TMI Blog2010 (5) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... d, in course of search, some documents relating to manufacturing and despatch of sponge iron were seized. Consequent upon such search operation, the PUCEC initiated proceedings to enquire into the alleged violation of provisions of the Central Excise Act, 1944 (for short 'the Act') and the Rules framed thereunder against the Company. In course of enquiry, the Superintendent of the PUCEC issued summons dated 26.11.2009 (Annexure-1) under Section 14 of the Act to the petitioner to appear before him in person or through an authorized agent on 11.12.2009. In response to the said summons under Annexure-1, vide letter dated 21.12.2009 (Anneuxre-2) addressed to opposite party, the petitioner authorized one Bijendra Kumar Chandrakar, Senior Manager (Finance) of the Company to appear and depose before the opposite party on behalf of the Company on the ground that the petitioner was staying at New Delhi and was not looking after the day-to-day operation of the factory. Another similar letter dated 02.01.2010 (Annexure-3) was also communicated authorizing the said Senior Manager (Finance) to appear and depose before the opposite party on behalf of the Company. Thereafter, opposite par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner is not looking after the affairs of the Company particularly the matters relating to Central Excise, with ulterior motive and mala fide intention has summoned the petitioner vide Annexure-9 enforcing his personal appearance. The Central Excise Board has issued instruction to the Department not to summon the Managing Directors/Directors of any Company for enquiry. In support of his contention, Mr. Pangari relying upon a circular bearing C.B.E. C Letter F.No.208/122/89- CX.6 dated 13.10.1989 forcefully argued that the said circular is binding on the Departmental authorities. To strengthen his argument, he relied upon decisions of the Calcutta High Court in Srei Infrastructure Finance Limited Vs. Union of India, 2009 (238) E.L.T. 579(Cal.) and Collector of Central Excise, Patna Vs. Usha Martin Industries, 1997 (94) E.L.T. 460 (S.C.). The petitioner has deposited ₹ 93.0 lakhs under protest because of harassment and coercive method adopted by the opposite party pending enquiry on allegation of non-payment of duty to the Government much before issuance of show cause notice under Section 11-A of the Act. The opposite party has already examined all the persons who were eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t he receives such information from other Department/Section of the plant and accordingly he maintains records. Sri B.K.Chandrakar, Senior Manager (Finance) was arrested as per the provisions of Section 9 9AA of the Act for violating various provisions of the Act and the Rules under reasonable belief that he was responsible for commission of offences with conscious knowledge and not just because he was authorized by the petitioner-Managing Director under his letters dated 21.11.2009 and 02.01.2010. The petitioner did not appear before the summoning authority even though he had been summoned for four times. So, it is not correct to say that the petitioner-Company is co- operating fully in the enquiry. It is necessary to examine the Managing Director as the alleged clandestine removal of goods from the factory premises appeared to have happened with the knowledge and approval of the Company, who is the beneficiary of such illegal activities. The Company has paid the Central Excise duty on their own which they realized. Ascribing mala fide design, extraneous consideration, harassment and colourable exercise of the powers as alleged by the petitioner is nothing but a figment to get ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries under this Act.--(1) Any Central Excise Officer duly empowered by the Central Government in this behalf, shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such office is making for any of the purposes of this Act. A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under the control of the person summoned. (2) All persons so summoned shall be bound to attend, either in person or by anauthorized agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required: Provided that the exemptions under Sections 132 and 133 of the Code of Civil Procedure, 1908 (5 of 1908) shall be applicable to requisitions for attendance under this section. (3) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt, documents seized in course of search and seizure operation as per Panchanama and the documents produced relating to the operational activities of the plant. Opp. Party issued summons to Bijendra Kumar Chandrakar, Senior Manager (Finance), Sri G.S.Garcha, Executive Director, Sri Dhananjay Swain, Deputy Manager (Process), who appeared and were examined on various dates and produced documents as were asked for by the opp. party. Apart from this, the petitioner by letter dated 05.04.2010 has supplied to the opp. party a list showing the names of employees with their designations engaged in various departments. In case the opp. party feels it necessary, he can issue summons to any person and record their statements. 9. Needless to say that to achieve the objective of unearthing the amount of excise duty evaded by any person liable to pay such excise duty and to plug leakage of excise duty legitimately due to the public exchequer, various measures have been provided in the Central Excise Act, 1944 and the Rules framed thereunder. One of such measures is search and seizure operation in the business premises of the assessee who is suspected to have committed economic offences fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to appear in person and explain about any document, record of the company pertaining to any particular activity only because he holds a very important post in the Company. 10. In S.M.S. Pharmaceuticals Ltd. (2) v. Neeta Bhalla, (2007) 4 SCC 70, the apex Court categorically held that there may be a large number of Directors, but some of them may not assign themselves in the management of the day-to-day affairs of the company and thus are not responsible for the conduct of the business of the company. 11. In National Small Industries Corporation Ltd vs. Harmeet Singh Paintal Another, (2010) 3 SCC 330, the apex Court while dealing with a matter under the Negotiable Instruments Act, 1881 with reference to Sections 141, 138 and 142 of the said Act held that the apex Court had distinguished the case of the persons who are in charge of and responsible for the conduct of the business of the company at the time of offence and the persons who are merely holding the post in a company and are not in charge of and responsible for the conduct of the business of the Company. 12. In the instant case, the Managing Director expresses his inability to explain the day-to-day affairs of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh it has been issued in a different factual scenario, i.e., with regard to collection of arrear dues. The relevant portion of the said Circular which will throw light on the present context is as follows:- Complaints have been received from the trade that in some of the Collectorates summons under Section 14 of the Central Excises and Salt Act, 1944 are being issued to the Managing Directors and other high officers with a view to enforce recovery of dues which are under dispute. Action under this section is to be taken only as a last resort in cases where assesses are not cooperating or investigations are to be completed expeditiously. This section should not be used for harassing the top management for forcing them to pay up demands which are disputed by them. For recovery of demands normal procedure under the law should be followed. If any instance of issue of summons to Managing Directors and other Directors without justification is noticed, a serious view will be taken by the Board. Collectors will be held personally responsible for enforcing these instructions in their charges. The Gujarat High Court in A.S. Corporation Vs. Union of India, 2008 (223) E.L.T. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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