Customs, Excise and Service Tax Appellate Tribunal

Amit Talwar Vs. CCE, Delhi-I

MANU/CE/0187/2018

08.05.2018

Excise

In absence of mutuality of interest and financial flow back from one firm to another, clubbing of clearances is not permissible

In facts of present case, Trueline Appliances Private Limited (TAPL) and 3D International (3D) were engaged in the activity of importing and trading of various items like home appliances, shoes, furniture, hardware items, stationary items etc. Amit Talwar and Sumit Sehgal were the Directors of TAPL as well as Partners in 3D. The Departmental Officers carried out search operations at various premises associated with the TAPL as well as 3D and also residential premises of the Directors/Partners and recovered various documents as well as pen drives, computers etc. Subsequently, searches were also conducted at the premises of various C & F agents as well as super stockists. Statements were recorded from Directors as well as various connected persons including Marketing Manager. At the time of search operations, various goods were also seized at the godown premises of TAPL as well as 3D. After completion of investigation of the alleged Central Excise duty evasion, show cause notice was issued. Separate show cause notices were also issued proposing confiscation of the seized goods.

The case was adjudicated vide the impugned order in which duty demands were raised and penalty were imposed against TAPL, 3D, Directors and Partners. Penalties were also imposed on various C & F agents. The seized goods were ordered for confiscation. Aggrieved by the impugned order, appeals have been filed.

TAPL is a Private Limited company with Shri Amit Talwar and Sh. Sumit Sehgal as Directors. The same two persons are Partners in 3D. Both the entities are shown as functioning from the same premises; have both undertaken the activity of importing various goods and selling the same at higher prices after affixing MRP stickers. The goods imported in the name of both TAPL as well as 3D have been stored at the same godown where the MRPs have been manipulated and have also been sold through the same set of C & F agents even though the latter were appointed only by TAPL. It is established during the course of investigation that, the price lists circulated by TAPL have also been adopted for selling of goods imported in the name of 3D. The modus-operandi adopted is not challenged by the Appellants. It stands admitted that, such activity amounts to manufacture in terms of Section 2(f)(iii) of Central Excise Act, 1944 . The demand raised is w.e.f. June 2012.

It is settled position of law that, in the absence of mutuality of interest and financial flow back from one firm to another, clubbing of clearances is not permissible merely on the ground that, both firms are in the common premises and affairs of all firm are looked after by one person. It is further seen that, the goods imported through TAPL as well as 3D have been separately tabulated by the Revenue and demand also was tabulated on that basis but the value of clearances was finally clubbed for purposes of determining the entitlement to SSI exemption. Since, TAPL as well as 3D have separate existence and have separate registration for VAT, Income Tax etc. each one will be entitled to the benefit of SSI exemption separately.

Demand has been made jointly and severally from both TAPL as well as 3D. It is well settled that demand cannot be made jointly and severally. The demand can only be made from that entity which has manufactured the goods in question. The activity carried out by TAPL as well as 3D will amount to manufacture as per Section 2(f)(iii) of the Act and hence, Central Excise duty is required to be paid on the basis of MRP but such Excise duty payable is required to be computed after extending the benefit of SSI exemption separately to TAPL as well as 3D. Further, the demand made jointly and severally from two parties cannot be upheld. The case is required to be remanded to the Adjudicating Authority to work out the demand denovo separately from TAPL as well as 3D after extending the benefit of SSI exemption separately to the two companies.

Tags : Demand Penalty Validity

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Customs, Excise and Service Tax Appellate Tribunal

CC (Import), ICD, TKD, New Delhi Vs. Sodagar Knitwear

MANU/CE/0189/2018

08.05.2018

Customs

The facts which are admitted need not be proved

The present appeal is against the order-in-appeal passed by the Commissioner of Customs (Appeals). The Respondent-Assessee imported certain goods and filed Bill of Entry and declared various items such as Baby Caps, Cloth Gloves, Baby Bootie, Baby Tights and Baby tops. When the goods were examined, certain discrepancies were noticed in respect of the total quantities on some of the declared goods. Further, certain extra items were also found during examination including adult jacket of 'Versace' brand. The Customs Authorities investigated the charges of mis-declaration as well as undervaluation of the impugned goods. The imported goods were not as per the declarations made in the Bill of Entry. The case was adjudicated by the Additional Commissioner in which the declared transaction value was rejected under Rule 12 of the Customs Valuation Rules; the assessable value was re-determined in terms of Rule 7 and enhanced to Rs. 39,64,694. The adjudicating authority upheld the confiscation of the goods under Section 111(l) and (m) of the Customs Act, 1962 and allowed redemption of the same on payment of redemption fine and penalties. Differential duty of customs was demanded and penalties were also imposed on the appellant as well as the Partners.

