1978 (8) TMI 78 - HC - Central Excise

Summary

Issues: Alleged evasion of excise duty and removal of excisable goods in contravention of the Act by company directors.

In this case, the petitioners, who were directors of a company licensed to manufacture aluminum tubes, were accused of evading excise duty and removing excisable goods in contravention of the Central Excises and Salt Act, 1944. The complaint alleged a shortage of aluminum pipes in the company's stock and storage of pipes outside the approved area without proper records. The directors were implicated under Section 9 of the Act for their role in the company's operations during the alleged offenses. The defense argued that the complaint lacked specific averments to hold the directors personally responsible for the offenses. The prosecution contended that directors could be vicariously liable under the Act unless they could prove lack of mens rea. The court analyzed Section 9(1) of the Act, emphasizing that personal liability for an offense must be specifically averred, and mere position in a company does not automatically extend liability. The court found that the complaint did not establish a prima facie case against the directors under Section 9 and subsequently quashed the proceedings against them. Additionally, the court clarified the application of Section 9C, stating that it presumes the existence of a culpable mental state but does not automatically apply if a person is not legally liable under the Act. Thus, the court allowed the application, made the rule absolute, and quashed the pending proceedings against the petitioners and the opposite party No. 3.