Gagan Freight Carriers Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. the above captioned appeals have been filed by the appellants against the common impugned order of the commissioner of central excise who had imposed penalty of rs. 5 lakhs each on them under rule 209a of the rules.2. the facts are not much in dispute. the appellants no. 1 and 3 constitute one transport company. they have got one at surat and the other at amritsar. similarly, appellants no. 3 & 4 are also one company, having one office at surat and the other at amritsar. they all are engaged in the transportation of the goods from surat to amritsar and vice versa. the appellants no. 1 and 2 transported fabrics from surat to amritsar under the cover of grs. the delivery of the goods was to be taken by the consignees at the amritsar offices of both these companies. acting on a prior information that the consignments of processed man made fabrics had been cleared by the manufacturers at surat without payment of duty for amritsar, the officers of central excise conducted raid on the offices of the transport companies at amritsar and seized the goods lying in their godowns. however, out of those seized goods, some had been claimed by the consignees, while others are still in the custody of the excise authorities. the names in the grs of the consignors and consignees were found to be incomplete.the appellants had been panalised under rule 209a of the central excise rules for having transported the goods with the knowledge that those were cleared without payment of duty by the manufacturers.3. the learned counsel has mainly contended that there is no iota of evidence on the record to prove the knowledge of any of the appellants about the non-duty paid character of the goods at the time of loading the same at surat or even at the time of unloading at amritsar.therefore, no penalty under rule 209a could be imposed on them.4. the learned jdr, on the other hand, has simply reiterated the correctness of the impugned order.5. i have heard both sides and gone through the record. admittedly, the appellants are the transport companies engaged in the transport of the goods. the goods in question, i.e. man made fabric in the instant case, were not loaded by them from the factory premises of the manufacturers of the goods. those goods were delivered at their offices at surat for transportation to amritsar. at the time of booking of the goods at surat, the companies were under no legal obligation to enquire about the duty paid character of the goods. they were only concerned with the invoices and the grs. there is nothing on the record to suggest that if they had any knowledge that the goods booked with them had been cleared without payment of duty by the manufacturers. the goods were got booked with them by the traders for transportation to amritsar and the companies were under no legal obligation to make enquiry from them about the payment of central excise duty in respect thereof by the manufacturers at the time of clearance of the goods.6. rule 209a of the central excise rules can be invoked only when any person acquires possession of, or is in any manner concerned with the transporting, removing, selling or purchasing etc. or in any other manner deals with, the excisable goods which he knows or has reason to believe are liable to confiscation under the act. in that event, such a person can be penalised under this rule. in the instant case, as observed above, there is not an iota of evidence on the record to prove knowledge on the part of the appellants' companies about the non-duty paid character of the goods transported by them. the goods were never lifted by them from the factory premises of the manufacturers for transportation. these were rather booked at their offices by third parties and they were under no legal obligation to enquire about the duty paid character of the goods from those parties. from the mere acceptance of goods for transportation from surat to amritsar, by them, no inference could be drawn that they had knowledge that the goods were liable to be confiscated under the excise act for non-payment of duty.7. in an exactly identical case inland road service v. cce, 1992 (60) e.l.t. 571 (t), wherein the goods were accepted by the transport company for transportation from delhi to calcutta and the company was sought to be penalised under rule 209a of the rules, it was observed by the tribunal that for want of any evidence to prove that the transport company had knowledge about the non-duty paid character of the goods, the provisions of rule 209a of the rules could not be invoked. to same effect is the proposition of law laid down in robindra textile mills v.cce,(t) and standard pencils (p) ltd. v. cce, madras, 8. therefore, keeping in view the facts and circumstances of the case, and the discussion made above, no case for imposition of penalty under rule 209a of the rules is made out against any of the appellants. the impugned order of the commissioner is, therefore, set aside against the appellants in toto. the appeals of the appellants accordingly stand allowed with consequential relief, if any, permissible under the law.

