring the questions to the Larger Bench, arises out of a fundamental error in concluding that there is a difference of opinion in the two decisions rendered by the Division Benches of this Court in Jupiter Exports (supra) and Textoplast Industries (supra). It is submitted .....

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ll are liable for confiscation? (b) Whether the license obtained by manipulation and forging the documents for creating false record so that the requirement of the DEEC scheme is fulfilled, is valid and legal? (c) Whether the license holder or the transferee of the license obtained by manipulation and forging documents are entitled to import validly, illegally and exempted from payment of duty?" It is, therefore, submitted that the issue of simultaneous penalties upon the partnershipfirm an .....

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le for the following reasons:- (a) The Division Bench in Textoplast Industries (supra) proceeded on the basis that the decision rendered in Jupiter Exports (supra) could not be followed as the same was contrary to the law laid down by the Supreme Court in Standard Chartered (supra). 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) pr .....

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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 order of the Tribunal be se .....

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stions as framed before the Division Bench of this Court did not raise the issue of simultaneous penalties being imposed upon the partnershipfirm and its partners yet, in the context of the submissions made before it, the Court gave its findings on the issue viz. simultaneous penalties not being imposable. Therefore to the above extent, the order of the Commissioner of Customs which was sought to be restored by the Revenue, could not be done, in its entirety. Thus, it cannot be now urged by the .....

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ger Bench need not emanate only on account of difference of opinion between two Coordinate Benches but could also arise where a Bench of the Court is unable to subscribe to the earlier view of a Bench of equal strength of the same Court (See UOI v/s. G. S. Grewal 2014(7)SCC 303.) Thus the questions as framed for our opinion, does require consideration. 14. We shall now examine the submissions made by Counsel in support of and against the proposition that simultaneous penalties cannot be imposed .....

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er 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 Shippin .....

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sessed to duty under Section 17 of the Act by a proper Officer of the Customs after being satisfied that the goods being imported, are not prohibited goods liable for confiscation under Section 111 of the Act. It is only then that the Assessing Officer passes an order, allowing clearance of the goods for home consumption either from the Customs Station i.e. Docks, Air Port and/or from the warehouse where the goods have been stored. 16. So far as penal provisions under the Act are concerned Chapt .....

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provides for imposition of penalty in respect of persons concerned with the import of offending goods which are hit by Section 111 of the Act. Section 112(a) of the Act which concerns us, makes any person who has done or omitted to do any act or abets the doing or omitting the doing of any act which would render the imported goods liable for confiscation under Section 111 of the Act liable to penalty. Section 112(b) of the Act provides for imposition of penalty when any person acquires possessio .....

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asses of persons liable for penalty there under, one a person who does or omits to do any act which renders the goods liable for confiscation and the other is a person who abets the doing of any act or omission to do any act which renders the goods liable for confiscation under Section 111 of the Act. It thus attempts to bring in persons who are not directly concerned but even indirectly concerned with the illicit importation within the scope of penal provision of Section 112 (a) of the Act. Thu .....

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ation 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 relatio .....

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ods which he knows or has reason to believe are liable for confiscation under Section 111 of the Act. (Covers cases falling under Section 112(b) of the Act); Satisfaction inter alia of any the above two sub clauses is an offence for the purposes of Chapter XVI of the Act. However, knowledge is a sinequanon for applicability of any of the two provisions. The words in Section 135(1)(a) of the Act are very wide viz. "in any way knowingly concerned in". Section 140 which is a part of Chapt .....

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at the offence has been committed without his knowledge, then the prosecution must fail. Thus, criminal prosecution can be initiated against the partnershipfirm and its partner as prescribed in Chapter XVI of the Act. 18. From the aforesaid Scheme of the Act with regard to import of goods, it is clear that though the charge under the Act is on import/export of the goods, action can be initiated against offending goods which fall foul of Setion 111 of the Act and also on any person whose act or o .....

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d confiscation of goods in case they offend Section 111 of 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 .....

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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) has incorrectly applied the decision of the Apex Court in Standard Chartered Bank (supra) to read the provisions of Section 140 of the Act into Section 112(a) of the Act. This is particularly so as according to the appellant when the decision i .....

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the Revenue who submit that there is, in fact, no distinction in the scheme of FERA and the Act in the context of Section 140 of the Act and Section 68 of FERA. Therefore, the application of the decision of the Apex Court in Standard Chartered Bank (supra) while dealing with Section 68 of the FERA is appropriate while considering Section 140 of the Act. It is submitted that the absence of Chapterisation in FERA is not such a difference as would warrant ignoring the principles laid down by the A .....

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se of Standard Chartered Bank (supra) was rendered in the context of FERA and we are concerned with the Act. Therefore, though the wordings of Section 68 of FERA and Section 140 of the Act are similar, there are significant differences between the two. In particular the words used in Section 140 of the Act that it applies to offences under this Chapter i.e. Chapter XVI of the Act and it is not so in Section 68 of FERA. Thus unlike Section 140 of the Act, Section 68 of the FERA does not restrict .....

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ven 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 .....

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djudication to impose a penalty or by way of prosecution leading to imprisonment and a fine." (emphasis supplied) The ratio of the decision of the Supreme Court would indicate the following principles: (i) Both, in the matter of criminal prosecution and in the imposition of a penalty, following a process of adjudication, the essential basis for the proceeding is a contravention of the provisions of the Act; (ii) The expression "offence" cannot be narrowly confined to a commission .....

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the 'Company' as defined is a partnership firm. In the case of a partnership firm, the expression 'Director' is extended by the explanation to mean a partner of a firm. The principles which have been enunciated by the Supreme Court were sought to be distinguished, however, on the ground that unlike in the case of the FERA, the Customs Act, 1962 contains a separate Chapter on offences and prosecutions and that hence, the deeming fiction can only be confined for the purposes of pro .....

