TMI Blog2006 (7) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... se Duty amounting to Rs. 33,20,03,239/- against M/s. Mar Jyoti Packers and imposed an equivalent amount of penalty under Section 11AC on M/s. Amar Jyoti Packers. 2. The brief facts leading to imposition of penalties and raising of demand of excise duty are as under. 3. All the three petitioners namely Shri Devi Dass Garg, Shri Rakesh Kumar Garg and Shri Santosh Kumar Garg were in the business of manufacturing pan masala and 'gutkha' under a partnership firm M/s. Sonal India products at Mathura. Pan Masala and Gutkha were being manufactured under four different trademarks viz. Raj Darbar, Rahat, Raj Tilak, Rustam. They had applied for registration of above trademarks in their names and were marketing pan masala and gutkha in pouches having above trademark. They also had an office in Delhi at G-3/4, Model Town. One Mahesh Kumar Gautam was working as Poojari of the petitioners at a temple at the residence of these petitioners and was getting a remuneration of Rs. 2000/- to Rs. 3000/- per month. The three petitioners entered into a franchise agreement for manufacturing and marketing of Pan Masala and Gutkha in above trade-names with pujari Mahesh Kumar Gautam, who had allegedly f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of Mahesh Kumar Gautam and also as accountant of the firm. He also stated that he was working under the instructions of the petitioners. At premises of Amar Jyoti Packers, 20 pouch packing machines were found working at the time of raid. Each machine was having manufacturing capacity of 200 pouches per minute. Six more such machines were lying in the tool room for repairs. Apart from these machines, 5 ovens, 2 pouch sealing machine, 1 mixer, 2 supari slitters and 2 supari cutters were found installed in the factory premises. One oven and one pouch sealing machine in dismantled state were also found lying in the factory premises. The officers also recovered a pocket diary belonging to one Dinesh Kumar, working as a typist in the factory. Statement of Vinod Bansal showed that about 35 workers were working in the factory. Registers were checked and it was found that daily production and clearance of goods was either not being entered or was being incorrectly entered in the Form-IV and RG-I register. The consumption of raw materials was found not entered in Form-IV register in respect of 18th, 19th and 20th October, 2000, though consumption of raw material and production of pouches ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed supari, katha, chuna and illaichi. 8. Statements of Pujari Mahesh Kumar Gautam were recorded on 26-4-2002, 4-11-2003 and 12-3-2004 Statements of Vinod Bansal, accountant and authorized signatory were recorded on seven occasions from 21-10-2003 to 5-3-2004 Excise Department also recorded statements of other persons involved namely, DK Sharma, accountant of M/s. Surya Traders and Sunil Aggarwal so-called owner of Surya Traders. 9. From all the statements and the documents and circumstances, Excise Department came to the conclusion that all the three petitioners were actually running the entire show of Amar Jyoti Packers and Surya Trading. Mahesh Kumar Gautam and Sunil Kumar Aggarwal were only name lenders and front men. The entire operation was being done clandestinely to evade excise duty. No record of purchase of raw material was being maintained by Surya Traders. All payments were being made to Surya Traders in cash. The correct record of production of pouches at Amar Jyoti Packers and Narsi Food was not being maintained and consumption of raw material was also not being maintained correctly and large amount of production and sale was going on unrecorded, to evade excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in a short span. He pleaded that this was no ground for imposing penalty and gave example of Mr. Dhirubhai Ambani stating that he had started business on a bicycle and had become one of the richest man in India. So, the richness of a person should not be considered as a reason to attract heavy penalty. 11. On the other hand, Learned Addl. Solicitor General appearing for UOI, drew our attention towards the huge amount of excise duty evasion running into several crores and the clandestine manner in which a Poojari of the petitioners and another known person were used as front men to do this evasion. Mr. P.P. Malhotra, Ld. ASG, stated that this was a fit case where the State should have prosecuted the petitioners and he wondered why the prosecution had not been done. He submitted that against the penalties of Rs. 21 crores, Rs. 25 crores and Rs. 21 crores respectively, the Tribunal had asked for a pre-deposit of paltry amount of Rs. 2 crores each only. The Tribunal had not adequately protected the interest of revenue and there was no scope for interference by this court. 12. During the arguments, we had asked the petitioners as to how much amount they were willing to pre-deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of each case. The order shows that the Tribunal had taken into account all the facts and then exercised discretion of asking quantum of pre-deposit. This court while exercising powers under Article 226 of the Constitution cannot substitute its own discretion in place of the discretion of the Tribunal. This court can interfere only if the order is perverse and not based on any evidence or has been passed on extraneous considerations. Supreme Court in H.B. Gandhi, Excise and Taxation Officer-cum-Assessing Authority, Karnal and others v. M/s Gopi Nath and Sons and Others 1992 (Supplementary) (2) SCC 312 has laid down the limitation of judicial review. High Court can interfere under Article 226 of the Constitution only if the action of the Tribunal is unfair or unreasonable or it defies the principle of natural justice or it violates any statutory provision and not otherwise. 16. We had gone through the franchise agreement placed on record. The date of agreement is 13-4-2000 while it is effective from 1-4-2000. In the agreement, the three petitioners, who are experienced businessmen have shown themselves incapable of managing the production and sale on all India basis and a Pujari, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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