TMI Blog2007 (9) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners to appear before the Commissioner and file their reply to the show cause notice dated 24-3-2003. Thereafter, fresh adjudication order was made by the Commissioner on 31-1-2004, confirming central excise duty demand of ₹ 46,53,866/- and ordering its recovery from the original noticee no. (1), which is the present appellant no. (1). Penalty of like amount was imposed under Section 11AC of the Central Excise Act, 1944, on the said assessees and interest on the amount of duty was ordered to be paid in terms of Section 11AB of the Act. Penalty of ₹ 5 lacs was imposed on the noticee no. (2) who was the managing partner in the appellant firm. 2.1 Though the appeal memo was filed showing the name of the appellant as M/s. Gopal Industries Ltd. , it was stated by the learned counsel for the appellant that the appellant was not a company, but was only a partnership firm, which was dissolved on 31-3-2001. The four partners of the appellant partnership firm M/s. Gopal Industries including the noticee no. (2) Shri Yogesh Garg, were engaged in the manufacture of tin containers falling under sub-heading 7310 of the Schedule to the Central Excise Tariff Act, 1985. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partnership firm Shri Girijesh Kumar Rai in his statement recorded on 28-9-1998 confirmed that all the record shown to him was withdrawn from the factory of the appellant in his presence and that he had put his signatures on the documents at the time of their recovery on 1-8-1998. Shri Awadesh Kumar Saxena, who was the Electronics Engineer engaged by the firm and its group concerns, stated on 28-9-1998 that, the said daily production report depicted the number of tin containers produced/manufactured on a specified day and that a copy of that report was submitted to the Managing Director also. Whenever, he prepared such daily production/challan, original copy of the same was submitted to the Managing Director. The daily production report/challans were prepared by him whenever he was directed to do so by the Managing Director. He also stated that the daily production reports/challans, which had been recovered from the factory and which were seen and signed by him on the day of recording his statement, pertained to the production of tin containers manufactured by M/s. Gopal Industries. 3.1 The Commissioner concluded from the facts revealed by the said persons that the private docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-8-2001, on the conspicuous parts of the residential address indicated by Shri Yogesh Garg in his affidavit and further copy of show cause notice was also affixed on the headquarter's notice board on 14-8-2001. It was held that the notices were duly served on the noticees. It may be made clear that no contention has been raised before us during arguments as regards the service of the notices, and rightly so, because the Hon'ble High Court had directed them to file their reply to the show cause notice, which they filed on 24-3-2003 pursuant to the directions. 7. The Commissioner found that there was a clear cut admission of clandestine production and clearance of the said goods by the appellant. The authenticity of the recovered documents had been admitted by the noticee nos. (2) and (6) who had stated that these records pertained to the unaccounted production and clearance of tin containers by the appellant. The adjudicating authority took note of the statement of the managing partner Shri Yogesh Garg that besides others, Shri Awadesh Kumar Saxena was also looking after the production and clearance work of appellant. It was held that charge of the production and remova ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir post-dissolution assessment for clearances effected prior to dissolution, was not permissible. It was submitted that the principle laid down in Jullundur Vegetables Syndicate (supra) has been held to have been reiterated in Murarilal Mahabir Prasad (supra). Reliance was also placed in support of his submissions on the decisions in Janaki Devi v. STO, reported in 1977 (39) STC 268 (Del), Chief Commissioner of Sales Tax v. Raj Kishan Goyal reported in AIR 1982 Del 110 (FB) and Assistant Commercial Taxes Officer v. National Bricks and Lime Industries, reported in 1980 (85) STC 295 (Raj.). It was also contended that the Central Excise Act does not contain any provision akin to Section 19(3) of the Bombay Sales Tax Act and, therefore, the observations made against the assessee in Murarilal Mahabir Prasad (supra) cannot justify the assessment of a dissolved firm, to tax it under the Central Excise Act for clearances effected prior to dissolution. 