Tip Top Plastic Industries Vs. Commissioner of C. Ex. - Court Judgment

Excerpt:
1. both these appeals arise from oia nos. 55 & 56/2003 dated 25-6-2003 passed by the commissioner (appeals), bangalore who has reduced the duty amount to rs. 86,490/- and also modified the penalty to this amount only in terms of section 11 ac of the ce act. the penalty of rs. 10,000/- on the partner of the appellant-firm has been confirmed. the firm and the individual partner have filed the appeal on a short point inasmuch as that the duty has been confirmed for a period beyond 5 years in terms of section 11a(1) of the act which is not sustainable.the second ground is that equal penalty of the amount which is more than 5 years cannot be imposed. the penalty on the partner also cannot be imposed and confirmed as the partner and the firm is one and the same.2. the learned counsel submits that the duty for 5 years would work out only to rs. 20,000/-, which should have been calculated from the date of receipt of the show cause notice i.e. 10-8-2001. the commissioner has not accepted the plea to restrict the duty for 5 years prior to the date of service of notice but has gone on to confirm the duty for a period beyond 5 years, which is not sustainable in law. he refers to the judgment of the tribunal rendered in the case of parry & co. ltd. v. cce, tricky 2002 (149) e.l.t. 1055 (tri. - chennai) which has clearly held that the 5 years period has to be only from the relevant date under proviso to section 11a(1), clause (c), of c.e. act. it is his submission that the duty would be only rs. 20,000/- if this clause is applied. he further relies on the judgment rendered in the case of sarpin pharmacal v. cce, ahtnedabad-ii wherein it has been held that partnership firm has no legal personality distinct from that of its partners. the tribunal has set aside the separate penalty imposed on the partners as not warranted.3. the learned sdk submits that the oio has clearly laid down the reasons for extending the period beyond 5 years and that should be confirmed. he justifies the imposition of like sum as penalty. he submits that the commissioner (appeals) has already granted the benefit by giving several deductions and in reducing the duty amount, which is just and proper.4. on a careful consideration and examination of the facts, we notice that the appellants had not declared themselves as manufacturers nor they had been following the procedures. therefore, in terms of the judgment rendered in the case of parry & co. ltd. (supra), the 5 years period should be computed in terms of section 11a(1), clause (c) and not for a period beyond 5 years. the duty is to be computed from the date of service of show cause notice which is 10-8-2001. the duty beyond 5 years from this date is set aside. the authorities should re-compute the amount. the learned counsel submitted that they have already re-computed and have deposited the amount. in case the computation is not proper, then the appellants shall be given an opportunity of hearing and be heard in the matter, otherwise, the amount deposited be accepted. the penalty confirmed is reduced to rs. 10,000/- on the firm. in the facts and circumstances of the case, and in the light of the judgment rendered in the case of sarpin pharmacal (supra) the penalty of rs. 10,000/- imposed on the partner shri m.k asif is set aside. the appeal is disposed of in the above terms.(operative portion of this order was pronounced in open court on conclusion of hearing)

Judgment:
1. Both these appeals arise from OIA Nos. 55 & 56/2003 dated 25-6-2003 passed by the Commissioner (Appeals), Bangalore who has reduced the duty amount to Rs. 86,490/- and also modified the penalty to this amount only in terms of Section 11 AC of the CE Act. The penalty of Rs. 10,000/- on the partner of the appellant-firm has been confirmed. The firm and the individual partner have filed the appeal on a short point inasmuch as that the duty has been confirmed for a period beyond 5 years in terms of Section 11A(1) of the Act which is not sustainable.

The second ground is that equal penalty of the amount which is more than 5 years cannot be imposed. The penalty on the partner also cannot be imposed and confirmed as the partner and the firm is one and the same.

2. The learned Counsel submits that the duty for 5 years would work out only to Rs. 20,000/-, which should have been calculated from the date of receipt of the Show Cause Notice i.e. 10-8-2001. The Commissioner has not accepted the plea to restrict the duty for 5 years prior to the date of service of notice but has gone on to confirm the duty for a period beyond 5 years, which is not sustainable in law. He refers to the judgment of the Tribunal rendered in the case of Parry & Co. Ltd. v. CCE, Tricky 2002 (149) E.L.T. 1055 (Tri. - Chennai) which has clearly held that the 5 years period has to be only from the relevant date under proviso to Section 11A(1), Clause (c), of C.E. Act. It is his submission that the duty would be only Rs. 20,000/- if this Clause is applied. He further relies on the judgment rendered in the case of Sarpin Pharmacal v. CCE, Ahtnedabad-II wherein it has been held that partnership firm has no legal personality distinct from that of its partners. The Tribunal has set aside the separate penalty imposed on the partners as not warranted.

3. The learned SDK submits that the OIO has clearly laid down the reasons for extending the period beyond 5 years and that should be confirmed. He justifies the imposition of like sum as penalty. He submits that the Commissioner (Appeals) has already granted the benefit by giving several deductions and in reducing the duty amount, which is just and proper.

4. On a careful consideration and examination of the facts, we notice that the appellants had not declared themselves as manufacturers nor they had been following the procedures. Therefore, in terms of the judgment rendered in the case of Parry & Co. Ltd. (supra), the 5 years period should be computed in terms of Section 11A(1), Clause (c) and not for a period beyond 5 years. The duty is to be computed from the date of service of Show Cause Notice which is 10-8-2001. The duty beyond 5 years from this date is set aside. The authorities should re-compute the amount. The learned Counsel submitted that they have already re-computed and have deposited the amount. In case the computation is not proper, then the appellants shall be given an opportunity of hearing and be heard in the matter, otherwise, the amount deposited be accepted. The penalty confirmed is reduced to Rs. 10,000/- on the firm. In the facts and circumstances of the case, and in the light of the judgment rendered in the case of Sarpin Pharmacal (supra) the penalty of Rs. 10,000/- imposed on the partner Shri M.K Asif is set aside. The appeal is disposed of in the above terms.

(Operative portion of this Order was pronounced in open Court on conclusion of hearing)