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esponsible whereas a much narrower construction would have to be imposed while construing who could be proceeded with for the purposes of an adjudication. There is no logical reason why Parliament would intend to make a stricter provision in the matter of 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 14 .....

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ot;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 the Act that it shall have .....

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provided, as is evident from Section 138B(2) of the Act. Therefore, we do not agree with the view of the Division Bench in Textoplast Industries (supra) to the extent it holds that the decision of the Apex Court in Standard Chartered Bank (supra) would apply to Section 140 of the Act so as to govern adjudication proceedings under Section 112(a) of the Act as in the case of Section 68 of FERA being applicable to Section 50 of FERA. 23. Similarly, the reliance by the Revenue upon the decision of .....

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urt. It was in the above circumstances that we closely read the decision of the Supreme Court in Prakash Metal Works (supra) and find that the issue of simultaneous penalty on the partnership firm and the partner was not the question raised before it.Consequently there were no arguments/submissions made before the Court contesting the imposition of simultaneous penalty upon the partnershipfirm and the partners. Thus the observations in Prakash Metal Works (supra) is of no effect as it is in the .....

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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." (emphasi .....

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24. It was then contended by the Revenue, de hors the decision of the Division Bench of this Court in Textoplast Industries (supra) to the extent it placed reliance upon the decision of the Supreme Court in Standard Chartered Bank (supra), the provisions of Section 140 of the Act has to be read in to Section 112(a) of the Act during the adjudication proceedings. This on a plain interpretation of the Act. In fact it is emphasized that this Court in Textoplast Industries (supra) had on first prin .....

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upon the partners as well as the firm. This is contested by the Appellant contending that the offence listed out in Section 135 of the Act are only criminal offences and require knowledge. Thus, it could have no application where penalty is being imposed for a civil wrong under Section 112 of the Act. More particularly so when it provides for strict liability. 25. We note that Section 135 of the Act begins with the words 'without prejudice to any action that may be taken under the Act' w .....

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able for confiscation under Section 111 of the Act for which penalty is provided under Section 112(a) of the Act if they are accompanied with knowledge / mens rea. Thus, the acting or omitting to act leading the goods becoming liable to confiscation would be an offence under Chapter XVI of the Act as it is specified in Section 135(1)(a) of the Act, provided it is done knowingly. Thus the provisions of Section 140 would apply to such offences. It is pertinent to note that Section 140 of the Act w .....

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he 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 intent .....

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…..." would cover acts done or omitted to be done on account of instigation and/or encouragement without knowledge. However, the first portion of Section 112 (a) of the Act is only to make person of first degree in relation to the act or omission strictly liable. Persons who are not directly involved in the act or omission to act, which has led the goods becoming liable for confiscation cannot be made liable unless some knowledge is attributed to them. Therefore, it is to cover such .....

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he license could be imposed with penalty. This could never be the intent or objective of Section 112 (a) of the Act. 26. It must be noted that the Division Bench of this Court in State Vs. Abdul Aziz =AIR 1962 Bom. 243, did observe in a Criminal Appeal that mens rea may not be required to establish the charge of abetment in case, the context so requires. The Court was concerned with Section 5 of the Imports and Exports (Control) Act, 1947, which at the relevant time, read as under:- "If any .....

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tion of the license was not fulfilled as the imported silk was sold in the local market after import. Therefore, prosecution 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 bein .....

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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 abetment would not require any kind of mens rea before Section 5 of the Import and Export Control Act could be attracted. Thus, the Court refused to interfere in launchin .....

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of abetment, not being necessary was in the nature of obiter. We would do well to keep in mind the manner in which a judgment is to be read as observed by the Supreme Court in Natural Resources Allocation -2012 (10) SCC 1 "It is important to read a judgment as a whole keeping in mind that it is not an abstract academic discourse with universal applicability, but heavily grounded in the facts and circumstances of the case. Every part of a judgment is intricately linked to others constituting .....

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ike Section 112(b) of the Act, mens rea is not a sina qua non for the imposition of penalty. The Supreme Court in Chairman, SEBI v/s. Shriram Mutual Fund -(2006) (5) SCC 361 has held mens rea is not an essential element/ingredient to impose penalty for a breach of a civil obligation, unless the language of the statute indicates the need to establish the same. Therefore normally where Section 112(a) of the Act is invoked (save cases of abetment on the part of the noticee), Section 140 of the Act .....

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xcept 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 pen .....

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which lead to prosecutions would necessarily be criminal offences. However as held by the Supreme Court in Frick (I) Ltd. v/s. UOI18 heading of chapter cannot determine the interpretation of a statutory provision in the absence of any ambiguity in the provision itself. No ambiguity is even alleged in Section 140 of the Act which would justify taking the aid of Chapter heading. Thus we do not need to look at and/or examine the Chapter heading of Chapter XVI of the Act to interpret Section 140 or .....

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kes a person liable both for penalty and for prosecution. Even though the heading to Section 56 refers to offences and prosecutions, what is made punishable by the Section is the contravention of the provisions of the Act and the prosecution is without prejudice to any award of penalty. The award of penalty is also based on the same contravention. Section 63 is the power of confiscation of currency, security or any other money or property in respect of which a contravention of the provisions of .....

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68 relating to offences by companies, by subSection (1) introduces a deeming provision that the person who was in charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty along with the company of the contravention of the provisions of the Act and liable to be proceeded against and punished accordingly. The proviso, no doubt, indicates that a person liable to punishment could prove that the contravention took place without his .....

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it 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 .....

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tion 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 'of .....

