Customs Appeal No. 100 of 2012 with Cus. A. Nos. 101-103 of 2012. Case: Amritlakshmi Machine Works Vs Commr. of Cus. (Import), Mumbai. High Court of Bombay (India)
| Case Number | Customs Appeal No. 100 of 2012 with Cus. A. Nos. 101-103 of 2012 |
| Counsel | For Appellant: Shri Naresh Thacker with C. Nanda and Chirag Shetty, Advs. and For Respondents: Shri A.S. Rao, i/b. S.D. Bhosale, Advs. |
| Judges | M.S. Sanklecha, M.S. Sonak and G.S. Kulkarni, JJ. |
| Issue | Customs Act, 1962 - Section 112(a) |
| Citation | 2016 (335) ELT 225 (Bom) |
| Judgement Date | January 29, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
M.S. Sanklecha, J.
1. This Full Bench has been constituted on a reference made on 23rd April, 2015 by a Division Bench of this Court in Amritlakshmi Machine Works & Others v. Commissioner of Customs (Import) - 2014 (303) E.L.T. 161. This reference has arisen when the Division Bench in Amritlakshmi Machine Works (supra) was considering four appeals (two by the partnership firm and two by its managing partner) under Section 130 of the Customs Act, 1962 (the Act) from a common order dated 7th May, 2012 of the Customs, Excise Service Tax Appellate Tribunal (Tribunal). All the four appeals raised the following substantial question of law:-
Whether the Tribunal has erred in imposing simultaneous penalties on both partners and partnership firm?
This reference arose as in the view of the Division Bench in Amritlakshmi Machine Works (supra) there was a cleavage of opinion on the above issue between the decisions of two Division Benches of this Court. In Texoplast Industries v. Additional Commissioner of Customs - 2011 (272) E.L.T. 513, the Division Bench answered the above question in the negative, i.e., in favour of the Revenue while in Commissioner of Customs (EP) v. Jupiter Exports - 2007 (213) E.L.T. 641, the Division Bench answered the above question in the affirmative, i.e., in favour of the appellant-assessee.
2. In view of the above conflict, the following questions have been referred to us for our opinion:-
(a) Whether under the Customs Act, 1962 and particularly in exercise of the powers conferred by Section 112(a) thereof, simultaneous penalties on both the partner and partnership firm can be imposed?
(b) Whether, the judgment in the case of Commissioner of Customs (E.P.) v. Jupiter Exports reported in 2007 (213) E.L.T. 641 (Bom.), holding that separate penalty on a partnership firm and a partner cannot be imposed, lays down the correct law or whether, as held by the later Division Bench in the case of Texoplast Industries v. Additional Commissioner of Customs reported in 2011 (272) E.L.T. 513 (Bom.) it is permissible to impose penalty separately on a partnership firm and a partner particularly in adjudication proceedings under the Customs Act, 1962?
3. The bare facts which arose before the Division Bench in Amritlaxmi Machine Works (supra) are set out in its order. The order of the Division Bench referred to the facts emanating from one of the two show cause notices (both of which are identical) leading to four appeals (two by the firm and two by the partner) and are reproduced in verbatim as under:-
4. The facts necessary to appreciate this question are that the appellants are, inter alia, engaged in the manufacture of textile machines. The appellants applied for and were granted Value Based Advance License No. 03014593, dated 22-11-1996 against which the appellants were, inter alia, permitted to import 248 pieces of ball bearings valued approximately at Rs. 9 lacs within the overall value of Rs. 50,05,468/-. It is stated that sometime in February, 1997 the appellants discharged their export obligation and therefore, the said license became transferable. As the appellants were not able to import any goods under the said license for the initial validity period, the appellants requested for extension of the validity period of the said license. A part of the said license was utilized by importing two consignments vide Bill of Entry filed in January, 1997 and August, 1998, respectively. The validity of the said license was extended up to 21-5-1999 and the value thereof was reduced by the office of the Joint Director General of Foreign Trade, Mumbai to Rs. 43,41,140/- leaving an unutilized balance of Rs. 27,32,557/-;
5. The information was received by officers of the Directorate of Revenue Intelligence, Mumbai Zonal Unit that several consignments of Bearings have been imported in the names of M/s. Hiral Overseas, M/s. Ankit International, M/s. Nippon Bearings Pvt. Ltd., M/s. M.M. Corporation, M/s. Nippon Bearings (India), M/s. S.N.M. Enterprises, M/s. Devanti Overseas and a few other firms. The bills of entry for all these goods have been filed by certain Customs House Agent. The clearance of the goods was sought against a duplicate Advance License No. 0111434, dated 22-11-1999 issued in the name of M/s. Amrit Laxmi Machine Works and transferred in the names of these firms and that this duplicate advance license was issued against the original license No. 03014593, dated 28-11-1996. The limits of this license and terms thereof are referred to and it is alleged that in the light of information received, the bills of entry were collected, documents were scrutinized and which reveal details of the