Commr. of C. Ex. and Cus. vs Mahendra Kumar Kapadia

K.A. Puj, J.—The Commissioner of Central Excise & Customs, Surat-II has filed this Tax Appeal u/s 130A of the Customs Act, 1962 proposing to formulate the following substantial questions of law for determination and consideration of this Court;

(a) Whether penalty under Section-114A of the Customs Act, 1962 can be imposed on the basis of unretracted admission of partner of unit in the statement recorded under Section-14 of the Central Excise Act, 1944 and/or Section-108 of Customs Act, 1962?

(b) Whether in the facts and circumstances of the case the Tribunal has committed substantial error of law in not recording its finding on the grounds of appeal set out in the memo of appeal as well as at the hearing by learned Department Representative and deciding appeal of the Department by mere reproduction of finding recorded by the Appellate Commissioner, in dismissing the appeal of the Department?

(c) Whether in the facts and circumstances of the case the Tribunal has committed substantial error of law in dismissing the appeal of the department and thereby confirming order passed by the appellate Commissioner exonerating Respondent from liability of penalty under Section-114A of the Customs Act, 1962?

Heard Mr. R.J. Oza, learned Senior Standing Counsel appearing for the Department and perused the orders passed by the authorities below. The present Appeal is filed by the partner of M/s. D.K. Polyn Industries (100% EOU). The show cause notice was issued on the partner under Section-112 of the Customs Act, 1962. However, the order was passed imposing the penalty of Rs. 3,34,923/- under Section-114A of Customs Act, 1962. This order was challenged by the Respondent before the Commissioner of Central Excise and Customs, who vide his order dated 4-9-2008 deleted the penalty on the ground that since the penalty has already been imposed on the firm and considering that the show cause notice does not bring out any specific role of the partner in the removal of goods clandestinely, except by way of general statement that he was looking after the day-today affairs of the firm and that the impugned goods have been cleared clandestinely without preparation of any excise documents and without payment of duty, the case does not call for separate penalty on the partner when penalty has already been imposed on the firm.

The revenue being aggrieved by the said order of the Commissioner (A) preferred an Appeal before the Tribunal and the Tribunal vide its order dated 29-5-2009 confirmed the order of CIT(A) and dismissed the Appeal. The Tribunal has followed its own orders passed in several other matters, many of which have been accepted by the department. The Tribunal has further observed that the penalty has not been set aside only on the ground that when penalty has been imposed on the firm, there is no need to impose penalty but role of the partner has also been discussed. The Tribunal has further observed that there is no specific allegation against the partner except by way of general observation. The Tribunal has further taken note of the fact that the penalty has been imposed on the firm and goods have been confiscated and this is a case of shortage. Considering all these factors the Tribunal took the view that the Commissioner (Appeals) was justified in cancelling the penalty imposed on the partner.

The issue as to whether penalty can be imposed on the partner when the penalty is already imposed on the firm has also come up for consideration before this Court in Tax Appeal No. 1179 of 2010 with Tax Appeal No. 1180 of 2010 decided on 28-7-2010 [2010 (259) E.L.T. 179 (Guj.)] and this Court after discussing the relevant provisions of the Partnership Act and considering the role of the partner viz-a-viz the role of the Director in the case of a Company has taken the view that for the purpose of liability in respect of commission of offences under the Act, a partnership firm is equated with a company, whereas there is no such corresponding provision in relation to imposition of penalties under the Act. The Court, thereafter, took the view that the Tribunal was justified in holding that no separate penalty was warranted on the partners in addition to the penalty on the partnership firm.

Here in the present case, CIT has deleted the penalty on this very ground, over and above the fact that no role of the partner was indicated in the show cause notice. Apart from this, one more ground is available in the present case for upholding of decision of the Commissioner (Appeals) as well as Tribunal and that is that the show cause notice was issued under Section-112 whereas the penalty was levied under Section-114A for which no show cause notice was issued.

Considering all these facts and circumstances of the case, we are of the view that no question of law, much less any substantial question of law, arises out of the order of the Tribunal. Hence, this Appeal is accordingly dismissed.