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e for (an offence)'. In the New Shorter Oxford English Dictionary (Vol. 2, 3rd ed., reprint 1993), the meaning of punishment is given as, "infliction of a penalty in retribution for an offence; penalty imposed to ensure application and enforcement of a law." Going by Black's Law Dictionary (8th ed.) it is, "a sanctionsuch as a fine, penalty, confinement, or loss of property, right or privilegeassessed against a person who has violated the law." According to Jowitts Di .....

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of 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 .....

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tion 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 are to consider only the issue of penalty under Section 112(a) of the Act without reading it with any other provisions. As pointed out above, Section 112(a) of the Act consists of two parts viz: (i) strict liability arising on doing any act or omitting to do it, which renders the imported good .....

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is not of abetment but of doing an act or omitting to do an act which rendered the goods liable for confiscation. It has nothing to do with mens rea/knowledge. In such a case 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 the goods liable for confiscation under Section 111 of the Act. It is a case of strict liability. However, in such cases, if the Revenue seeks to impose a penalty .....

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. It cannot be imposed on a partner ipso facto merely because penalty is being imposed upon the partnership firm under Section 112(a) of the Act. 31. We make it clear that that although the Division Bench of this Court in Textoplast Industries (supra) has held on first principles that Section 140 of the Act is to be read into all cases falling under Section 112(a) of the Act, we do not agree. Section 140 of the Act on first principles has to be read into only in cases where the notice to impose .....

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on 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 ca .....

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tive or sleeping partner. 32. It was next contended by the Appellant that in any case on a plain reading of Section 112(a) of the Act, simultaneous penalties are not imposable upon a partnership firm and its partner. In terms of Section 112(a) of the Act a penalty is imposable upon any person whose act or omission to act renders the imported goods liable for confiscation under Section 111 of the Act. The word 'person' has not been defined under the Act. Therefore, the meaning as ascribed .....

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dious name to describe all the partners collectively. In as much as it is not an entitydistinct and different from its partners. In support reliance is placed upon the decisions of the Supreme Court in Controller and Auditor General v/s. Kamlesh V. Mehta -2003(2) SCC 349 and N. Khadevvali Saheb v/s. N. Gudu Saheb -2003(3) SCC 229. There can be no dispute to the above general proposition of law. The above position is also clear by virtue of Sections 4, 25 and 26 of the Indian Partnership Act, 193 .....

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well as Sales Tax, it is a legal entity." Similarly in an proceeding under the Income Tax legislation the Apex Court in CIT v/s. A. W. Figgis =24 ITR (SC) 405 has observed "It is true that under the law of 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 .....

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s 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 Section 68 of FERA - that penalty was imposed on both the firms a .....

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he provisions of FERA 1947 and the Sea Customs Act but are only required to consider the provisions of the Act. Further the Apex Court in Agarwal Trading(supra) was not concerned with Section 112(a) of the Act. Thus the above case does not in the context of the question raised for our consideration advance the cause of the Revenue. 34. In fact the IEC number is in the name of the partnership firm which collectively represents all the partners as laid down under the Partnership Act. Therefore in .....

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the Act, against the firm unless the notice issued invokes Section 135 of the Act. This breach is not only for imposition of penalty under Section 112(a) of the Act but also an offence under Chapter XVI the Act. 35. We may point out that the appellant also placed reliance upon the decisions of the Supreme Court in Deputy Commissioner of Sales Tax v/s. K. Kalukkutti -1985 AIR 1443, Malbar Fisharies Co., v/s. CIT -1979(4) SCC 766 and Dulichand v/s. CIT -29 ITR 535. In all the above cases the factu .....

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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 partnersh .....

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being imposed on two separate persons under the Act. 37. In view of the above, the decision of the Division Bench of this Court in Textoplast Industries (supra) to the extent it places reliance upon the Apex Court decision in Standard Chartered Bank (supra) does not seem to be appropriate as it was rendered under a different statute. Each of the two Act i.e. FERA and the Act, provides a different scheme for imposition of penalty. However, the decision in the case of Textoplast Industries (supra) .....

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as rendered the goods liable for confiscation under Section 111 of the Act. The notice in such a case need not invoke Sections 135 or 140 of the Act for simultaneous imposition of penalties. However, we would like to clarify that (a) above are not cases where Section 112(a) of the Act is alone invoked for breaches under Section 111 of the Act. These are cases where penalty is being imposed for an offence under Section 135(1)(a) of the Act r/w Section 112(a) of the Act. Thus, it would cover cases .....

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Section 112(a) of the Act. 39. In the light of our above discussion, we answer the two questions posed for our opinion as under:- Question (a)- Yes. Simultaneous penalty can be imposed both on the partners and partnershipfirm under Section 112 (a) of the Act where the charge on the firm is of acting or omitting to act rendering the goods liable for confiscation and the notice issued to the partner makes out a separate case of abetment on his part. This abetment should be in respect of the act an .....

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n 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) wher .....

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t the correct view. 40. In view of the above we conclude that there is jurisdiction with the authorities under the Act to impose simultaneous penalties upon the partnership firm and its Managing Partner under Section 112(a) of the Act in the above cases. 41. It is made clear that the issue posed before us was only in respect of a partnership firm registered under the Indian Partnership Act 1932. We have not in any manner dealt with partnership firm registered under the Limited liability Partners .....

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.Sanklecha, J. I am of the view, that, as the statutory provision stands, simultaneous penalties can be imposed on the partnership firm and the partners under Section 112(a) of the Customs Act 1962 (for short 'the Act'). I am, therefore, unable to persuade myself to the following view by my learned brother M.S.Sanklecha, J. as observed in paragraph 39 of the judgment, as a condition on which simultaneous penalties is held, can be imposed: "(i) As regards 'Question a ':Only w .....

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f 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 .....

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sion 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 the extent it places reliance upon the Apex Court's decision in the case "Standard Chartered Bank V. Directorate of Enforcement, (2006(1997) ELT 18(S.C.)" is not appropriate. I am of the clear opinion that the decision in "Textoplast Industries Vs. Additional Commissioner of Customs" ( .....