8.2 The learned counsel for the appellant submitted that where the Statute talks of person , firms are deemed to have been specified as distinct legal entities. He placed reliance on the decision in Murarilal Mahabir Prasad (supra) in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ordinarily made by the 5th of the month following the month of clearance and the return is to be ordinarily filed by 10th day of the month following the month of clearance. Since the goods are cleared on the basis of self-assessment, all that remains to be done is, to verify the correctness of the self-assessment. In the Central Excise liability, assessment and payment are at the points of time specified in the law and not over a period of time, unlike under the Income Tax and Sales Tax laws. Therefore, changes over a period of time may be relevant in the context of the Income Tax and Sales Tax laws, but not in the Central Excise law where one has to examine the position under the Act and the Rules at the point of time when the liability/self-assessment/payment was done. For this, he referred to the provisions of Section 11A of the Act and rule 12 of the rules framed thereunder, which provided for filing of monthly returns. He further contended that levy of duty was a legislative function, self-assessment and payment an individual act on the part of the assessee, passing of assessment orders, a quasi judicial one, while collection was an administrative or executive action. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs 21 to 30 of the decision Murarilal Mahabir Prasad (supra). He relied on the decision of the Supreme Court in Maya Mahal Industries v. CCE, Meerut, reported in 1995 (80) E.L.T. 118 (T), for proposition that summoning of a co-noticee for cross-examination was not proper. 10. The contentions of the learned counsel for the appellants have proceeded on the footing that under the Central Excise Act, a partnership firm should be treated as a distinct legal entity from its partners. He submitted that the liability of the partnership firm and that of its partners was distinct and the partners cannot be assessed for the manufacturing activity of the partnership firm. He submitted that since recoveries may be possible against the partners, the partner (Yogesh Garg) has challenged the impugned order made against the firm and himself by filing the appeal in the name of the firm. 11. There is no dispute about the fact that there is no reference express or implied in the Central Excise Act or the Rules made thereunder for assessment of a partnership firm, unlike in the provisions of the Income Tax Act in which Section 2(31) provides an inclusive definition of person , which includes a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their partnership firm. In this context, we may approvingly refer the following from paragraph 9 of the said judgment : 9. The word manufacturer , under Section 2(f) of the Central Excise Act, 1944 shall include not only person who employs hired labour in the production or manufacture of the excisable goods, but also any person who engages in their production or manufacture on his own account. Thus, a manufacturer has to be a person, living or juristic. A sole-proprietory concern is not a juristic person and cannot, of its own, be a manufacturer or producer. For the purpose of Section 4, assessee is defined in sub-section (3)(a) thereof, to mean the person who is liable to pay the duty of excise under the Act and includes his agents. Any prescribed person who is engaged in the production or manufacture or any process of production or manufacture of specified goods is required to get himself registered with proper officer, as required by Section 6 of the said Act. Therefore, registration can be done only of such prescribed person, and not of a sole-proprietory concern, which by itself is not a person. The practice of giving registration in the name of a proprietory concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ever existed in the earlier proforma application for registration. This is evident from the earlier proforma A1 issued under Rule 9 of the Rules of 2001, which required a request being made to the Superintendent of Central Excise to issue a Registration Certificate under Rule 9 for the purposes indicated in the Schedule to that proforma. In that Schedule, name and address of the person applying for the registration was required to be mentioned. There was absolutely no scope for registering the name of any non-person ; and the details of the properties, persons, directors as the case may be, were also required to be given. In the same way, even in the still earlier proforma in Form R1 under the Central Excise Rules of 1944, the application for registration was required to be made by the person in whose name the registration certificate was required to be issued. The application was to be made in the name of the person (living or juristic) applying and not in any other name. Thus, there never was any possibility of giving excise registration in the names of sole-proprietory concerns. In view of the substantive provisions of Section 6 of the said Act and Rule 9 of the said Rules, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners have a joint or common interest . 