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Shri Motilal Gupta, Shri Gopal Joshi, Mohd. Yaseen Nihal, Ahmed alias Yaseen S.T., Shri Vinod Todi, Shri Maheshkumar U Mour, Shri Paresh Suresh Chhabra, Shri Siddharth J Patani Versus Commissioner of Central Excise, Thane-I

2016 (5) TMI 608 - CESTAT MUMBAI

Demand of duty and imposition of penalties - Appellant contended that once the case against main noticees is settled in Settlement Commission, he argued that, a case against all other noticees stands settled and since there is no confiscation of goods, no penalty under Rule 26 of the Central Excise Rules can be imposed - Held that:- by applying the decision of Hon'ble Supreme Court in the case of Yogesh Korani Vs Union of India [2003 (7) TMI 703 - SUPREME COURT], if the liability of the co-notic .....

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said that no offence meriting confiscation of goods was committed. Therefore, the penalty is imposable. - Decided against the appellant - Appeal No. E/400 to 405 & 565/11 - Final Order Nos. A/87374-87380/2016-WZB/SMB - Dated:- 27-4-2016 - SHRI RAJU, MEMBER (TECHNICAL) For the Petitioner : Shri Susanth Murthy, Advocate For the Respondent : Shri N.N. Prabhudesai, Supdt. (AR) ORDER PER: RAJU The appellants were also noticees in a case booked against Pratima Syntex, Thane. A show-cause notice deman .....

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ntinue in view of the settlement of the case by the main noticee. Revenue challenged the said decision before the Commissioner (A) who reversed the order and penalties were imposed on these appellants. Aggrieved by the imposition of penalty, they are in appeal before the Tribunal. 2. Learned Counsel for the appellant argued the matter on two issues: - (i) Once the case against main noticees is settled in Settlement Commission, he argued that, a case against all other noticees stands settled. (ii .....

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on entitled to file an application before the Settlement Commission and therefore, penalty imposed upon the appellants cannot be sustained and is set aside. He further argued that the said decision has been followed in the case of Virender Bansal Vs. Commissioner of Customs (ICD), New Delhi 2015 (317) ELT 796 (Tri-Del). He also relied on the decision of the Tribunal in case of Radiant Silk Mills (P) Ltd. Vs. Commissioner of Customs & Central Excise, Jaipur 2013 (288) ELT 311 (Tri-Del), where .....

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Supreme Court are entirely different from the facts of the instant case or the facts available in the case of S.K. Colombowala. The proceedings are under the Central Excise Act as regards imposition of penalty in terms of Rule 26 of Central Excise Rules. The question of obtaining any decree or order by mis-representing the facts of the case or by fraudulently representing the case, as was the case before the Honble Supreme Court, are not involved in the present appeal. While delivering the major .....

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nble Supreme Court was in altogether different facts and circumstances and under different provisions of law. He argued that there are plethora of judgments in which the decision of the Tribunal in the case of S.K. Colombowala (supra) was followed in similar circumstances. He further argued that there was no confiscation order and therefore, question of imposing penalty under rule 26 does not arise. For this purpose, he relied on the decision of the Tribunal in the case of Sharda Synthetics Ltd. .....

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ribunal has been stayed by the Hon'ble Bombay High Court. He further argued that the provisions of KVS scheme are similar to the provisions of Settlement Commission, in so far as the finality of the proceedings is concerned. He pointed out that the Section 90(3) of the Finance Act, 1998 (No. 2) in which the KVS Scheme was introduced reads as under: - (3). Every order passed under sub-section (1), determining the sum payable under this Scheme, shall be conclusive as to the matters stated ther .....

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, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. He argued that in the case of Yogesh Korani Vs Union of India 2003 (159) ELT 3 (Bom), while examining similar issue under KVSS, the Hon'ble Bombay High Court has observed as follows: - 11. As regards the first submission, we entirely agree with Mr. Bulchandani that ordinarily when a declaration made by the main noticee, under K.V.S.S. is accepted, the .....