Judgment:
1. The above captioned appeals have been filed by the appellants against the common impugned order of the Commissioner of Central Excise who had imposed penalty of Rs. 5 lakhs each on them under Rule 209A of the Rules.

2. The facts are not much in dispute. The appellants No. 1 and 3 constitute one transport company. They have got one at Surat and the other at Amritsar. Similarly, appellants No. 3 & 4 are also one company, having one office at Surat and the other at Amritsar. They all are engaged in the transportation of the goods from Surat to Amritsar and vice versa. The appellants No. 1 and 2 transported fabrics from Surat to Amritsar under the cover of GRs. The delivery of the goods was to be taken by the consignees at the Amritsar offices of both these companies. Acting on a prior information that the consignments of processed man made fabrics had been cleared by the manufacturers at Surat without payment of duty for Amritsar, the Officers of Central Excise conducted raid on the offices of the transport companies at Amritsar and seized the goods lying in their godowns. However, out of those seized goods, some had been claimed by the consignees, while others are still in the custody of the Excise Authorities. The names in the GRs of the consignors and consignees were found to be incomplete.

The appellants had been panalised under Rule 209A of the Central Excise Rules for having transported the goods with the knowledge that those were cleared without payment of duty by the manufacturers.

3. The learned Counsel has mainly contended that there is no iota of evidence on the record to prove the knowledge of any of the appellants about the non-duty paid character of the goods at the time of loading the same at Surat or even at the time of unloading at Amritsar.

Therefore, no penalty under Rule 209A could be imposed on them.

4. The learned JDR, on the other hand, has simply reiterated the correctness of the impugned order.

5. I have heard both sides and gone through the record. Admittedly, the appellants are the transport companies engaged in the transport of the goods. The goods in question, i.e. man made fabric in the instant case, were not loaded by them from the factory premises of the manufacturers of the goods. Those goods were delivered at their offices at Surat for transportation to Amritsar. At the time of booking of the goods at Surat, the companies were under no legal obligation to enquire about the duty paid character of the goods. They were only concerned with the invoices and the GRs. There is nothing on the record to suggest that if they had any knowledge that the goods booked with them had been cleared without payment of duty by the manufacturers. The goods were got booked with them by the traders for transportation to Amritsar and the companies were under no legal obligation to make enquiry from them about the payment of Central Excise Duty in respect thereof by the manufacturers at the time of clearance of the goods.

6. Rule 209A of the Central Excise Rules can be invoked only when any person acquires possession of, or is in any manner concerned with the transporting, removing, selling or purchasing etc. or in any other manner deals with, the excisable goods which he knows or has reason to believe are liable to confiscation under the Act. In that event, such a person can be penalised under this Rule. In the instant case, as observed above, there is not an iota of evidence on the record to prove knowledge on the part of the appellants' companies about the non-duty paid character of the goods transported by them. The goods were never lifted by them from the factory premises of the manufacturers for transportation. These were rather booked at their offices by third parties and they were under no legal obligation to enquire about the duty paid character of the goods from those parties. From the mere acceptance of goods for transportation from Surat to Amritsar, by them, no inference could be drawn that they had knowledge that the goods were liable to be confiscated under the Excise Act for non-payment of duty.

7. In an exactly identical case Inland Road Service v. CCE, 1992 (60) E.L.T. 571 (T), wherein the goods were accepted by the transport company for transportation from Delhi to Calcutta and the company was sought to be penalised under Rule 209A of the Rules, it was observed by the Tribunal that for want of any evidence to prove that the transport company had knowledge about the non-duty paid character of the goods, the provisions of Rule 209A of the Rules could not be invoked. To same effect is the proposition of law laid down in Robindra Textile Mills v.CCE,(T) and Standard Pencils (P) Ltd. v. CCE, Madras, 8. Therefore, keeping in view the facts and circumstances of the case, and the discussion made above, no case for imposition of penalty under Rule 209A of the Rules is made out against any of the appellants. The impugned order of the Commissioner is, therefore, set aside against the appellants in toto. The appeals of the appellants accordingly stand allowed with consequential relief, if any, permissible under the law.