On Appeal, the Commissioner (Appeals) held that, there was no mis-declaration of the goods, since the departmental officers have not recorded the length of the garment in the examination report. He also set aside the re-determination of the value of the imported goods on the basis of market enquiry. Finally, he set aside the confiscation of goods and penalties imposed. Aggrieved by the impugned order, Revenue has filed the present appeal.

The Respondent-Assessee filed Bill of Entry for import of certain goods and when the consignment was examined it was noticed that the quantities of goods imported did not tally with that declared in the Bill of Entry. It was noticed that a few extra items were also found. It is evident that, extra items have been found including adult jacket 'Versace' brand. In particular, it is evident that, the branded goods bearing the brand name Versace stand imported in the consignment which has not been declared. Consequently, there has been mis-declaration on the part of the importer and hence, confiscation of the imported goods under Section 111(l) of Act, is upheld.

The Customs Authorities re-determined the value of the imported goods in terms of Customs Valuation Rules, 2007. Since, the importer had failed to advance any documents/invoice to substantiate the value of the goods, the transaction value stands rejected and the value of the goods have been re-determined as per Rule 7 of the Customs Valuation Rules, 2007. It is noteworthy that, the representative of the importer has been specifically shown the basis for re-determination of the value and his statement recorded by the Customs Officers. It is on record that, Eklovey Chug, Manager of the importer has specifically admitted in his statement that, he agreed with the manner of calculating the assessable value and differential duty.

It is settled position of law that, the facts which are admitted need not be proved. Further, present Tribunal in the case of Jai Shiv Trading Company has observed that, it is settled position of law that once the importer has admitted the re-determination of value on record and has accepted the method of such valuation, he cannot subsequently challenge the same on the same ground. The ratio of the above judgment is squarely applicable to the instant case.

The impugned order is set aside and order-in-original is restored. However, in the facts and circumstances of the present case, the redemption fine merits reduction from Rs. 5 lakhs to Rs. 3 lakhs under Section 125 of the Customs Act. Further, the penalty imposed on partner under Section 112(b) of the Act is reduced from Rs. 3 lakhs to Rs. 1.5 lakhs. The appeal filed by the Revenue is partially allowed.

Tags : Confiscation Penalty Validity

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High Court of Delhi

Kalka Public School and Ors. Vs. Honble L.G. of Delhi and Ors.

MANU/DE/1677/2018

07.05.2018

Education

Administrator may take over management of a school only after giving reasonable opportunity of showing cause against proposed action

The Petitioner No. 1/School, which is a private unaided school recognized by the Respondent No. 2/Directorate of Education, and the Petitioner No. 2, which is a duly elected Parent Teachers' Association of the Petitioner No. 1, have preferred the present petition seeking a direction to the Respondent No. 1/Hon'ble Lt. Governor of GNCTD to afford them an opportunity of showing cause against the Respondents' proposed action of taking over the management of the Petitioner No. 1 under Section 20 of the Delhi School Education Act, 1973, by giving them a personal hearing in compliance with the principles of natural justice. The question before this Court is whether, in the circumstances of the instant case, the Petitioner No. 1 is entitled to a personal hearing to show cause against the Respondents' proposed action to take over its management under Section 20 of the DSE Act.

As per Section 20(1) of the DSE Act, an Administrator may take over the management of a school only after giving the management committee or manager of such school a reasonable opportunity of showing cause against the proposed action. While, there can be no doubt that, the provision necessarily contemplates adherence to the principles of natural justice, the question is whether the expression "reasonable opportunity of showing cause" occurring in the said provision necessarily contemplates granting a personal hearing to the management committee/manager of the concerned school.

The absence of a personal hearing may not ipso facto be fatal to a final decision passed in the circumstances of any given case. However, it is equally well settled that, there can be no straitjacket formula or test to determine what the observance of the principles of natural justice would entail in any given situation.

In view of the observations of the Supreme Court in the case of Manohar and Jesus Sales, while there can be no doubt that, an order passed under Section 20(1) of the DSE Act, must necessarily comply with the principles of natural justice, what constitutes due adherence to the principles of natural justice, being circumstantially subjective, will necessarily require an examination of the facts of the case at hand. In the facts of the present case, what matters is that, the Petitioner No. 1 has to be given a reasonable opportunity to explain the allegations levelled against it in the show cause noticed issued by the Respondents.

In fact, the Petitioners have invoked the writ jurisdiction of this Court at a pre-decisional stage not only because its substantive rights are at stake, but also because the nature of the relief sought by it, can only be granted at such a stage, since an order passed under Section 20(1) of the DSE Act cannot be impugned merely on the ground that, no personal hearing was granted to the Petitioner No. 1. Thus, the present petition is maintainable at this stage while the proceedings under Section 20(1) of the DSE Act are still ongoing.

