Cce, Chandigarh Vs. M/S. Monga Brothers and Tarsemlal - Court Judgment

Excerpt:
1. both the appeals have been filed by the revenue against the common order in appeal dated 25.9.99 vide which the commissioner (appeals) had set aside the penalty of rs.1,00,000/- imposed on shri rajeev gupta, respondent and of rs.10000/- on shri tarsem lal singla, respondent which was imposed on both of them by the deputy commissioner through order in original dated 16.6.98.2. the facts are not much in dispute. m/s. monga brothers ltd. company and the present respondents who were the manager and managing director of the company were proceeded against on the basis of show cause notice dated 11.7.95 issued after conducting raid on their factory as clandestine removal of the goods without payment of duty was detected by the excise staff on 10.2.95. it was found during the raid that unauthenticated invoices were being prepared for clearing the goods on tractor trolly and the trucks. the record of the company was taken into possession and the statements of the respondents were also recorded.the unaccounted goods and truck were also seized.3. after getting reply to the show cause notice from the company as well as the present respondents, the deputy commissioner through the orders in original ordered confiscation of the goods and also imposed redemption fine of rs.50,000- for release of the truck and of rs.75,000/- for the release of the goods. besides this he also imposed penalty of rs.3,00,000/- on the company under rule 173-q and of rs.10,00,00-/- on respondents tarsem lal singla under rule 209-a as he was manager of the appellant company at that time and of rs.1,00,000/- on respondents, rajeev gupta, under rule 225 of the central excise rules as he was managing director of the company at that time.4. the company m/s. monga brothers ltd. admittedly got the duty liability settled under the kvs scheme, from the designated authority, namely, the commissioner. the present respondents, however, challenged the order in original of the deputy commissioner imposing penalty of the amounts, referred above, on them before the commissioner(appeals) who set aside the same and reversed the order in original of the deputy commissioner on the ground that there was no evidence on the record to prove their role in the clanestine removal of the goods from the factory premises. he also observed that requirement of rule 225 of the central excise rules was already met with by penalising the company(manufacturer) heavily.5. the revenue has come up in appel against the above order in appeal of the commissioner(appeals) setting aside the penalty against the present respondents.6. the learned counsel for the respondents at the very outset contended that when the company(manufacturer) for the duty liability settled under the kvs scheme by paying the duty and the penalty involved, no penalty liability could survive against the respondents who were employees of the company. in support of his contention,he has placed reliance on the two judgments of the tribunal, he has placed reliance on the two judgments of the tribunal, namely, quality fabricators & erectors vs. cce,baroda, 1999(85)ecr 544 and anil k.arora and ravi k.arora 2000(118) elt 346.7. the learned jdr has not been able to refute this contention of the counsel.8. i have gone through the record and perused the impugned order.admittedly, the main notice in this case was the company m/s. monga brothers whose factory premises were checked and inspected by the excise staff and some unauthorised invoices were found and clandestine removal of the goods was also detected. the deputy commissioner ordered confiscation of the goods and also imposed penalty on that company. the present respondents were only at that time were working in that company as manager and managing director respectively. they were acting on behalf of the company apparently.9. it also remains undisputed that the company got the duty and penalty liability settled under the kvs scheme and paid the adjudicated amount as per the orders of the designated authority (commissioner) under the said scheme. that being so, the penalty liability against the present respondents who were merely employees and acting only on behalf of the company at that time, did not legally survive. the case of the present respondents stands fully covered by the ratio of the law laid in the above referred cases. in both those cases, it had been ruled by the tribunal that" proceedings against the co-noticee will bate when the main noticee had filed a declaration under the kvs scheme as a result of which, the adjudication order did not survive in view of the full settlement under the said scheme consequently any penalty imposed thereunder on the co-noticee will also not survive".10. moreover, there exists no reason to reverse the findings of the commissioner(appeals) that provisions of rule with, by penalising the manufacturer heavily and there was no evidence to connect both these respondents directly with the cladestine removal of the goods.11. in view of the discussion made above, the impugned order of the commissioner(appeals) is perfectly valid and does not need any interference. therefore, both the appeals filed by the revenue have no merit and the same are ordered to be dismissed.

