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TMI Blog2008 (4) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... ll as on the respondents and its partner. The notice was adjudicated by Additional Commissioner, Central Excise, who confirmed the duty amount against the processors together with interest in terms of section 11A.B. and imposed penalty amounting equal to duty under Section 11AC of the Central Excise Act, 1944 read with 173Q (i) of the Central Excise Rules 1944, upon the processors and imposed penalty of ₹ 50,000/- under the provisions of Rule 209A read with Rule 225 of the Central Excise rules upon the Respondents as well as penalty under Rule 209A on the partner of the Respondents. The Commissioner (Appeals) set aside the penalty imposed on Respondents and allowed their appeal. He however, dismissed the appeal of the partner by upholding the penalty imposed upon him. Hence this appeal filed by the Revenue against the setting aside of the penalty on the Respondent Firm. 2. We have heard both sides. The Revenue relied upon the decision of the Tribunal in the case of National Jagan Nath V/s. Commissioner of Central Excise, 1990 (46) E.L.T.295 (Tribunal) holding the view that simultaneously penalty can be imposed upon partnership Firm and its partner. Ld.DR contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 339 (Tri-Kolkata) upheld by aped court as seen from 2004 - 170 E.L.T. A 307 (SC) 4. We have carefully considered the rival submissions. We find that the issue stands settled in favour of the Respondents by Tribunal Order in the case of Woodmen Industries Ltd (Supra) which has been upheld by Hon'ble Supreme Court. This decision is directly on Rule 209A of the Central Excise Rule. Apex Court's decision in Agarwal Trading Corporation has been rendered in the context of Foreign Exchange Regulation Act, wherein by an explanation to Section 23C Person Company includes Firm or other Association of individual and Director in relation to Firm means Partner in the Firm for the purpose of that section. The Kerala High Court decision in India Sea Foods cited above is not a decision directly on Rule 209A and further, from paragraph 3 of the judgment, it is clear that the counsel for the appellant before the High Court himself conceded having regard to terms and language of section 112 (a) of the Customs Act, that the extreme contention that penalty is not imposable both on the Firm and also its Managing Partner cannot sustain. In the case of Nandlal Jagan Nath, the Tribunal relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find a little difficult in accepting the proposition that Woodmen Industries (cited supra) is a declaration of law on the question as to whether penalty can be imposed on a partnership firm under Rule 209A of the erstwhile Central Excise Rules, 1944 which corresponds to present Rule 26 of the Central Excise Rules, 2002. 9. In Aditya Steel Industries (cited supra), the Single Member deciding the appeal has recorded as follows: - Penalty under Rule 209A cannot be imposed on partnership concern and only the person concerned could have been penalized. Therefore, penalty levied on Pioneer Re-rolling Mills is not maintainable and is set aside and their appeal allowed. I find that while holding that penalty under Rule 209A cannot be imposed on partnership concern, the learned Single Member has given no reasons whatsoever, nor cited any provision of the law or any case law to support his finding. 10. In Woodmen Industries (cited supra), the Kolkata Division Bench has recorded as follows:- Further, penalty on this appellant has been imposed under Rule 26 of the Central Excise Rules (erstwhile Rule 209A). The said rule permits imposition of penalty on a person and not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forum into the judgment, order or decision of a superior forum is often employed, as a general rule the judgment or order having been dealt with by a superior forum and having resulted in confirmation, reversal or modification, what merges is the operative part i.e the mandate or decree issued by the court which may have been expressed in a positive or negative form. For example, take a case where the subordinate forum passes an order and the same, having been dealt with by a superior forum, is confirmed for reasons different from the one assigned by the subordinate forum, what would merge in the order of the superior forum is the operative part of the, order and not the reasoning of the subordinate forum; otherwise there would be an apparent contradiction. However, in certain cases, the reasons for decision can also be said to have merged in the order of the superior court if the superior court has, while formulating its own judgment or order, either adopted or reiterated the reasoning, or recorded an express approved of the reasoning, incorporated in the judgment or order of the subordinate forum. 