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TMI Blog1995 (7) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... erated water factory was being looked after by Sh. Charanjit Singh while their partner was looking after his business interest at Delhi. The appellants unit had started manufacture of aerated waters falling under erstwhile Tariff item No. 1D under the brand names ₹ 77 , `Tingler etc. since June 1981. The unit was initially exempt from licensing control. However, in March, 1982, an L-4 licence was taken out and the appellants started maintaining all the requisite statutory records. On 19-5-1985, a consignment of 693 crates of aerated water originating from the factory premises of M/s. Punjab Bottling Company was intercepted by officers of the Central Excise at Beas Bridge on the G.T. Road and was allegedly found to be moving under cover of a fake Central Excise gate pass No. 148, dated 19-5-1985 and removed without payment of duty. In follow-up action, the officers visited the above factory premises and two trucks standing there loaded with a total quantity of 353 crates of aerated water which allegedly was intended to be removed without payment of duty. Furthermore, another quantity of 142 crates of aerated water was also found lying in the filling and capping section of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngh and the learned Advocate has not seriously contested the levy of duty and has also given up the claim of benefit of Notification No. 31/92 and we see no reason to interfere with the finding regarding evasion of duty by the appellants. We accordingly uphold the confiscation of 1188 crates of aerated water, Truck No. DEL-1377 and the levy of duty. 5. On the penalty aspect, we see great force in the contention of the learned Counsel that in the absence of any notice to Shri Charanjit Singh Anand and Shri S.S. Dhanjal to show cause against imposition of penalty, the penalties imposed upon them are not sustainable. The show cause notice called upon Punjab Bottling Company, Amritsar to show cause against imposition of penalty (para 18). It has been held by the Tribunal in the case of Mukha Mal Gokal Chand v. Collector of Customs and Central Excise, New Delhi.- [1987 (32) E.L.T. 163] that the issue of show cause notice to a person concerned prior to imposition of penalty is not an empty formality but a mandatory requirement and the fact that a copy of the show cause notice was also sent to the appellant firm, does not improve the case of the department regarding the penalty imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing them as partners of the above concern. They were thus put on notice about alleged omissions and commissions. Both have in turn replied to the Show Cause Notice. In their reply dated 24-12-1985 it is mentioned inter alia, as follows :- Please refer to the Show Cause Notice C.No.IV (HQRS) Prev/12/17/85/4706-77 issued by the Assistant Collector Preventive, Central Excise Collectorate, Chandigarh to Shri Charanjit Singh Anand, partner and Shri S.S. Dhanjal, partner of M/s Punjab Bottling Company Jandiala Guru (Amritsar) ...... 9. The Show Cause Notice also refers to alleged contravention by M/s Punjab Bottling Company Jandiala Guru and records the action taken in the presence of Shri Charanjit Singh Anand also. The statement of Shri Charanjit Singh Anand was also recorded and it is mentioned, inter alia, in Show Cause Notice that :- Shri Charanjit Singh admitted that he has himself made these entries in the PLA in advance as he was not to attend the factory on 20-5-1985. He also maintained that he himself was maintaining the records required to be maintained under Central Excise Law. He also admitted the fact that two trucks were being loaded in the factory premises at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining 100 gross each of crown corks and 320 packets containing 50 gross each of crown corks were not found entered anywhere in the Raw Material Account Register. The production slips were written upto 17-4-1985. For this he explained that he himself enters the production in the RG1 Register after actual verification of the production. [para 5] The following such copies have been resumed from the residence of Shri Charanjit Singh, partner of the firm M/s Punjab Bottling Company, Jandiala Guru (Amritsar). The scrutiny of these copies shows that against the PLA entry Nos. mentioned on these copies, no duty has been debited in the PLA. [para 15] Four chits dated 20-6-1984, 25-9-1984, 27-3-1985 and 17-5-1985 and letters dated 11-3-1985 and 18-3-1985 resumed from the Residential premises of Shri Charanjit Singh, partner of M/s Punjab Bottling Company Jandiala Guru (Amritsar) show that this firm has sent 570, 625, 130, 650, 700, 700 and 610+284 crates of Aerated Water Bottles to M/s Amrit Beverages Pvt. Ltd., Delhi without issuing any gate pass and without debiting the duty in the PLA. 10. These paragraphs are illustration of alleged personal involvement and liability of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received, without ensuring payment of duty by the firm by the second partner Shri S.S. Dhanjal at the receiving end, therefore this notice dated 9-11-1985 is a Show Cause Notice to M/s. Punjab Bottling Company as well as Shri Charanjit Singh Anand and Shri S.S. Dhanjal personally by name and designation (As partners) notwithstanding non-reiteration of their names in the last few paragraphs. 