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TMI Blog2006 (10) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) Whether the decision of the division bench in the case of Shaper Chemicals Ltd. v. Commissioner of Central Excise, Mumbai-VII as reported in 2004 (173) E.L.T. 327 has laid down the correct law as regards the imposition of penalty under Rule 209A of the Central Excise Rules, 1944 and; (b) Whether the decision of the division bench in the case of Indian Roadways Corporation Ltd. v. C.C.E., Rajkot as reported in 2005 (187) E.L.T. 321 (Tribunal) = 2005 (71) RLT 203 has laid down the correct law in context of imposition of penalty under Rule 209A of the Central Excise Rules, 1944. 2. We find that the Tribunal in the case of Shaper Chemicals Ltd., (supra) has held that : "After hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them. The referral bench has doubted the correctness of the above decisions on the reading of the Rule 209A of the Central Excise Rules, 1944. In order to appreciate the questions referred to the larger bench it is necessary to read the said rule : "Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater". 5. As regards the imposition of penalty under rule 209A, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tact with the goods. Section 112 of the Customs Act covers the situation as it existed a number of years ago when all acts of smuggling revolved around the physical importation of goods and handing thereof. It does not cover the activities which lead to or result in illegal importation etc. Thus where a person makes a fraudulent declaration and obtains a license under which the goods are subsequently imported by another person, the wordings of proviso (b) to Section 112 might not enable imposition of penalty upon him. The phrase' in any other manner dealing with any goods' must be read as the extension of the number of activities enumerated there before and cannot cover the area of the action undertaken by that person which would ultimately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t hand. The relevant text of one of the specimen notices is reproduced hereinbelow :- OFFICE OF THE COLLECTOR OF CENTRAL EXCISE, DELHI ROOM No. 273, C.R. BUILDING, IP ESTATE NEW DELHI C. No. V(24) 15/3/CCE/DLI/Adj./94 Dated 23-3-1994 SHOW CAUSE NOTICE 1. " " 2. " " 3. " " 4. " " 5. " " 6. " " 6. In view of the foregoing, it appears that : (i) " " (ii) " " (iii) " " (iv) " " (v) " " (vi) It further appears that M/s Lodha Company, Bombay and M/s Jayanti Lal Thakkar Company Chartered Accountants of GTC have deliberately certified the books of accounts of GTC to be true in spite of noticing identical invoices/delivery challans raised by the franchise units of GTC and existence of these documents in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable goods as contemplated under Section 9(1)(bbb) of the Act or Rule 209A of the Rules while discharging their professional duties. The cases at hand are the cases wherein the show cause notices are absolutely without jurisdiction muchless they do not make out any case of any of the notices having dealt with the excisable goods with specific knowledge so as to stand to the test of either Section 9(1)(bbb) of the Act or Rule 209A of the Rules as such each show cause notice in our opinion, is non est and liable to be quashed and set aside." 8. The ratio as laid down by Hon'ble High Court squarely covers the issue referred to the larger bench in as much that for imposition of penalty under Rule 209A of the Central Excise Rules, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the corporation/company. The decisions taken by the Board of Directors would be for the company but it will not be a decision of the corporation/company. In a given situation, if the Board of Directors decide between themselves, and pass a resolution to engage in the act of evasion of the duty on excisable goods it would be an act of individuals who did so for their personal gain. The corporation/company, stands to no gain out of misdemeanors of the individuals i.e. Board of Directors. In the eyes of law, the corporate entity being a person would be held responsible for the act of the natural persons. But in order to punish the guilty individuals, the veil of corporate entity had to be lifted to understand the correct picture. Precisely fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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