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the co-noticee ? In other words, the question to be considered is in a composite order, where the liability of the main noticee and the co-noticee arise under two independent causes of action and the main noticee settles the dispute under one cause of action, then whether the co-noticee, who is penalised for the other cause of action for which there is no settlement of tax arrears can claim immunity on the basis of declaration made by the main noticee He argued that the decision of Hon'ble B .....

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ELT 229 (Tri-Chennai) (ii) Sanjay Vimalbhai Deora Vs. CESTAT 2014 (306) ELT 533 (Guj). (iii) Commissioner of Central Excise, Ahmedabad Vs. Navneet Agarwal 2012 (276) ELT 515 (Tri-Ahmd). 4. I have considered the rival submissions. I find that learned Counsel for the appellants has primarily relied on the decisions of S.K. Colombowala (supra). In the said decision, there was a difference of opinion between Member (Judicial) and Member (Technical) and the matter was referred to third Member. The fo .....

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main persons in the crime? 15. Whether treating the appellants as mere co-noticees waiver of penalty should be granted on the ground that M/s. Amrit Laxmi Machine Works and its Director have obtained immunity from penalty by the order of the Settlement Commission. 16. Whether order proposed by ld. Member (Judicial) or Member (Technical) should be endorsed? The said questions were answered in following manner: - 26. The points of difference are therefore, are answered as under : - (a) While the p .....

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a case then cannot be adjudicated qua other co-noticees. (c) The case against all co-noticees comes to an end once the order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission and therefore, penalty imposed upon the appellants cannot be sustained and is set aside. (d) The order proposed by the ld. Member (Judicial) is endorsed. 4.1 The learned Counsel has relied on sub-para (c) of para 26, wherein it has been held that once the orde .....

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India 2003 (159) ELT 3 (Bom) which has been upheld by Hon Supreme Court as reported in 2004 (163) ELT A50 (SC). 4.2 The Larger Bench of Tribunal in case of S.K. Colombowala (supra) has held that the (a) While the provisions of KVS Scheme and those relating to settlement of cases under the Customs Act are not completely identical, the underlying objective in both the scheme is similar and it is for this reason that the case laws in respect of cases under KVSS including in the case of Onkar S. Kan .....

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n 127J, which is the provision in Customs Act dealing reads as follows: - Section 127J. Order of settlement to be conclusive. - Every order of settlement passed under sub-section (7) of section 127C shall be conclusive as to the matters stated therein and no matter covered by such order shall, save as otherwise provided in this Chapter, be reopened in any proceeding under this Act or under any other law for the time being in force. The provisions regarding conclusion of proceedings in the KVSS s .....

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ion did not consider the decision of Hon'ble High Court in the case of Yogesh Korani (supra) which was upheld by Hon Supreme Court as reported in 2004 (163) ELT A50 (SC). The issue being dealt with in the said case, like in case of Onkar S. Kanwar (Supra), was interpretation of the provision of the KVSS scheme regarding conclusion of proceedings. 4.3 The decision of Hon Supreme Court in case of Yogesh Korani (supra) has been given after considering the decision of Hon Supreme Court in case o .....

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nd the co-noticees are based on separate, distinct and independent causes of action and the principle noticee settles only part of the tax arrears arising out of composite order, then whether the benefit of K.V.S.S. granted to the principal noticee will be available to the co-noticee ? In other words, the question to be considered is in a composite order, where the liability of the main noticee and the co-noticee arise under two independent causes of action and the main noticee settles the dispu .....

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igh Court of Mumbai had the occasion to examine a case after considering the law laid down in both the earlier decisions i) Yogesh Korani v. U.O.I. 2003 (159) E.L.T. 3 (Bom.) which was approved by Hon Supreme Court on 21.7.2003 ii) U.O.I. v. Onkar S. Kanwar 2002 (145) E.L.T. 266 (S.C.) The facts of the case in Modest Shipping were as follows 2.The facts relevant to the present case are that some time in February, 1989, a rig ED-HOLT imported by M/s. Jindals arrived at Bombay. The said rig was im .....