Judgment:
1. Both the appeals have been filed by the Revenue against the common order in appeal dated 25.9.99 vide which the Commissioner (Appeals) had set aside the penalty of Rs.1,00,000/- imposed on Shri Rajeev Gupta, respondent and of Rs.10000/- on Shri Tarsem Lal Singla, respondent which was imposed on both of them by the Deputy Commissioner through order in original dated 16.6.98.

2. The facts are not much in dispute. M/s. Monga Brothers Ltd. Company and the present respondents who were the Manager and Managing Director of the company were proceeded against on the basis of show cause notice dated 11.7.95 issued after conducting raid on their factory as clandestine removal of the goods without payment of duty was detected by the Excise staff on 10.2.95. It was found during the raid that unauthenticated invoices were being prepared for clearing the goods on tractor trolly and the trucks. The record of the company was taken into possession and the statements of the respondents were also recorded.

The unaccounted goods and truck were also seized.

3. After getting reply to the show cause notice from the company as well as the present respondents, the Deputy Commissioner through the orders in original ordered confiscation of the goods and also imposed redemption fine of Rs.50,000- for release of the truck and of Rs.75,000/- for the release of the goods. Besides this he also imposed penalty of Rs.3,00,000/- on the company under Rule 173-Q and of Rs.10,00,00-/- on respondents Tarsem Lal Singla under Rule 209-A as he was manager of the appellant company at that time and of Rs.1,00,000/- on respondents, Rajeev Gupta, under Rule 225 of the Central Excise Rules as he was Managing Director of the company at that time.

4. The company M/s. Monga Brothers Ltd. admittedly got the duty liability settled under the KVS Scheme, from the designated authority, namely, the Commissioner. The present respondents, however, challenged the order in original of the Deputy Commissioner imposing penalty of the amounts, referred above, on them before the Commissioner(Appeals) who set aside the same and reversed the order in original of the Deputy Commissioner on the ground that there was no evidence on the record to prove their role in the clanestine removal of the goods from the factory premises. He also observed that requirement of Rule 225 of the Central Excise Rules was already met with by penalising the company(manufacturer) heavily.

5. The Revenue has come up in appel against the above order in appeal of the Commissioner(Appeals) setting aside the penalty against the present respondents.

6. The learned counsel for the respondents at the very outset contended that when the company(manufacturer) for the duty liability settled under the KVS Scheme by paying the duty and the penalty involved, no penalty liability could survive against the respondents who were employees of the company. In support of his contention,he has placed reliance on the two judgments of the Tribunal, he has placed reliance on the two judgments of the Tribunal, namely, Quality Fabricators & Erectors Vs. CCE,Baroda, 1999(85)ECR 544 and Anil K.Arora and Ravi K.Arora 2000(118) ELT 346.

7. The learned JDR has not been able to refute this contention of the counsel.

8. I have gone through the record and perused the impugned order.

Admittedly, the main notice in this case was the company M/s. monga Brothers whose factory premises were checked and inspected by the Excise staff and some unauthorised invoices were found and clandestine removal of the goods was also detected. The Deputy Commissioner ordered confiscation of the goods and also imposed penalty on that company. The present respondents were only at that time were working in that company as Manager and Managing Director respectively. They were acting on behalf of the company apparently.

9. It also remains undisputed that the company got the duty and penalty liability settled under the KVS Scheme and paid the adjudicated amount as per the orders of the designated authority (Commissioner) under the said Scheme. That being so, the penalty liability against the present respondents who were merely employees and acting only on behalf of the company at that time, did not legally survive. The case of the present respondents stands fully covered by the ratio of the law laid in the above referred cases. In both those cases, it had been ruled by the Tribunal that" proceedings against the co-noticee will bate when the main noticee had filed a declaration under the KVS Scheme as a result of which, the adjudication order did not survive in view of the full settlement under the said Scheme Consequently any penalty imposed thereunder on the co-noticee will also not survive".

10. Moreover, there exists no reason to reverse the findings of the Commissioner(Appeals) that provisions of Rule with, by penalising the manufacturer heavily and there was no evidence to connect both these respondents directly with the cladestine removal of the goods.

11. In view of the discussion made above, the impugned order of the Commissioner(Appeals) is perfectly valid and does not need any interference. Therefore, both the appeals filed by the Revenue have no merit and the same are ordered to be dismissed.