TMI Blog2015 (4) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... nvenience is in the favour of the Revenue for imposition of penalty on these persons. Accordingly I differ with the findings recorded by learned Member (Judicial). And to avail the facility to hear the appeals, it is necessary that all these appellants M/s. Suraj Medical Agencies, Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar are directed to deposit 50% of the penalty imposed upon them by the Commissioner under Rule 26 of the Central Excise Rules, 2002. Ordered accordingly consequently balance amounts of penalty shall remain waiver if penalties are deposited within six weeks and compliance reported within four weeks thereafter. - E/1003-1006/2012-EX(DB) - Stay Order Nos. SO/51350-51353/2015-EX(DB) - Dated:- 1-4-2015 - Ms. Archana Wadhwa, Member (J) and Shri Manmohan Singh, Member (T) Third Member on Reference : Shri Rakesh Kumar, Member (T) Shri K.K. Anand, Advocate, for the Appellants. Shri M.S. Negi, DR, for the Respondent. ORDER [Order per : Archana Wadhwa, Member (J)]. - It is seen that vide Stay Order Nos. 55665-55669/2013, dated 10-1-2013, stay petitions of the present applicants were disposed of along with stay petitions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 of Central Excise Rules, 2002 have been held, prima facie, ultra vires by the Hon ble Kolkatta High Court in the case of Prompt Castings Pvt. Ltd. v. Jt. Commissioner of Central Excise, Kolkata [2012 (284) E.L.T. 641 (Cal.)]. By observing so, the Hon ble High Court has stayed the operation of the order impugned before the High Court insofar as the same relate to penalty imposed upon under Rule 26. 5. We have considered the submissions made by both the sides. We find that the Tribunal s decision in the case of Woodmen Industries stand confirmed by the Hon ble Supreme Court. As such, in terms of the same, no penalty can be imposed on the firm M/s. Suraj Medical Agencies. 6. As regards the penalty on the individual, without going into the prima facie merits of the case, we take note of the Hon ble Calcutta High Court decision in the case of Prompt Castings Pvt. Ltd. The Hon ble High Court has observed as under :- 2. Section 11AC of the Central Excise Act, 1944, provides for imposition of penalty on the person who is liable to pay duty as determined under sub-section (2) of Section 11A. Rule 26 of the Central Excise Rules which provides for imposition of penalty on any pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies cannot be penalized under the rule as they are not natural persons and are juristic persons only whereas as per the language of the Rule 26 ibid only natural persons can be penalized under the rule. Judgments in the case Woodmen Industries v. CCE, Patna - 2004 (164) E.L.T. 339 (T) and 2004 (170) E.L.T. A307 (S.C.) and C.C. (EP) v. Jupiter Exports - 2007 (213) E.L.T. 641 (Bom.) were relied upon. 12. Regarding waiver of penalty under Rule 26 ibid on other persons the decision of the Calcutta High Court in the case of Prompt Castings Pvt. Ltd. v. CCE, Kolkata-IV - 2012 (284) E.L.T. 641 (Cal.) has been relied upon where the Hon ble High Court has vide interim order held that prima facie Rule 26 ibid is ultra vires to the Section 11AC of the Central Excise Act, 1944. 13. Calcutta High Court decision in the case of Prompt Casting Pvt. Ltd. is only an interim stay order and does not lay any ratio. Stay was operative only up to 17-12-2012 in terms of para 6 of the High Court order which reads as follows :- 6. The interim order shall remain in force till 17th December, 2012 or until further orders whichever is earlier. I find that the Hon ble Calcutta High Court decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 in both of which person has been defined as including any company or association or body of individual, whether incorporated or not. It is of course contended that this definition does not apply to a firm which is not a natural person and has no legal existence, as such Clauses (3), (8) and (37) of Section 167 of the Sea Customs Act are inapplicable to the appellant firm. In our view, the explanation to Section 23C clearly negatives this contention. In that a company for the purposes of that section is defined to mean anybody 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 in-charge of its business or are responsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial as referred above are no more reliable when the Delhi High Court in the above referred decision of Sunil Mittal relying upon the Supreme Court decisions in the case of Agarwal Trading Corporation and Ors. v. Assistant Collector of Customs, Calcutta - 1983 (13) E.L.T. 1467 (S.C.) and Standard Chartered Bank and Ors. v. Directorate of Enforcement and Ors. - (2005) 275 ITR 81 has held that companies are persons liable to penalty under Rule 26. I also note that Kerala High Court in the case of India Sea Foods (Regd.) - 1984 (16) E.L.T. 243 (Ker.) has held that penalty under Sections 111 and 112(a) of the Customs Act, 1962 is imposable both on partner and the firm. 19. In light of the above, I hold that issue regarding imposition of penalty is no longer res integra and cases relied upon in the draft order of Member (Judicial) are no more good law. It is also noted that Hon ble Delhi High Court judgment in Sunil Mittal case was not cited before the Tribunal. It is further held that penalty is imposable upon the persons dealing with the offending goods liable to confiscation and the issue of the persons being natural or juristic is only an artificial question not accepted by the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne injections numbering 10302215 assessable value ₹ 67691782/-; Diazepam numbering 226929 assessable value ₹ 1013988/- and Pentazocine numbering 396239 assessable value ₹ 1188717/-. Statements of the chemists concerned with the production of the medicines in M/s. Gold Star Pharmaceuticals Pvt. Ltd. were recorded which are incriminating and clearly point out that excess production of medicines were going on in the factory by way of repeating the batch number of the medicines being produced there. The three such chemists whose testimony has been relied upon by the Revenue are Sh. B.B. Lahri, Sh. Vikas Mittal and Sh. G.S. Roy. All three of them had tendered statements before the Judicial Magistrate, Ghaziabad and accepted the excess production by way of repeat batches. Two of them i.e. B.B. Lahri, and Sh. G.S. Roy were also