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. However, on 27th June, 1989 the petitioners on instructions from M/s. Jindals amended the IGM by adding an additional entry and thereupon a Bill of Entry was filed seeking clearance of the rig. 3. On 27th January, 1994 a show cause notice was issued to M/s. Jindals by the Customs authorities calling upon them to show cause as to why the rig should not be confiscated and penalty imposed. On 7th March, 1994 a corrigendum was issued to the said show cause notice increasing the amount of duty paya .....

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he said order, penalty of ₹ 5 crores was levied upon the petitioners. The petitioners as well as M/s. Jindals filed appeals against the said order-in-original, but the same were dismissed by CEGAT on 4th December, 1998 [2001 (138) E.L.T. 1335 (Tri.)]. The petitioners thereupon filed Civil Appeal before the Honble Supreme Court against the order passed by the CEGAT. During the pendency of the Civil Appeal filed before the Supreme Court, it was noticed that the importers namely M/s. Jindals .....

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e granted to the petitioners from payment of penalty. The representation made by the petitioners was rejected by the Deputy Commissioner of Customs on 12th March, 2000. Hence the present petition. 5. Mr. Rebello, learned Counsel for the petitioners submitted that in the present case the petitioners were acting as agents of M/s. Jindals and had filed the IGM as per the instructions given to them by M/s. Jindals. Subsequently, at the instance of M/s. Jindals, the IGM was amended. Misdeclaration, i .....

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d of all the liabilities fastened upon the petitioners under the common order dated 31st August, 1994. The Counsel for petitioners relied upon the judgment of the Apex Court in the case of Union of India & Ors. v. Onkar S. Kanwar & Ors. reported in [2002 (145) E.L.T. 266 (S.C.) = 258 I.T.R. 761 S.C.] and submitted that in view of the said decision which is squarely applicable to the present case, no penalty can be recovered from the petitioners. The Hon High court distinguished the facts .....

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and that the liability of the co-noticee arose from different act than that of the principal noticee. In the present case, we have held that the liability of the principal noticee (M/s. Jindals) and the co-noticee (petitioners) flow from the same act and hence the decision of the Apex Court in the case of Onkar S. Kanwar (supra) squarely applies to the facts of the present case. It can be seen that the Hon High court has clearly held that if the liability of the co-noticees arise from same act t .....

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Yogesh Korani (supra) the notices were issued to the company and the buyers of the licence, who happened to be outsiders. In case of Modest Shipping (Supra) the co-noticee was the agent of the importer and they filed the wrong declaration in order to clear the goods. It is seen that where a co-noticee acts as an employee of agent of the main notice, he gets the immunity but if he acts on his own he does not get the immunity. 4.6 In the instant notice the facts are similar to those in case of Yo .....

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import specified quantity of raw materials duty free with the corresponding export obligation. The said licences were with actual user conditions and could not be sold to third parties and the duty free goods imported under the said licences were required to be used in the manufacture of export items. Investigations carried out by the Customs Authorities revealed that M/s. Choice Laboratories had illegally sold glycerine and Sodium Lauryl Sulphate (SLS) imported and cleared without payment of d .....

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r a premium of 35% and a consignment of 2.22 M.Ts. of Clove Bud oil was cleared duty free on the basis of the said advance licence and sold to M/s. Colgate Palmolive Ltd. During the course of investigation, statement of various persons, including the Petitioner were recorded u/s. 108 of the Customs Act, 1962 (Actfor short) and all the aforesaid goods cleared duty free were seized in the hands of the respective parties. 5. Thereafter, a show cause notice dated 14th February, 1984 was issued again .....