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1962 and particularly in exercise of the powers conferred by Section 112(a) thereof, simultaneous penalties on both the Partner and Partnership firm can be imposed ? (ii) Whether, the judgment in the case of "Commissioner of Customs (E.P.) Vs. Jupiter Exports" reported in "2007 (213) E.L.T. 641 (Bom.) " holding that separate penalty on a partnership firm and a partner cannot be imposed, lays down the correct law or whether, as held by the later Division Bench in the case of T .....

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he Division Bench as also in the judgment rendered by my learned brother M.S.Sanklecha, J. I avoid repetition and proceed to deal with the legal issues. 47. In the context in hand, the parties have confined their submissions principally to the interpretation of Section 112(a) of the Customs Act,1962 (for short "the Act"). Learned Counsel for the appellant would submit that simultaneous penalties cannot be imposed on the partnership firm and the partners. He submits that the decision of .....

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pplied 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 ' .....

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tion 140 so as to make it applicable outside Chapter XVI and more particularly to make it applicable in respect of imposing of penalties. It is submitted that the decision of the Division Bench in "Commissioner of Customs (E.P.) Vs. Jupiter Exports" reported in "2007(213) E.L.T. 641 (Bom.) " lays down the correct law which holds that simultaneous penalties cannot be imposed on the firm and the partners. In the written submissions the appellants have urged as under:- (i) Penal .....

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) A firm acts through its partners, therefore, act of the partner on behalf of the firm is an act of the firm. An imposition of penalty on the firm would in effect be imposition of penalty on all the individual partners since 'person' referred to in Section 112(a) is the body of individuals as a whole; (iv) Separate penalty on the individual partners would amount to double penalty. This is against Article 20(2) of the Constitution of India; (v) Section 140 does not override the entire Ac .....

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be separately and individually liable to penalty. (viii) The provisions of Section 135 in Chapter XVI cannot be imported into Section 112 to read every contravention as an offence so as to attract Section 140. Invocation of prosecution in terms of Section 135 is 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 Indus .....

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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 decisions in t .....

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the firm and its partners. It is submitted that in view of the decision in "Standard Chartered Bank" (supra), the deeming fiction under Section 140 of the Act can be made applicable to the penalty proceedings and thus simultaneous penalties can be imposed on the partners and the firm. It is, therefore submitted that the questions as referred to the Larger Bench do not arise. 49. As noted above, the Division Bench of this Court in the case of "Commissioner of Customs (E.P.) Vs. Ju .....

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ns to be answered by the larger Bench. For the reasons which are elaborately set out in the referral order, the submission on behalf of the Revenue that no referable question arises for consideration of the Larger Bench, cannot be accepted. 50. At the outset, it would be appropriate to refer to the said two decisions of the Division Bench of this Court. In "Commissioner of Customs (E.P.) Vs. Jupiter Exports" (supra), the Division Bench in paragraph 19 has observed as under:- "19. .....

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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 deci .....

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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 "as to whether imposition of a penalty on a partnership firm as well as on the partners under Section 112 of the Act is permissible and justified", the Division Bench considering the scheme of the Act and more particularly, the provisions of Chapter XIV which deal with 'Confiscati .....

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particularly the following Explanation to the said provision which would make the firm and its partners liable if the offence is committed by a firm:- "Explanation.- For the purposes of this section- (i) "company" means any body corporate and includes a firm or other association of individuals; and (ii) "director", in relation to a firm, means a partner in the firm." The Division Bench in "Textoplast Industries" noted that as in Section 68 of the FERA, Se .....

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on as created under Section 140 more particularly by the "Explanation" to the said provision can be read into the provisions of Section 112(a) of the Customs Act so as to include imposition of penalty separately on a firm and its partners.' 53. To examine the above issues, it would be appropriate to extract Section 112 of the Customs Act,1962 which reads thus:- "112. Penalty for improper importation of goods, etc. - Any person,- (a) who, in relation to any goods, does or omits .....

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hibition 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 .....

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s], whichever is the highest; [(v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.]" (emphasis supplied) 54. In the present context legislative background of the Act would be of some relevance. Since ancient times in England duties were collected on import and export of goods and the same .....

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an enactment as held by the Supreme Court in Ravalu Subba Rao versus CIT (AIR 1956 SC 604) would be to interpret the provisions as forming an Act, being complete in itself and exhaustive of the matters dealt therein. Further an interpretation, keeping in view the object, the Act seeks to achieve would be required to be resorted. The Supreme Court in a recent decision in the case of "Nemai Chandra Kumar & Ors. Vs. Mani Square Ltd. & Ors., (AIR 2015 SC 2955)", considering catena .....

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Act, which is in question, is a penalty provision. Coupled with the above principles of statutory interpretation it would also be useful to refer to the following rules of construction as applicable to penal statutes noted in the 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 .....

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tation 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 ambiguous in that sense. Difference of judicial opinion .....

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quot;true and sober sense" stated the same as follows: "Penal statutes are not to be enlarged by implication or extended to cases not obviously within their words and purport. But where the words are general, and include various classes of persons, I know of no authority, which would justify the court in restricting them to one class, or in giving them the narrowest interpretation, where the mischief to be redressed by the statute is equally applicable to all of them. And where a word .....

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1: 1965(1) SCR 7.]" (emphasis supplied) 56. In the light of the above principles of interpretation, Section 112(a) needs to be examined. Section 112(a) begins with the word "any person", 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. The words "in relation to" as used in section 112 of the Act would mean "to be concerned wi .....

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r 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 .....

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e 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 first step what does a plain reading of Section 112 indicate can be considered? Section 112 of the Act opens with the word "any person". When the Legislature has thought it appropriate to use the word 'any person' as regards the applicability of Section 112(a) then what is the purport as regards a partnership firm a .....

