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TMI Blog2014 (2) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 dated 10.1.2013, stay petitions of the present applicant were disposed of along with stay petitions of the main appellant M/s. Gold Star Pharmaceuticals Pvt. Ltd., who were directed to deposit an amount of Rs. 1.15 crores. Subject to deposit made by M/s. Gold Star Pharmaceuticals Pvt. Ltd., pre-deposit of penalties imposed upon the present appellants was waived. Inasmuch as M/s. Gold Star Pharmaceuticals Pvt. Ltd., did not deposit the amount, their appeal was dismissed for non-compliance with the provision of section 35F read with stay order vide Final Order No. 57266/2013 dated 6.8.2013 and the stay petitions of the present applicants were directed to be listed for fresh decision independently on merits. Accordingly, the same were listed afresh for disposal. 2. We have heard Shri K K Anand, learned advocate appearing for the applicant and Shri M S Negi, learned DR appearing for the Revenue. The prayer in the application is to dispense with the condition of pre-deposit of Rs. 10 lakh each imposed on M/s. Suraj Medical Agencies, Shri Roshan Lal Kwatra, Director of M/s. Gold Star Pharmaceuticals Pvt. Ltd. and partner of M/s. Suraj Medical Agencies, Shri Kashmir Chand. Further, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 26 of the Central Excise Rules which provides for imposition of penalty on any person who acquires possession of or is in any way concerned with transporting, removing, depositing keeping, concealing, selling or purchasing, or in any other manner dealing with any excisable goods that are liable to confiscation, is prima facie ultra vires of Section 11AC of the Central Excise Act, 1944. It is well settled that no penalty can be levied save by authority of law. Rule 26 is prima facie in excess of the Rule making power conferred under the Central Excise Act, 1944. 3. There will be an interim order restraining the respondents from giving further effect to the impugned letter dated 13th December, 2011 being part of the Annexure 'P-6' to the writ petition." 7. Though the said decision was passed on 13.9.12, neither the learned advocate appearing for the appellant nor the learned DR appearing for the Revenue has been able to show us the final outcome of the decision before the Hon'ble High Court. As such, we are constrained to follow the same at this interim stage. Inasmuch as the Hon'ble High Court has granted interim order restricting Revenue from further effect to the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntil further orders whichever is earlier. I find that the Hon'ble Calcutta High Court decision cannot be relied upon. Accordingly I differ with the findings recorded by learned Member (Judicial) and record my separate order. 14. I hold that the facts of the case need to be examined and if the appellants are found prima facie guilty, then revenue interest are to be safe guarded. 15. In respect of other cited judgment by the appellants, it is observed that Hon'ble Delhi High Court in the case of Sunil Mittal Vs. CCE 2013 (289) ELT 441 (Delhi) has held that companies can be penalized under rule 26. In the Punjab and Haryana High Court judgment in V.K. Enterprises Vs. CCE 2011 (266) ELT 436 (P H), it has also been held that penalty under rule 26 is imposable. Reference was also made to Supreme Court judgment in standard Chartered Bank Others Vs. Directorate of Enforcement others (2005) 275 ITR 81 in the above judgment where it is held that legislative never intended to give immunity from prosecution or penalty for grave economic crimes. It was held that company is corporate body and not a natural person. It was held that fine penalty can be imposed. 16. For ready reference, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re in-charge of its business or are responsible for the conduct of the same, cannot escape liability, unless it is proved by them that the contravention took place without their knowledge or the exercised all due diligence to prevent such contravention." 10. We may also note that a similar contention was raised before Supreme Court in Standard Chartered bank and Ors. v. Directorate of Enforcement and Ors. (2005) 275 ITR 81. The majority view elucidated that a company can be prosecuted and punished for an offence under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973, even though imprisonment for a term of not less than six months was compulsory. It was also held that legislative intent to prosecute corporate bodies for the offence committed by them is clear and explicit and the statute never intended to exonerate them from being prosecuted. The Legislature never intended to give immunity from prosecution or penalty for grave economic crimes. In such cases it is not possible to impose penalty of imprisonment because the company is a corporate body and not a natural person but fine or cash penalty can be imposed. 17. Hon'ble High Court of Punjab Haryana too in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question not accepted by the Hon'ble Delhi High Court. 20. I have also examined the role of all these companies fringe and individuals namely M/s Suraj Medical Agencies, Shri Roshan Lal kwatra, Shri Kashmir Chand and Shri Ashok Kumar for penalty liability upon them under rule 26 ibid. 21. The main accused in these proceedings is M/s Gold Star Pharmaceuticals Pvt Ltd. There are serious allegations against him for clandestinely manufacturing and clearing medicaments - the main drug being G-Norphine. The modus operandi was to manufacture the drugs with repeat batch numbers. The excess production was further cleared clandestinely mainly through M/s Suraj Medical Agencies. Stay matter against M/s Gold Star Pharmaceuticals Pvt Ltd was earlier decided by this bench and pre deposit of Rs 1.15 Crores ordered vide Final Order No 55665-55669/2013 dated 10.01.2013 dated. As no compliance has been made by him nor any extension sought his stay application along with appeal stands dismissed. Therefore now I restrict my examination for the stay proceeding for the four appellants M/s Suraj Medical Agencies Sh. Roshan Lal Kwatra, Sh. Kashmir Chand and Sh. Ashok Kumar. The last three appellants a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the factory illegally on the basis of rough bills at the instance of Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar. Similarly the statement of Sh. Swaran Singh the salesman of M/s Gold Star Pharmaceutical Pvt Ltd also shows that he was getting necessary orders for supplying medicines to different dealers and to collect money from them, in cash, by all these three persons. It in noted here that the prices quoted and collected for the sale of main medicine G-Norphine from the dealers were much more (@Rs3.75/- to Rs. 4.25/- per ampoule) than as shown in the statutory records (@ Rs. 2/- per ampoule). The illegally received remunerations were also being put in the bank accounts of the above noted three persons Sh. Roshan Lal Kawatra, Sh. Kashmir Chand and Sh. Ashok Kumar and also in the account of Mrs. Richa Kwatra wife of Sh. Roshan Lal Kwatra. 22. Therefore without going into further details of the case, it is very clear that all the four noticees are directly involved in the illegal manufacturing and clearance of the medicines. In the interest of the Revenue, some terms need to be imposed upon them especially when the main accused M/s Gold Star Pharmaceuticals P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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