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imposed on each of them. 6. After hearing the parties, the order in original was passed by the Commissioner of Customs on 11th September, 1995 ordering the confiscation of seized 108 M.Ts. of glycerine, 7.2 M.Ts. S.L.S., 2.2 M.Ts. of Clove Bud Oil and 1998 kgs. of pepperment oil. The Commissioner of Customs further ordered recovery of customs duty on those confiscated goods. The Commissioner of Customs also levied penalty of ₹ 5,00,000/- on M/s. Choice Laboratories, ₹ 1,00,000/- on .....

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ng aggrieved by the aforesaid order, all the four parties, namely; M/s. Choice Laboratories, M/s. Fresh Laboratories, M/s. Ratilal Hemraj and the Petitioner herein filed appeals before CEGAT, Mumbai. During the pendency of said appeal before CEGAT, M/s. Choice Laboratories filed declaration under Kar Vivad Samadhan Scheme, 1998 (K.V.S.S.in short) admitting their liability only in respect of confiscated glycerine, S.L.S. and peppermint oil (but not on Clove Bud Oil) and paid customs duty thereof, .....

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y the said order dated 11th March, 2002, CEGAT confirmed the liability of the customs duty on Clove Bud Oil and also redemption fine and personal penalty levied on M/s. Ratilal Hemraj. By the said order, appeal filed by the Petitioner was also dismissed by holding that the benefit of K.V.S.S. granted to M/s. Choice Laboratories will not be available to the Petitioner, as his role continued even after the role of M/s. Choice Laboratories stopped. Challenging the said order, this petition has been .....

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nly penalties were imposed as the cause of action in the two cases are different. Different cause of action can be determined from the purpose of transaction. If the co-noticee gain personally from the transaction of if they are merely assisting the main noticee to benefit. In case of the Onkar S. Kanwar (supra), the co-noticees being directors and officers of main notice were working for the benefit of the company. Thus the directors and officers were granted immunity after the company succeede .....

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red without payment of duty independently of the main noticee. 4.7 Furthermore the decision of tribunal in case of S.K. Colombowala (Supra) seems to consider the term case include all proceedings initiated by a notice. If a notice demands duty from two different noticees, then according to the decision of tribunal in case of S.K. Colombowala (Supra) if one of the noticee settles the case the other notice from whom duty is demanded would also get immunity. It cannot be the intention of the legisl .....

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nged before Hon HC of Chennai and the matter was pending there. However in the instant case the decision of Hon HC of Mumbai in the case of Yogesh Korani (supra), which was approved by Hon SC, has not been considered by the tribunal in case of S.K. Colombowala (Supra). A decision in which a particular matter is not discussed upon is said to be passed sub silentio in respect of that particular matter and cannot be relied as a precedent for that specific matter which is not discussed upon. Hon Sup .....

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the Act conferring express power on the Municipal Corporation to direct removal of encroachments from any public place like pavement or public streets, and without any citation of authority. Accordingly, we do not propose to uphold the decision of the High Court because, it seems to us that it is wrong in principle and cannot be justified by the terms of the relevant provisions. A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rul .....

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attached to that phrase, when the particular point of law involved in the decision is not perceived by the court or present to its mind. The Court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the court should not have decided in favour of the particular party unless it also decided point B in his favour; but point B was not argued or considered by the court. In such circumstances, although poin .....

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n the name of the liquidator. When, therefore, this very point was argued in a subsequent case before the Court of Appeal in Lancaster Motor Co. (London) Ltd. v. Bremith, Ltd., [1941] 1 KB 675. the Court held itself not bound by its previous decision. Sir Wilfrid Greene, M.R., said that he could not help thinking that the point now raised had been deliberately passed sub silentio by counsel in order that the point of substance might be decided. We went on to say that the point had to be decided .....

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allowed to be reopened. The weight accorded to dicta varies with the type of dictum. Mere casual expressions carry no weight at all. Not every passing expression of a Judge, however eminent, can be treated as an ex cathedra statement, having the weight of authority. 5. In view of the above, I am of the opinion that the decision of Hon'ble High Court in case of Yogesh Korani (supra) which has been approved by the Hon Supreme Court, is squarely applicable to the present case. The decision of .....

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