11. Secondly, the doctrine of merger has a limited application. In State of U.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Full Bench in the light of Article 141 of the Constitution and not by applying the doctrine of merger. Article 141 speaks of declaration of law by the Supreme Court. For a declaration of law-there should be a speech i.e. a speaking order. In Krishna Kumar vs. Union of India - (1990) 4 SCC 207 : 1991 SCC (LandS) 112 : (1990) 14 ATC 846 this Court has held that the doctrine of precedents, that is being bound by a previous decision, is limited to the decision itself and as to what is necessarily involved in it. In State of U.P. vs. Synthetics and Chemicals Ltd. - (1991) 4 SCC 139 R.M.Sahai, J. (vide para 41) dealt with the issue in the light of the rule of sub silentio. The question posed was can the decision of any appellate court be treated as a binding decision of the appellate court on a conclusion of law which was neither raised nor preceded by any consideration or in other words can such conclusions be considered as declaration of law? His Lordship held that the rule of sub silentio is an exception to the rule of precedents. A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta nor on any principle of public policy analogous thereto, would the order of this Court bar the trial of identical issue in separate proceedings merely on the basis of an uncertain assumption that the issues must have been decided by this Court at least by implication. 14. It follows from a review of several decisions of this Court that it is the speech, express or necessarily implied, which only is the declaration of law by this Court within the meaning of Article 141 of the Constitution. 15. A situation, near similar to the one posed before us, has been dealt in Salmond's Jurisprudence (12th Edn., at pp. 149-50) under the caption - 'Circumstances destroying or weakening the binding force of precedent: (perhaps) affirmation' or reversal on a different ground.' It sometimes happens that a decision is affirmed or reversed on appeal on a different point. As an example, suppose that a case is decided in the Court of Appeal on ground A, and then goes on appeal to the House of Lords, which decides it on ground B, nothing being said upon A. What, in such circumstances, is the authority of the decision on ground A in the Court of Appeal? Is the decision binding on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housand, whichever is greater. One of the expressions used in these rules cited above, for example, deals with the act of keeping excisable goods, which a person knows to be liable to confiscation. A partnership firm may knowingly buy contravened non-duty paid goods and store the same in a godown owned by it. Prima facie, in such a case, the said Rule 209A/Rule 26 would appear to be applicable. It is not obvious from the expressions used in the Rule that in no case a partnership firm can commit any of the offences 'referred to in these rules. Hence, a bland declaration without reasoning that penalties under the rule cannot be imposed on a partnership firm as has been done in the case of Aditya Steel (cited supra) and Woodmen Industries (cited supra) does not appear to be tenable. 13. In paragraph 3 of the proposed order, the Hon'ble Vice President has listed several cases cited by the respondents. I find that these decisions do not support the case of the respondents that penalty cannot be imposed on the partnership firm as may be seen below:- (i) Harish Dyeing and Printing Works (cited supra) - In this case the Bench has upheld and reduced the penalty to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ELT 65 (Tri), the Tribunal has upheld imposition of penalty on the partnership firm M/s Sima Exports though reduced the same from ₹ 8 lakhs to ₹ 5 lakhs. This order of the Tribunal has been maintained in appeal to the Hon'ble Supreme Court vide 2002 (146) ELTA219 (SC). 15. In the case of Asstt. Collector of Customs, Calcutta vs. Bhimraj Banshidhar - 1999 (110) ELT 524 (Cal), the Hon'ble Kolkata High Court has held that proposal For imposition of penalty-on the partnership firm was valid. 16. In the case of Sinharaju Chettiar vs. UOI - 2000 (126) ELT 522 (Mad), the Hon'ble High Court of Madras has upheld the imposition of penalty on the partnership firm and partners. In this case, the Hon'ble High Court has referred to Sections 24, 25 and 26 of the Indian Partnership Act, 1932, which provide for liability of a firm for wrongful act of a partner as well as the liability of the partners jointly and severally. 