examined under Section 14 of the Central Excise Act. All three have stated that the manufacturing was being supervised by all the three applicants Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar. Testimony of Sh. Narinder Kumar, clerk with M/s. Gold Star Pharmaceuticals Pvt. Ltd. has also been relied upon where he states that medicin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 of the Central Excise Rules, 2002. Ordered accordingly consequently balance amounts of penalty shall remain waiver if penalties are deposited within six weeks and compliance reported within four weeks thereafter. Sd/- (Manmohan Singh) Member (Technical) POINT OF DIFFERENCE OF OPINION Whether in view of the facts of active involvement of M/s. Suraj Medical Agencies, Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar in the clandestine manufacture and clearance of medicaments by M/s. Gold Star Pharmaceuticals Pvt. Ltd., pre-deposit of penalty imposed upon them under Rule 26 of the Central Excise Rules, 2002 is demandable as recorded by the Member (Technical)? OR Whether considering the case laws cited by the ld. Advocate Stay is to be granted to M/s Suraj Medical Agencies, Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar as held by the Hon ble Member (Judicial)? Sd/- (Manmohan Singh) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) 25 . [Order per : Rakesh Kumar, Member (T)]. - In this case, the Commissioner, Central Excise, Chandigarh II vide order-in-original dated 27-12-2011 had confirmed Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its recovery stayed. However, M/s. Gold Star Pharmaceuticals Pvt. Ltd. did not deposit the directed amount as a result of which the appeal filed by M/s. Gold Star Pharmaceuticals Pvt. Ltd. was dismissed vide final order No. 57266/2013 dated 6-8-2013. However, by this order, the stay applications and the other appellants namely M/s. Suraj Medical Agencies, Shri Roshan Lal Kawatra, Shri Ashok Kumar Kawatra and Shri Kishan Chand were directed to be listed for fresh decision independently on merits. 25.1 The abovementioned stay applications were heard by Division Bench on 10-9-2013. While Member (Judicial) vide her order dated 23-9-2013 waived the requirement of pre-deposit of penalty following the judgments of the Tribunal in the case of Woodmen Industries v. CCE, Patna reported in 2004 (164) E.L.T. 339 (Tri.-Kol.) and also the Tribunal s judgment in the case of Aditya Steel Industries v. CCE, Hyderabad reported in 1996 (84) E.L.T. 229, wherein it was held that penalty under Rule 26 of the Central Excise Rules, 2002 (corresponding to Rule 209A of the Central Excise Rules, 1944) can be imposed only on the natural persons and not on the companies or firms constituted under the law an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Rules, 2002 for imposition of penalty, that in any case, Hon ble Calcutta High Court in the case of Prompt Castings Pvt. Ltd. (supra) observing that Rule 26 is prima facie in excess of the rule making powers conferred on the Central Government under Central Excise Act, 1944 has stayed the recovery of the penalty imposed under Rule 26 of the Central Excise Rules, 2002, that in view of this, there is no justification for ordering pre-deposit of penalty by M/s. Suraj Medical Agencies and other appellants and it is the order recorded by Member (Judicial) is the correct order. 28. Shri Yashpal Sharma, the learned DR, defended the order recorded by Member (Technical) and pleaded that the word person in Rule 26 of the Central Excise Rules, 2002 need not be a natural person and can be a juristic person also, that when M/s. Suraj Medical Agencies are alleged to have received the goods cleared by M/s. Gold Star Pharmaceuticals Pvt. Ltd. either without payment of duty or on short payment of duty, penalty on them would be attracted in terms of the provisions of Rule 26 of the Central Excise Rules, 2002, that in this regard he relies upon the Apex Court s judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Rules, 2002, prima facie, in excess of the rule making power of the Central Government, has stayed the recovery of the penalty. 31. Coming first to the judgment of Hon ble Calcutta High Court in the case of Prompt Castings Pvt. Ltd. (supra) this is only an interim order and findings are only prima facie findings which are reproduced below :- Section 11AC of the Central Excise Act, 1944, provides for imposition of penalty on the person who is liable to pay duty as determined under sub-section (2) of Section 11A. Rule 26 of the Central Excise Rules which provides for imposition of penalty on any person who acquires possession of, or is in any way concerned with transporting, removing, depositing keeping, concealing, selling or purchasing, or in any other manner dealing with any excisable goods that are liable to confiscation, is prima facie ultra vires of Section 11AC of the Central Excise Act, 1944. It is well settled that no penalty can be levied save by authority of law. Rule 26 is prima facie in excess of the Rule making power conferred under the Central Excise Act, 1944 . There will be an interim order restraining the respondent from giving further effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the word person in this Rule need not be a natural person and would include a juristic person also which can be a firm, a corporate body or even a company. The Apex Court in the case of Madhumilan Syntex Ltd. v. Union of India (supra) had in para 23 of the judgment held that while it is, no doubt, true that a company is not a natural person but is a legal or juristic person, the Corporate criminal liability is not unknown to law and that while a company cannot be ordered to suffer imprisonment, other consequences e.g. payment of fine etc. can ensue. Though Apex Court vide order reported in 2004 (170) E.L.T. A307 (S.C.) has dismissed the civil appeal filed by the Government against Tribunal s order in case of Woodmen Industries v. CCE, Patna (supra), the Apex Court s order being mere dismissal of civil appeal without giving any reasons does not lay down a binding precedent and it is only the Apex Court s judgment on this issue in case of Madhumilan Syntex Ltd. (supra) which has to be treated as a binding precedent. In view of this, notwithstanding the Tribunal s judgment in the case of Woodmen Industries v. CCE, Patna (supra), the civil appeal against which has been dismis ..... 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