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use of the words 'any person' in framing Section 112 of the Act on a plain reading would include every category of person who can be said to render himself liable for a penalty, as a result of confiscation of goods imported in contravention of the provisions of the Act. The Customs Act has not defined the word "person" and therefore the definition and rules of interpretation contained in the General Clauses Act 1897, can be to be taken recourse of, provided there is nothing rep .....

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on law of England, a firm is not a juristic person, the firm name being only a compendious expression to designate the various partners constituting it, however as held by the Supreme court in Dulichand Laxminarayan versus CIT, Nagpur (AIR 1956 SC 354), inroads have been made by the statutes into this conception, and firms have been regarded as distinct entities for the purpose of some statutes. The Act in question can be said to be one of such legislations. A firm for the purposes of the Act an .....

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on 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 .....

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s defined in S.2(1) of the Act as including "a Hindu undivided family and a local authority." That evidently is not an exhaustive definition and recourse is permissible to the General Clauses Act which says in S.3(42) that a "person" includes "any company or association or body of individuals whether incorporated or not." A firm is manifestly a body of individuals and would therefore fall within the definition of "person", and may be exposed to an order fo .....

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l Clauses Act which defines "person", has observed that the definition of "person" under Section 3(42) of the General Clauses Act cannot be imported into the Partnership Act, the provisions of which alone are relevant to find out as to who could join as partners. It was observed that it is a partnership constituted according to the Partnership Act that can be considered as partnership under the Act. Whereas the definition of 'person' under the Income Tax Act is intend .....

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pauper who is not possessed of sufficient means to enable him to pay the fee prescribed by law." 65. The exposition of law in the above decisions makes it clear, that a partnership firm, when is an importer of goods would be a person for the purposes of Section 112(a) of the Act and cannot escape the liability to be fastened of a penalty 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. .....

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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 h .....

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i Abolition and Land Reforms Act,1950, has observed that the word 'person' was required to be interpreted keeping in view the object of the legislation and by applying the rule of contextual interpretation, the applicability of which has been recognized in the decisions of the Supreme Court in "Poppatlal Shah Vs. State of Madras, (AIR 1953 SC 274)", "S.K.Gupta Vs. K.P.Jain, (AIR 1979 SC 734)", "RBI Vs. Peerless General Finance and Investment Co.Ltd., (AIR 1987 SC .....

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legislature has considered the partnership firm and the partners to be distinct and independent for the purposes of Section 112(a) of the Act for the purpose of levy of penalty. There is no different legislative intent which can be gathered. When the firm by itself is required to be regarded as a distinct entity, then the partners are required to be considered as independent 'persons' in the word 'person' as incorporated in Section 112(a) of the Act. 68. Now as regards the questi .....

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Act in a given case, may be apparent to the Customs Authorities. In 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 use .....

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ete. 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 become necessary to revise the Act. The Land Customs Act was passed in 1924. It is not a selfcontained Act and applies by reference provisions of the Sea Customs Act to land customs with certain modifications. There is no separate la .....

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ing changes in the existing provisions:- (i) The existing provisions do not provide for personal penalty on the concerned persons for every contravention specified in the existing provisions corresponding to the new clause 111. Under the proposed clause 112, the persons concerned in every contravention mentioned in clause 111 will become liable to a personal penalty. (ii) under the existing provisions even where a personal penalty is provided in respect of a contravention, it is leviable only on .....

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es the duty sought to be evaded or one thousand rupees, whichever is the higher. The maximum penalty of one thousand rupees is inadequate considering that duty amounting to several thousands of rupees is many a time sought to be evaded." (emphasis supplied) 70. The Statement of objects and reasons can very well be relied upon in understanding the legislative intent as observed by the Supreme Court in "Hyderabad Industries Ltd. & Anr. Vs. Union of India and Others, (1995)5 SCC 338)& .....

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ly 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. T .....

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f a penalty would therefore be the nature of the acts or omission which would render the goods liable for confiscation. Each of the clauses (a) to (p) of Section 111 of the Act speaks of such acts or omission which contravene and or violate the provisions of the Act and thus become directly relevant for the purposes of levy of penalty under Section 112(a) of the Act. Thus what is relevant for the purposes of imposing a penalty is the contravention /breach of the provisions of the Act as specifie .....

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dication procedure' to say that the adjudicating authority shall in a proceeding under Chapter XIV or any other provision under the Act, give an opportunity of being heard to a party in a proceeding. Section 123 of the Act provides for the 'burden of proof'. Section 124 provides for issuance of a show cause notice and provides that no order confiscating any goods or imposing any penalty on any person shall be made under the said chapter unless the owner of the goods or such person is .....

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ted thereby is liable under the provisions of chapter XVI of the Act or any other law. A conjoint reading of these provisions shows that before an order imposing a penalty is made, the authority is required to adopt a procedure 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/ .....

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h 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) of the Act. As a guiding factor the illustration of abetment as appeari .....

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rs can indulge into such acts through another firm and so on and so forth by escaping a penalty. The legislature has thought it appropriate that be it the firm or the partners, the contravention if is, at their hands needs to be met with a penalty. The penalty should serve as a deterrent not only for the act of commission or omission in question, in a given contravention, but also for all times to come. Assuming that only firm is imposed a penalty and not its partners or other persons through wh .....

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which provides for publishing the names of any person and any other particulars relating to 'any proceedings' or 'prosecutions' under the Act in respect of such persons. A reference also needs to be made to Section 147 of the Act which provides for the liability of principal and agent. This provision throws a light that the Act seeks to bring within its purview, the contravention if any by the agent of the owner or importer or exporter, as if it is the act of the owner or import .....

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d 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 pe .....