transaction. The details of goods covered by another 29 bills of entry are referred to and in the light of further disclosures, what has been alleged is that M/s. Amrit Laxmi Machine Works, Khar, Mumbai, the license holder and Shri N. Nagdutt Bramhachari, Director of the license holding firm for the advance license No. 0111434, dated 22-11-1996 read with license No. 03014593, dated 28-11-1996 have caused the obtaining of the advance license duplicate copy of the advance license, amendment to the list attached to the license so as to cover the goods which were not used in the export product and made misrepresentation in obtaining duplicate copy of the license. But, for the said license being obtained in the manner in which it has been so obtained fraudulently, based on misrepresentation/false documents, the clearance of goods free of duty would not have been considered and allowed by the Customs. They have thereby abetted the doing or omitted the doing of such acts which have been rendered the goods covered by this notice liable to confiscation under the provisions of Section 111 of the Customs Act, 1962. They have, therefore, rendered themselves liable to action under the provisions of Section 112(a) and/or Section 112(b) of the Customs Act, 1962;
6. Accordingly, a show cause notice was issued calling upon M/s. Amrit Laxmi Machine Works, the license holder and others, as to why 2033 pieces of Bearings as detailed in the notice should not be confiscated under the provisions of Section 111(d) of the Customs Act, 1962 read with the Foreign Trade (Development & Regulation) Act, 1992 and under Section 111(m) of the Customs Act, 1962; and without prejudice to above for the reasons of liability to confiscation of goods under Section 111 as to why penalty under Section 112(a) and/or 112(b) of the Customs Act, 1962 should not be imposed on each of them;
7. The show cause notice was, therefore, taken up for adjudication by the Commissioner of Customs (Adjudication), Mumbai and he confirmed the demand to the extent indicated therein. He imposed penalty under Section 112(a) of the Customs Act, 1962 on the following persons:
(a) M/s. Amrit Laxmi Machine Works: Rs. 15 lacs,
(b) Mr. N. Nagdutt K. Brahmachari: Rs. 5 lacs.
8. This order of adjudication of the adjudicating authority was challenged before the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Mumbai and by the impugned order dated 7-5-2012, the appeal of the appellant has been dismissed.
4. Being aggrieved by the impugned order dated 7th May, 2012 [2014 (303) E.L.T. 454 (T)] of the Tribunal, the appellant-firm and its partner had preferred two appeals each under Section 130 of the Act arising out of two separate show cause notices. The substantial question raised in the four appeals to this Court is the jurisdiction of the authorities under the Act to impose simultaneous penalties both upon the partnership firm and its managing partner under Section 112(a) of the Act.
5. Before the Division Bench, the appellant contended that in view of the decision of this Court in Jupiter Exports (supra) it was not open to the authorities under the Act to impose simultaneous penalties upon the appellant-firm and the appellant-partner of the firm. This is so as this Court in Jupiter Exports (supra) has held that when a penalty is imposed upon the partnership firm, separate penalty cannot be imposed upon the partner of the firm. As against the above, the Revenue contended that in view of the later decision of this Court in Textoplast Industries (supra) rendered after considering the decision in Jupiter Exports (supra), simultaneous penalties are imposable upon both the partnership firm and its partner under Section 112(a) of the Act.
6. The Division Bench in Amritlakshmi Machine Works (supra) observing the apparent conflict between the decisions rendered by the two Division Benches in Jupiter Exports (supra) and Textoplast Industries (supra) referred the above questions to the Hon''ble the Chief Justice. This for constituting a Larger Bench of this Court so as to resolve the conflicting views of the two earlier Division Benches.
7. It is in the above context that the two questions as formulated herein above have been referred by the Hon''ble the Chief Justice for consideration of this Court.
8. On reading of the questions framed for our consideration, the counsel for the parties jointly submit that it is clear that the answer to question No. 2 is inter alia dependent upon our answer to question No. 1. This is so as for the purposes of opining on question No. 1, we would have to consider the two decisions of this Court in Jupiter Exports (supra) and Textoplast Industries (supra) and in that context also decide whether they are reconcilable and if not, which of the two views is the correct view or is there a third view in the context of Section 112(a) of the Act. Thus, inherent in answering Question No. 1, we would have to necessarily answer Question No. 2. In the circumstances no separate submissions were made in respect of each of the questions but while making submissions on Question No. 1, submissions were also made in respect of Question No. 2. Thus our discussions on the two questions are not segregated question wise, but...
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