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TMI Blog2012 (5) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... s manufacture plastic soft-drink crates for supply to M/s. Hindustan Coca Cola Beverages Pvt. Ltd. and during the relevant period, that is, July 1999 onwards, there was a considerable slow down in lifting of the finished goods by the said customer. Due to this, the petitioners had accumulated a huge inventory of plastic crates in the petitioners' factory. Consequently, during the month of December 1999, the petitioners were holding stock of more than 11,00,000 plastic crates. According to the petitioners, the stock of crates lying in the factory in the month of December 1999 was ten times more than the normal inventory of crates maintained by the petitioners. 3. It is further the case of the petitioners that, on 2-12-1999, a huge fire accident had occurred in the factory of one of the plastic units viz., M/s. Supermaid belonging to the Time Packaging Group, situated in the vicinity of the petitioners' factory in which the entire factory, plant, machinery, stock and building were destroyed. Since, the stock of finished goods lying in the factory of the petitioners was highest at an unprecedented level leaving practically no room for the movement of men and materials within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners and authorized signatory of the petitioners. The show cause notice culminated into an Order-in-Original dated 26-2-2002, whereby the adjudicating authority ordered confiscation of the seized goods and imposed a redemption fine of Rs. 32,08,600/-, imposed penalty of Rs. 15 lakhs on the petitioner company as well as Rs. 10 lakhs and Rs. 5 lakhs on one of the Directors of the petitioner company and the General Manager cum Authorized Signatory, respectively. Being aggrieved, the petitioners went in appeal to the Appellate Tribunal who, vide the impugned order dated 11-3-2003, upheld the order of confiscation regarding goods other than 4,215 crates and the truck, reduced the redemption fine from Rs. 32,08,600/- to Rs. 5 lakhs and reduced penalties on the petitioner company from Rs. 15 lakhs to Rs. 3 lakhs, on the second petitioner Shri Lalit Nathji Chheda from Rs. 5 lakhs to Rs. 2 lakhs. Being aggrieved, the petitioners have filed the present petition, challenging the aforesaid order passed by the Tribunal, to the extent the same is adverse to the petitioners. 5. Mr. Paresh Dave, learned advocate appearing on behalf of the petitioners invited attention to the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntravention of any of the provisions of the Act or the Rules made thereunder with intent to evade payment of duty, and that, similar is the case which sub-rule (6) of Rule 57-U of the Rules. It was submitted that in the circumstances, for the purpose of invoking Rule 173A of the Rules, the Tribunal not only is required to record a finding to the effect that the petitioner has committed any of the defaults enumerated under the said rule, but is also required to record a finding that such default is for the reasons envisaged under Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57-U of the Rules. It was submitted that in the present case, the Tribunal has specifically recorded a finding of fact to the effect that there was no intention on the part of the petitioners to evade payment of duty; in the circumstances the provisions of Rule 173Q of the Rules would not be applicable to the facts of the present ease. It was submitted that in the circumstances, in the absence of any intention on the part of the petitioners to evade payment of duty, confiscation of the seized goods could not have been ordered under Rule 173Q(1) of the Rules, nor could penalty hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mens rea, no case was made out to impose penalty. Reliance was also placed upon the decision of the Bombay High Court in the case of Union of India v. Mohibali Roshanali Naser, 1992 (59) E.L.T. 403 (Bom.) for the proposition that a mere breach of condition would not ipso facto result in contravention. The Court in the facts of the said case held that the evidence indicated irregularity or a breach but nonetheless it would not constitute contravention by the petitioners. 9. It was, accordingly, urged on behalf of the petitioner that the impugned order of the Tribunal to the extent it confirms the redemption fine and imposition of penalties, is required to be quashed and set aside. 10. Resisting the petition, Mr. Varun Patel, learned Standing Counsel appearing on behalf of the respondents raised a preliminary objection to the very maintainability of the petition, contending that against the order of the Tribunal, the petitioners have an efficacious alternative remedy available under the provisions of the Central Excise Act and as such, the petition deserves to be dismissed on this count alone. Reliance was placed upon a decision of the Supreme Court in the case of Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, no ground in respect thereof has been taken in the petition, and hence, the petitioners should not be permitted to raise the said ground during the course of hearing of the present petition. It was, accordingly, submitted that the impugned order of the Tribunal being just, legal and proper, does not warrant interference by this Court and that, the petitioners having an alternative remedy under the provisions of the Act, the petition deserves to be dismissed on the ground of maintainability alone. 