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view of the authoritative pronouncement of the Supreme Court in the case of "M/s.Agrawal Trading Corporation and others Vs. The Asstt. Collector of Customs, (AIR 1972 SC 648)". In this decision the Supreme Court was dealing with a case in which a fine was imposed on the firm under Section 167(3) of the Sea Customs Act 1878 with a personal liability of ₹ 1000/under Section 167(37) of the Act with further fine of ₹ 51,000/under Section 167(8) of the Act read with Section 23C .....

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es as also offences. It would be apt to extract the relevant provisions of the Sea Customs Act which fell for consideration of the Supreme Court:- "CHAPTER XVI OFFENCES AND PENALTIES Punishments for Offences: 167. The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Offence Section of this Act to which offence has reference Penalties 3. If any person ship .....

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the shipment and landing of goods, General 11 such person shall be liable to a penalty not exceeding one thousand rupees 8. If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, he imported into or exported 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 Cus .....

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fiscation ; 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 application for passing them, or the contents thereof have been wrongly desc .....

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rcumstance is not accounted for to the satisfaction of the Customscollector, 86 & 137 such packages, together with the whole of the goods contained therein, shall be liable to confiscation, and every person concerned in any such offence shall be liable to a penalty not exceeding one thousand rupees. 74. A perusal of the above provisions clearly indicate that the provisions pertained to imposing of a penalty and not dealing with punishment for acts constituting a criminal offence though the p .....

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the company for the conduct of the business of 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: Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in subsection (1) .....

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"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 a .....

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e provisions, the Supreme Court held that the contention of the appellant that the firm is not a legal entity and thus it cannot be a person within the meaning of under Section 167(3), (8) and (37) of the Sea Customs Act and Section 8 of the Foreign Exchange Regulation Act was untenable. The Supreme Court, in repelling the contention firstly that the definition of 'person' under the General Clauses Act does not apply to a firm which is not a natural person which has no legal existence an .....

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lties, the Supreme Court observed that the High Court was right in holding that once it is found that there has been a contravention of any of the provisions of the Sea Customs act read with the Foreign Exchange Regulation 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 due diligence to prevent such .....

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s of the Supreme Court which read thus:- "7. The second contention that because the firm is not a legal entity, it cannot be a person within the meaning of Section 8 of the Foreign Exchange Regulation Act or of Section 167(3), (8) and (37) of the Sea Customs Act, is equally untenable. There is of course, no definition of person in either of these Acts, but the definition in section 2(42) of the General Clauses Act 1897, or section 2(3) of the Act of 1868 would be applicable to the said Acts .....

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t 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, un .....

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is significant as also it cannot be overlooked that in the above decision, the Supreme Court has confirmed the following observations of the Division Bench of the Calcutta High Court in the case "M/s.Agarwal Trading Corporation and others Vs. The Assistant Collector of Customs & Ors., (AIR 1964 Cal 347)" "20. The argument that only a natural person is amenable to the jurisdiction under Clauses (3), (8) and (37) of Section 167 of the Sea Customs Act cannot also be accepted. Alt .....

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f, and was responsible to the firm for the conduct of its business as well as the firm itself shall be deemed to be guilty of the same and liable to be proceeded against and punished. The result is that once it is found that there has been a contravention of any provision of the Foreign Exchange Regulation Act read with the Sea Customs Act by a firm the partners of it who were in charge of its business or were responsible for the conduct of the same cannot escape liability unless it is proved by .....

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d under the Sea Customs Act. 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 offen .....

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he 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 currency to Hongkong. The inference drawn from the circumstances by the Customs authorities that Tewari could not have been doing it on his own behalf is one which can easily be deduced. On a common sense view of things the fir .....

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… … … … I do not find myself able to hold that all the principles of criminal jurisprudence are attracted to enquiries under the Sea Customs Act by the Customs Officers. Dealing with Sea Customs Act and the Land Customs Act in Thomas Dana v. State of Punjab, AIR 1959 SC 375 at p.381 the Supreme Court observed that "all criminal offences are offences, but all offences in the sense of infringement of a law, are not criminal offences. Likewise, the other expressions .....

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ough an offence, being an act infringing certain provisions of the sections and rules under the Act, is not a criminal offence. Out of the more than 81 entries in the Schedule to Section 167, it is only about a dozen entries, when contemplate prosecution in the criminal case, the remaining entries contemplate penalties other than punishments for a criminal offence." (emphasis supplied) From the above decision, it is quite clear that the firm and its partners are 'persons' described .....

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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 .....

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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 s .....

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nder Chapter XVI is a company then every person who at the time offence was committed was incharge 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. However, with a safeguard that nothing contained in the provision shall render any such person liable to such punishment if he proves that the offence was committed without his kno .....

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all also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. The Explanation extends the scope of the provision by bringing within the ambit of the expression "Company" a firm or an association of individuals and within the ambit of the expression 'director' a partner of the firm. It is therefore, clear that under Section 140, a partnership firm as also the partners would become liable to be punished simultaneously. It ca .....

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li, (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 [Fatto .....

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be ascertained from the decision of the Supreme Court in M/s. Agarwal Trading Corporation (supra) in which the Supreme Court applied the deeming fiction (similar to Section 140 of the Act) created by Section 23C of the FERA,1947 to the penalty provision under Section 167(3), (8) and (37) of the Sea Customs Act to uphold imposing of the penalty on the firm and the partners. The situation in hand, pertaining to the Act is not at all different. In fact Section 140 is available in the Act itself. Th .....

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made a criminal offence but can still be regarded as an offence for the purpose of applying the deeming fiction created under section 140 of the Act, so as to make the firm and the partners simultaneously liable for imposing a penalty. A purposive interpretation of these provisions in my submission explicitly say so. It is a well settled that all criminal offences are offences but all offences in the sense of infringement of a law, are not criminal offences as held in "Thomas Dana v. State .....