13. As provided by Section 24 of the Partnership Act, notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm operates as notice to the firm, except in cases of fraud. The Hon'ble the Supreme Court has held in Ashutosh v. State Rajasthan and Others, reported in (2005) 7 SCC 308, that the liability of the partners is joint and several under Section 25 of the Partnership Act, and that it is open to the creditor of the firm to recover the debt from any one or more of the partners and each partner shall be liable as if the debt of the firm has been incurred on his personal liability. The Hon'ble Supreme Court, has held in Dena Bank v. Bhikhabhai Prabhudas Parekh Co. reported in 2000 (5) SCC 694, that, while the firm is incurring a liability, it can be assumed that all the partners were incurring that liability and so the partners remained liable jointly and severally for all the acts of the firm. Therefore, it cannot be said that such liability ceased merely because a partner has ceased to be a partner subsequent to the period in which the liabilities were incurred. In ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 'person' would include more than one person as a body of individuals, there is no automatic birth of a juristic person unless specifically so recognized by law. 16. For the purpose of income tax and sales tax assessments, 'firms' are specifically recognized as distinct assessable entities. Not so, under the central excise law. Therefore, the assessment of a partnership firm under the excise law is, in fact and reality, an assessment of persons who constitute that firm and not an assessment of the firm as distinct from the assessment of its partners in respect of the excisable goods manufactured by them and removed from the factory in the firm name. Under the provisions of excise law, a person (including persons together entering into a partnership agreement, who all are natural persons), or a juristic person like a company are contemplated as assessee and a partnership firm is not contemplated to be a distinct assessable entity because, no juristic personality for the purpose of assessment distinct from its partners is attributed to it, unlike under the income tax and sales tax laws. Therefore, the decisions rendered in the context of the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot frustrate by its dissolution. The assessment under the Central Excise law in the name of partnership firm will virtually, for all purposes, be assessment of the partners of such firm who will be jointly and severally liable for the duty liability that was incurred during the currency of their partnership venture of manufacturing excisable goods. The decisions of this Tribunal taking a contrary view are no longer good law and will stand overruled. 17. It is not in dispute that the show cause notice dated 10-8-2001 was sent not only in the name of the partnership firm, but to all the partners of the firm. The learned Commissioner has for valid reasons, recorded in paragraph 25 of the impugned order, held that the show cause notice was to be treated as properly served. It is evident from the record that when the service of the show cause notice was questioned before the Hon'ble High Court of Madhya Pradesh, the Hon'ble High Court, while disposing of the writ petition of the partners ordered the noticees to file their reply on 24-3-2003 and participate in the proceedings. Accordingly, the partners have participated in the proceedings and, in fact, the present appeal has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d they were of the appellant firm. According to him, the daily production report depicted the number of tin containers produced/ manufactured on a specific day. Whenever, he prepared the daily production report/challan he submitted the original copy to the Managing Director. The facts revealed by the Managing Director, Shri Yogesh Garg, the authorized signatory, Shri Girijesh Rai and Shri Awadesh Kumar Saxena make it clear that the said private documents recovered from the appellant premises on 1-9-1998 were maintained by the appellant and that the record, namely, the daily production reports, challans etc. were pertaining to the clandestine production and removal of tin containers without payment of duty. We have perused copies of these two note-books containing the private record and we find that there were signatures of Awadesh Kumar Saxena, Electronics Engineer at various places. The daily report showed particulars of the opening stock, production and the closing stock of the said excisable goods. Admittedly, the production of the tin containers, which was recorded in these daily record books and which were removed, did not appear in the statutory record i.e. RG. 1 register of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cleared tin containers in a clandestine manner. The quantum of liability which is worked out, has not been disputed before us. We find ourselves in complete agreement with the reasoning and findings of the learned Commissioner in holding that the charge of clandestine removal of tin containers by the appellants was established beyond doubt. No further corroboration was required in view of the clinching nature of the oral and documentary evidence establishing clandestine production and removal of tin containers by the appellant. It is evident that Shri Yogesh Garg, noticee No. (2), partner of the appellant, was in charge of the unit and was having overall control of the affairs of the unit. It was, therefore, rightly held that he was aware that the goods clandestinely manufactured and removed in the name of his partnership firm were liable to be confiscated. 19. For the foregoing reasons, we hold that the demand of ₹ 46,53,866/- has been rightly confirmed against the appellant-assessees and the penalty of the like amount was justified under Section 11AC of the said Act along with payment of interest, as provided under Section 11AB. The penalty of ₹ 5 lacs imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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