17. In the case of Jacsons Thevara vs. CCandCE - 1992 (61) ELT 343 (SC), the Hon'ble Supreme Court has upheld the imposition of penalty against M/s Jacsons Thevara, which is a partnership firm. 18. I also find that in the case of Vika ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the Hon'ble President for resolution by Third Member: Whether penalty under the provisions of Rule 209A of the Central Excise Rules, 1944 is not sustainable both upon the partnership firm and its partner as he d by the Hon'ble Vice President OR whether the following issues viz: (i) Whether penalty can be imposed on a partnership firm under erstwhile Rule 209A/present Rule 26 of the Central Excise Rules and under similar provisions in Section 112(b) of the Customs Act, 1962, and if so (ii) Whether separate penalties can be imposed on partners in addition to penalty imposed on the partnership firm. are required to be referred to Larger Bench, as held by the Hon'ble Member(Technical) Jyoti Balasundaram Vice President Dated: 4/10/2006 C. Satapathy Member Technical Dated: 9/10/2006 MAJORITY ORDER The impugned order of the Commissioner (Appeals) setting aside the penalty upon the respondent firm is upheld and the appeal of the Revenue is rejected. ORDER M.V. Ravindran : 1. Following points of difference of opinion are referred to me:- i) Whether penalty under the provisions of Rule 209A of the Central Excise Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it has been upheld by the Hon'ble Supreme Court as reported at 2004 (170) ELT A307 (SC). He would also submit that whether penalty under the provisions of Rule 209A of Central Excise Rules is on the individual or on the company is settled. It is his submission that the very same issue was considered by the Larger Bench of the Tribunal in the case of Steel Tubes of India Ltd., vs. CC, Indore (2007 (217) ELT 506 (Tri-LB) wherein the Larger Bench took a view that penalty under the provisions of 209A is imposable only on the individual and not on the firm. 6. On perusal of the record, I find that the Ld. Member (Technical) while arriving at the conclusion that, whether the issues, as reproduced in para 1 is required to be referred to Larger Bench relying upon various decisions and sections of the Central Excise Act. Since the view of the Ld. Member (Technical) was whether the matter should be referred to Larger Bench or not is already answered by the decision of the Larger Bench of the Tribunal in the case of Steel Tubes of India Ltd., (supra) to may mind, the opinion of the Member (Technical) is already answered in negative. Be that as it may, the question of penalty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Larger Bench of Tribunal in the case of S Kumar's Ltd., vs. CCE, Indore as reported at 2003 (153) ELT 217 (Tri.-LB) was called upon to consider the binding nature of the dismissal of the Civil Appeal by the Apex Court. The Larger Bench held as under:- The above would clearly show that when a Civil Appeal is dismissed even though without assigning reasons it will have an effect of binding precedent unlike in the case of dismissal of a special leave petition. We are not therefore inclined to accept the contention raised by the ld. Counsel for the appellant that dismissal of the appeal by the Supreme Court challenging the decision of the Tribunal in Sangam Processors (Bhilwara) Ltd. has no value as a binding precedent. It is submitted before us at the bar that the decision of the Madras High Court in Addison and Co. has been taken in appeal and the matter is pending before the Supreme Court. 8. In view of this decision of the Larger Bench, Civil Appeal as filed before the Apex Court, if dismissed, without assigning any reasons will have binding precedent for the ratio against which such Civil Appeal was filed. Hence, the decision of the Woodmen Industries (supra) will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have to be booked on the basis of duty paying documents) and the goods are seized by the authorities at the destination point, can the Indian Railways be penalized under the provisions of Rule 209A of the Central Excise Rules, 1944? The resounding answer would be NO as Indian Railways is not having any knowledge that goods so booked are liable for confiscation. The booking clerk is in knowledge and hence he is liable to be penalized under the said Rule 209A. Accordingly, we find that the conciusion reached by the Tribunal in the case of Indian Roadways Corporation Ltd. (supra) is also correct and does not require any reconsideration. 10. It can be seen from the above reproduced paragraph, that the Larger Bench had taken to consideration, the meaning of the word Any person specifically as was sought to be argued by the Jt. CDR. After noting the words used Any Person in the rule, the Larger Bench held that provisions of Rule 209A would be applicable only to an individual person and not to the firm. 11. Accordingly, I am of the considered view that the conclusion arrived at by the Hon'ble Vice President is a correct conclusion and concur with the same. Reference to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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