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ement" (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 .....

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urt:- "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 makes a person liable both for penalty and for prosecution. Even though the heading to Section 56 refers to offences and prosecutions, what is made punishable by the Section is the contravention of the provisions of the Act and the prosecution is without prejudice to any award of p .....

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for prosecution, subSection (2) of Section 64 makes the attempt to contravene or abetment of contravention, itself a contravention, for the purposes of the Act including an adjudication of penalty under the Act. Section 68 relating to offences by companies, by subSection (1) introduces a deeming provision that the person who was in charge of and was responsible to the company for the conduct of the business of the company, shall also be deemed to be guilty along with the company of the contraven .....

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oceeded 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, fau .....

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ich 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 .....

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ly defined as deserving of, or capable or liable to punishment. According to Concise Oxford English Dictionary, 'punish' means, 'inflict a penalty on as retribution for an offence, inflict a penalty on someone for (an offence)'. In the New Shorter Oxford English Dictionary (Vol. 2, 3rd ed., reprint 1993), the meaning of punishment is given as, "infliction of a penalty in retribution for an offence; penalty imposed to ensure application and enforcement of a law." Going b .....

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ngly. There does not appear to be any reason to confine the operation of Section 68 only to a prosecution and to exclude its operation from a penalty proceeding under Section 50 of the Act, since the essential ingredient of 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 ca .....

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is used, it does not mean that it is confined to a prosecution under Section 56 of the Act, since the element that attracts the imposition of penalty and the prosecution is the same, namely, the contravention of any of the provisions of the Act. Moreover, there is nothing 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 .....

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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 scope of Section 68 of the Act. .....

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a company liable for penalty as well as for prosecution, there does not appear to be any justification in confining the scope of the Section 68 only to prosecutions under Section 56 of the Act. We have earlier indicated that use of the expression 'offence' in the marginal heading of Section 68 is not indicative of the expression 'being confined to a criminal offence alone' because an offence in the context of the Act is really a contravention of any of the provisions of the Act .....

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t is to be dealt. As regards the deeming fiction created by it, the deeming fiction cannot be confined only in respect of prosecutions against the firm but also to the penalty proceedings which can be initiated under Section 112(a) of the Act. Thus, even on this count the deeming fiction created under Section 140 can be taken recourse in applying Section 112(a) of the Act. In view of the enunciation of law in "Standard Chartered Bank" (supra), the reliance of the appellants on the obse .....

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tnership 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 .....

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in which the scheme of the Act was not the same as in the Customs Act. It is further urged that the provision Section 140 of the Act which pertains to Offences by Companies falls in a separate Chapter namely Chapter XVI of the Act which is a chapter dealing with offences and penalties, whereas section 112 falls under Chapter XIV of the Act which pertains to "Confiscation of goods and conveyances and imposition of penalties" and thus the decision of the Supreme Court in Standard Charter .....

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e Calcutta High Court (supra) wherein the Calcutta High Court had held that the term offence in construing the penalty provision is required to be understood in the generic sense and not as they are understood in the Indian Penal Code or other laws dealing with similar offences. In "Agarwal Trading Corporation" (supra) a penalty on the partners and the partnership firm was confirmed, whereas in Standard Chartered Bank (supra) the Directors were held liable for a personal penalty by app .....

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fiction as created in Section 140 of the Customs Act falls under Chapter XVI which pertains to offences cannot be read in Chapter XIV in its application to Section 112(a) of the Act, cannot be accepted. Even otherwise, it is a settled principle of law that the Legislation in its entirety is required to be considered to construe the real intention of the Legislature. In view of the clear position in law as laid down in the above decisions of the Supreme Court, the Appellant cannot be successful t .....

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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 se .....

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is to bring within its ambit the acts of those persons which are distinct from the principal acts falling under the previous part of the said provision. In other words, the word "abets" would mean the acts and omissions of those persons who would be principals of the second degree. The word "abets" cannot be construed to mean that the 'principal persons' who by their acts and omissions have rendered the goods liable for confiscation under Section 111 of the Act can be .....

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rement of a mens rea for imposing a penalty for an act of abetment. Abetment in this context would be abetment to contravene the provisions of the Act. This can be noted from the fact that the legislature has not used the words 'knowingly', 'willfully' etc. It may not, therefore, be appropriate to read such words into the provision which would render it nugatory. Whenever the legislature wanted to include such prior knowledge or intention in contravening the provisions of the Act .....

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64 SC 1140)", the Supreme Court was considering the question 'whether contravention of Section 52A of the Sea Customs Act,1878 could be established unless mens rea was proved in respect of alleged contravention. 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 punisha .....

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ptation 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 that if we read S.52A along with S.167(12A), it would be clear that the legislature int .....

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(12A) reproduces the material words of s. 52A and does not add the words "knowingly or wilfully". It is significant that the words "knowingly or wilfully" are used in several other provisions contained in s. 167. Section 167(14) and s. 167 (61) use the word "wilfully" in respect of the commission of the offences there specified. Similarly s. 167(3) and s. 167(81) use the word "knowingly" and s. 167(78) uses the word "intentionally". Similarly, in .....

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to be deliberate. In our opinion, there is some force in this argument as well. Besides, there can be no doubt that in construing a section, it would be relevant for the Court to consider whether the construction for which Mr. Choudhary contends would not make the provisions of S.52A read with S.167(12A) substantially nugatory. If it appears that the adoption of the said construction would substantially defeat the very purpose and intention of the legislature in enacting the said section, that .....

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ion 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 .....

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a serious problem and is intended to be checked by this absolute prohibition. If it was held that the knowledge of the owners of the offending vessel or of its master should be proved before S.52A is held to be contravened, in a majority of cases, the offending vessels will escape punishment. It is not difficult to imagine that mens rea or guilty mind could rarely be established against the owners of vessels which are traveling on the Highseas and it may not be always easy to prove the guilty k .....