14. But even if it is considered that since the last few paragraphs mention only M/s Punjab Bottling Company as a firm and ask the firm to Show Cause (and do not reiterate the appellants name) and this amounts to an infirmity a question arises whether the infirmity was such as to invalidate the notices in respect of the appellants or vitiate the entire proceedings and render the penalty liable to be set aside? In the case of Kallatra Mahin v. C.C.E., Bangalore - [1984 (16) E.L.T. 622] in which penalty was imposed on a partner although Show Cause Notice was issued to the partnership firm, although the Tribunal held it to be a serious infirmity it also added that the question of de novo readjudication after issue of Show Cause Notice does not arise as the person is no more and significantly 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter was required to be remanded for de novo consideration after issue of fresh notice. It is ordered accordingly. 20. In so far as M/s. M.K. Industries are concerned I find that the main Show Cause dated 9-11-1985 does not bring out any specific charge against them nor the Show Cause Notice was originally issued to them. The main Show Cause Notice dated 9-11-1985 has not been endorsed to them at all whereas the corrigendum dated 13-11-1985 which asks them to Show Cause as to why the truck No. DEL 1377 should not be confiscated for having used the same for transportation of contraband excisable goods and why action under Rule 173Q should not be taken against them. Therefore they come into picture by virtue of the description of facts and events as contained in the original Show Cause Notice dated 9-11-1985 read with the charges made in the corrigendum dated 13-11-1985. Hence it cannot be said that no Show Cause Notice was issued to them. However in so far as the question of confiscation of truck and imposition of penalty were concerned that was a different matter to be considered on merits. 21. In their appeal memo and the hearing they have not disputed the fact that the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to be remanded ? 3. Whether the truck was liable to confiscation or not ?" My learned brother as well as sister both have narrated the facts and as such, I need not reproduce the same. 25. Mrs. Archana Wadhwa, the learned advocate appeared. She pleaded that no show cause notice was issued to the partners. The learned Advocate relied on the order passed by the Member Judicial and in particular referred to para No. 5 of the order passed by the Member Judicial. She also referred to para No. 7 of the order passed by the learned Vice President. She pleaded that show cause notice has been issued to the firm, but the penalty has been imposed on the partners. She argued that before the penalty can be levied there has to be a specific show cause notice issued to the partners. She read the learned Vice President s order and pleaded that the order passed by him is not correct. She referred to the show cause notice which is annexure `F of the paper book and in particular referred to paras No. 17 and 18 of the show cause notice. She further pleaded that a perusal of the show cause notice shows that M/s. Punjab Bottling Co., Jandiala Guru, had evaded central excise duty fraudulent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber Judicial. In para No. 4 of her order she has mentioned that the levy of duty and claim of benefit of Notification No. 31/92 is not seriously contested and had upheld the levy of duty part and also upheld the confiscation of truck No. DEL-1377. No argument has been advanced before me as to the confiscation of the truck. The only argument advanced by the learned Advocate is as to the levy of penalty on S/Shri Charanjit Singh Anand and S.S. Dhanjal of Rs. 10 lacs each. The show cause notice appears in annexure `F of the paperbook. For the proper appreciation of the legal position and facts whether the show cause notices had been issued to the partners or not reproduction of paras 16 to 21 and the parties to whom the show cause notice has been issued is very essential. Paras 16 to 21 of the show cause notice are reproduced below :- 16. The examination of the documents/records resumed from various dealers of M/s. Punjab Bottling Co., Jandiala Guru (Amritsar) as well as the residential premises of Shri Charanjit Singh, partner of the firm shows that the party M/s. Punjab Bottling Co., Jandiala Guru (Amritsar) has been evading Central Excise duty by adopting modus operandi detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice shows that show cause notice for levy of penalty has only been mentioned in the case of Punjab Bottling Co., Jandiala Guru. In paras 17 and 18 there is no mention of issue of show cause notice to the partners, S/Shri Charanjit Singh Anand and S.S. Dhanjal. A perusal of page 9 of the show cause notice shows that copy of the show cause notice has been sent to the partners. It is a settled law that penalty proceedings are quasi-criminal proceedings before the penalty can be levied. There has to be a specific charge. There is no specific charge in the case of Shri Charanjit Singh Anand as well as Shri S.S. Dhanjal. The Tribunal in the case of Mukha Mal Gokal Chand v. Collector of Customs and Central Excise, New Delhi reported in 1987 (32) E.L.T. 163 (Tribunal) has held as under :- From a plain reading of Section 79 of the Gold (Control) Act, 1968, it is clear that no order of adjudication of confiscation or penalty shall be made unless the owner or other person concerned is given a notice in writing, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty, and giving him a reasonable opportunity of making a representation against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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