13. Dealing with the contention as regards maintainability of the petition on the ground of there being an efficacious alternative remedy available under the provisions of the Central Excise Act, it is true that the Supreme Court in the case State of U.P. v. U.P. Rajya Khanij Vikas Nigam Sangharsh Samiti, (supra), has held that it cannot be laid down as a proposition of law that once a petition is admitted, it could never be dismissed on the ground of alternative remedy. However, in the said decision, the Court has observed that issuance of rule nisi or passing of interim orders is a relevant consideration for not dismissing a petition if it appears to the High Court that the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned advocates for the respective parties, the core issue that arises for consideration is as to whether in the facts and circumstances of the case, the Tribunal was justified in confirming the redemption fine of Rs. 5 lakhs and penalty of Rs. 3 lakhs under Rule 173Q of the Rules. In this regard, it would be germane to refer to Rule 173Q of the Rules which insofar as the same is relevant for the present purpose, reads as under : "Rule 173Q - Confiscation and penalty : (1) Subject to the provisions contained in section 11AC of the Act and sub-rule (4) of Rule 57-J and sub-rule (6) of Rule 57-U, if any manufacturer, producer, registered person of a warehouse or a registered dealer - (a) removes any excisable goods in contravention of any of the provisions of these rules; or (b) does not account for any excisable goods manufactured, produced or stored by him; or (bb) xxx (bbb) xxx (c) xxx (d) contravenes any of the provisions of these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the manufacturer, producer, registered person of a warehouse or a registered dealer, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon which the licence is given are fulfilled or not. The use of the words "subject to " has reference to effectuating the intention of the law and the correct meaning, in our opinion, is "conditional upon". 18. In Ashok Leyland Ltd. v. State of T.N., (2004) 3 SCC 1, the Supreme Court held thus : "Section 9(2) of the Act is subject to the other provisions of the Act which would include sub-section (2) of Section 6-A of the Act. "Subject to" is an expression whereby limitation is expressed." "In Black's Law Dictionary, 5th Edn., at p. 1278, the expression "subject to" has been defined as under : "Liable, subordinate, subservient, inferior, obedient to; governed or affected by; provided that; provided; answerable for. Homan v. Employers Reinsurance Corpn., 345 Mo 650"" 19. In S.N. Chandrashekar v. State of Karnataka, (2006) 3 SCC 208, the Supreme Court followed its earlier decision in the case of Ashok Leyland Ltd. v. State of T.N. (supra) and held that the words "subject to" used in Section 14 of the Karnataka Town and Country Planning Act, 1961 are of some significance. The said words must be given full effect to. 20. Thus as laid down by the Supreme Court the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only where a manufacturer, producer, registered person of a warehouse or a registered dealer removes excisable goods in contravention of any of the provisions of the Rules; and clause (b) thereof would be attracted if such person does not account for any excisable goods manufactured, produced or stored by him. In the present case, the Tribunal, on facts, has found that clause (a) as well as clause (b) would be attracted. However, for the purpose of invoking Rule 173Q of the Rules, it is not sufficient that the ingredients of clause (a) and/or (b) or the other clauses set out under sub-rule (1) of Rule 173Q are satisfied. For the purpose of invoking Rule 173Q, the requirements of the relevant clause/clauses enumerated under sub-rule (1) of Rule 173Q as well as the requirements of Section 11AC of the Act and Rule 57-I (4) and 57-U (6) should cumulatively be satisfied. If any of the conditions is not satisfied, Rule 173Q cannot be invoked. 23. The aforesaid view is reinforced by the decision of this Court in the case of Commissioner of C.Ex. & Customs v. Saurashtra Cement Ltd. (supra) wherein it was held thus : "17. It is also to be borne in mind that Rule 25 starts wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rule 173Q are duly satisfied. However, as observed hereinabove, for the purpose of falling within the ambit of Rule 173Q of the Rules, two conditions precedent have to be satisfied, firstly that one or more of the situations enumerated in the clauses under sub-rule (1) of Rule 173Q of the Rules have to be fulfilled, and secondly that the requirements of Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57-U of the Rules, also have to be satisfied. If either of these conditions is not satisfied, the provisions of Rule 173Q of the Rules would not be attracted. 25. As noticed earlier, in the present case, though the Tribunal has found that clauses (a) and (b) of sub-rule (1) of Rule 173Q of the Rules are duly satisfied, the Tribunal has also recorded a finding of fact to the effect that the action of the petitioner of removing the goods from the place of manufacture and storing the same in adjacent premises was not suggestive of intention to evade duty. In the circumstances, the requirements of Section 11AC of the Act and sub-rule (4) of Rule 57-I and sub-rule (6) of Rule 57-U of the Rules are clearly not satisfied, inasmuch as apart from the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for invoking Rule 209A of the Rules the ingredients of Section 11AC and Rules 57-I(4) and 57U(6) of the Rules are not required to be satisfied. In the circumstances, merely because confiscation under Rule 173Q is set aside as the ingredients of Section 11AC of the Act and Rules 57-I(4) and 57U(6) of the Rules are not satisfied does not mean that penalty under Section 209A cannot be levied if upon the evidence on record a case is made out for levy of such penalty. In this regard, a perusal of the order-in-original indicates that the petitioner No. 2 had in his statement recorded on 9-12-1999 admitted that the fact that, removal of goods in question without payment of Central Excise duty is an offence and that the goods are liable to confiscation being offending in nature. The Tribunal after appreciating the evidence on record was of the view that the petitioner No. 2 is liable for penalty by his actions and accordingly sustained the order of imposition of penalty on him. However, the Tribunal was of the view that the penalty should be commensurate with the gravity of the offence and accordingly reduced the penalty from Rs. 5,00,000/- to Rs. 2,00,000/-. Thus, the Tribunal upon appr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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