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refers to the construction for the purpose of concealing goods, but it is obvious that no vessel would ordinarily be constructed initially for the purpose of concealing goods. Like the adaptation, alteration or fitting, the construction also would be made in such a manner as would not be easily detected or discovered. Therefore, it seems to us plain that if we are to accept the construction suggested by Mr. Choudhary, mens rea would rarely be proved against the owners of the vessel, or even its .....

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(n) of the Factories Act,1948. The question being 'whether in the case of a company which owns and runs a factory, it is only Directors of a Company who can be notified as the occupier of the company in the meaning of proviso (ii) to Section 2(n) of the Factories Act,1948', or whether the Company can nominate any other employee to be an occupier by passing a resolution to the effect that the said employee shall have ultimate control over the affairs of the factory. The Supreme Court in t .....

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n 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 o .....

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affairs of the factory to see that the requirements for safety and welfare of the employees are fully and properly carried out besides carrying out various duties and obligations under the Act. Section 92 contemplates a joint liability of the occupier and the manager for any offence committed irrespective of the fact as to who is directly responsible for the offence. The fact that the notified/identified director is ignorant about the 'management' of the factory which has been entrusted .....

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r imprisonment and/or fine, both on the occupier (the notified director) and the manager of the factory, jointly and severally, for the contravention of any of the provisions of the Act or any rule made thereunder or of any order in writing given thereunder, irrespective of the fact whether the occupier (the notified director) or manager, had any mens rea in respect of that contravention or that the contravention was not committed by him or was committed by any other person in the factory withou .....

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nominate such a person to be the 'occupier' of the factory and make him responsible 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 liabi .....

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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 and abroad. "Absolute offences" are not criminal offences in any real sense but acts which are prohibited in the interest of welfare of the public and the prohibition is backed by sanction of penalty. Such o .....

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nd abroad, especially regarding economic crimes and departmental penalties, have created severe punishments even where the offences have been defined to exclude mens rea. Therefore, the contention that Section 37(1) fastens a heavy liability regardless of fault has no force…." (emphasis supplied) 87. In "James David Crighton & Ors. Vs. S.K.Srivastava, reported in AIR 1969 Calcutta 260", a learned Single Judge of Calcutta High Court held that mens rea may not be an eleme .....

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the Supreme Court, I have to see how far those considerations apply in interpreting Sections 30,111 and 112 of the Customs Act. There is no dispute that the goods seized from the vessel are all prohibited goods, within meaning of Section 2 (33) of the Customs Act. They were brought to India form places outside India. Thus even though the petitioners were not aware that the offending goods were being brought to India, they were in fact being carried to India by their vessel from places outside I .....

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at 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 k .....

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n the part of the Master of the vessel, regard being had to the plain language of Section 30 of Customs Act which does not make any exception for any kind of I mported goods even though unknowingly carried or brought to India. But then the question arises as to how can a Master of a vessel include in the manifest, goods about the existence of which he had no knowledge and which were so cleverly secreted by smugglers that it required the full ingenuity of the rummaging department of the Customs t .....

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e proper official of the Customs under Section 30 that the failure so to do will render the imported goods liable to confiscation under Section 111(f) and that omission to discharge the statutory duty will render the person responsible therefor to a penalty under section 112, are all meant to safeguard the economies of the country form the danger of uncontrolled clandestine importation. To hold that an innocent Master of a vessel who is unable to contro l illegal importation of large quantities .....

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goods did not enter the vessel without complying with the legal formalities and thus escape the provisions of section 112, read with sections 111 and 30. An interpretation of section 30, 111 (f) and 112 in a manner which may render imposition of penalty for importation of prohibited goods in India impossible should be avoided." (emphasis supplied) 88. In the case of "State Vs. Abdul Aziz, (AIR 1962 Bom 243)" in construing Section 5 of the Imports and Exports (Control) Act,1947, r .....

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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, th .....

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d of mens rea." 89. It is thus clear from the principles of law as enunciated in the above decisions of the Supreme Court, it would not be appropriate to read that only when the partners knowingly do certain acts or omissions or when only they have the prior knowledge, that their acts amount to contravention of the provisions of Section 111 of the Act which would lead to confiscation of goods, only in that case they can be held liable for penalty under Section 112(a) of the Act. Such an int .....

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onsidered to be deliberately avoided to be used by the Legislature, if read into the provisions of Section 112(a), it would render Section 112(a) nugatory resulting in defeating what is intended by the Legislature. The firm and the partners thus can in a given case be subjected to a simultaneous penalties for the contravention of Section 111 of the Act resulting into confiscation of the goods, however the same would be subject to the either of the parties proving that the contravention has taken .....

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proceedings before a Criminal Court and thus would not attract the Rule of mens rea. 90. 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 .....

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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 Section 135(i)(a) of the Act to adjudication proceedings under Section 112(a) of the Act and more particularly to the partnership firm and its partners, pertinently, neither of the parties ha .....

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imposed on the firm and its partners, where the authorities on materials available to them are clear of the direct or indirect involvement of the partners in contravening the provisions of the Act. It is not in every case, penalty is required to be imposed simultaneously on the firm and its partners. It would obviously depend on facts and circumstances of each case. Before an order imposing a penalty is made, the authority is required to adopt a procedure as contemplated in the provisions wherei .....

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ient in respect of a criminal offence is mens rea. This is how Section 135(i)(a) specifically refers to a prior knowledge. Reading Section 135(i)(a) even remotely in the implementation of Section 112(a) would result into a legal absurdity and a violence to the provisions of Section 112(a) and defeat the clear intention of the legislature, as it would amount to incorporating a foreign ingredient or something which the legislature never intended. In the entire scheme of Chapter XIV of the Act whic .....

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