In determining whether a personal hearing is necessary in the facts of the present case, present Court must examine not only the nature of allegations levelled against the Petitioner No. 1 but also the stage at which the Petitioners have approached this Court. In the facts of the present case, where a final decision is yet to be taken by the Respondents, the Petitioner No. 1's request for a personal hearing cannot be said to be whimsical since, a very vital decision pertaining to its rights is at stake.

The Petitioners deserve to be given an opportunity of personal hearing at this stage. It is an admitted case of the parties that, the issue has been engaging the attention of the Respondents for more than the last eight months and, therefore, there is no such grave urgency in the matter that should compel the Respondents to decline the Petitioner No. 1's request for a personal hearing. Writ petition is allowed. The Respondents are directed to give a personal hearing to the Petitioner No. 1 to explain the alleged violations in the show cause notice before passing an order under Section 20(1) of the DSE Act.

Relevant

Manohar S/o Manikrao Anchule vs. State of Maharashtra and Anr. MANU/SC/1140/2012
; Union of India and another vs. M/s. Jesus Sales CorporationMANU/SC/0382/1996

Tags : Show-cause notice Personal hearing Grant

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High Court of Jammu and Kashmir

Anil Kumar and Ors. Vs. State of J&K and Ors.

MANU/JK/0350/2018

05.05.2018

Criminal

A purely civil dispute can be given a colour of a criminal offence to wreak vengeance, it is necessary to draw a distinction between a civil wrong and a criminal one

In instant petition, filed under Section 561-A of the Code of Criminal Procedure, 1973, the Petitioners seek the indulgence of present Court in quashing the FIR registered against them for the commission of offences under Sections 426, 420, 467, 468, 471, 406 of the Ranbir Penal Code (RPC). Issue raised in present petition is whether the criminal proceedings initiated against the accused are manifestly attended with mala fides and devised to wreck vengeance on the accused and whether the allegations made in the FIR or the complaint, if taken at their face value and accepted in their entirety, do prima facie constitute an offence or make out a case against the accused.

The contention of the informant i.e. the Respondent No. 3 is that, the Petitioners did not specifically perform the contract, which they executed in his favour. Such a course gives rise to civil consequences. Section 54 of the Transfer of Property Act, 1882 makes it clear that, an agreement to sell does not itself create any interest or title on immoveable property. Specific performance is an equitable remedy in the law of contract, whereby a Court issues an order requiring a party to perform a specific act that is to complete the performance of a contract. It is an equitable relief which a Civil Court can grant instead of directing the payment of money. Specific performance in real estate term means when either the buyer or the seller wants to complete the sale under the agreed terms and conditions in the agreement to sell. An agreement to sell is a contract between the buyer and seller of the property in which like any other contract, the deal can go wary. Therefore, it is important for both the buyer and the seller to pay due consideration while making or accepting the offer.

The SDPO, who conducted the enquiry into the matter and came to the conclusion that, the case has a civil lineage and has to be determined by a civil Court, was right in his conclusions. Therefore, even if the allegations made in the FIR or the complaint are taken at their face value and accepted in their entirety, these do not constitute any offence or make out a case against the accused. Respondent No. 3 in pursuing his claim has to knock at the doors of the civil Court and he cannot set the criminal law into motion for implicating the Petitioners for the commission of the offences for which the FIR has been registered against them.

The FIR against the Petitioners is totally unwarranted, unjust and against the law. In 'Joseph Salavaraj Vs. State of Gujrat & Ors.', the Supreme Court has viewed that, a purely civil dispute can be given a colour of a criminal offence to wreak the vengeance against the Applicant and it is necessary to draw a distinction between a civil wrong and a criminal one and the Applicant cannot be allowed to go through the rigmarole of a criminal prosecution for a long number of years, even when admittedly a civil suit has been filed.

It was on 3rd April, 2012 and 11th June, 2012 that the cheques were issued by the Respondent No. 3 in favour of the Petitioner Nos. 1 & 3. These cheques were delivered to the Petitioner Nos. 1 & 3 in token of the advance money for the purchase of the property i.e. a house situated at Gandhi Nagar, Jammu. These dates, have been culled out from the FIR lodged by the informant. The informant i.e. Respondent No. 3, after a great lull, filed a complaint before the learned Chief Judicial Magistrate, which was forwarded to the SHO with a direction to investigate the matter under law, if cognizable offence appears to have been committed by the accused. The FIR was registered on 2nd April, 2013 i.e. much after the time laid down in the law, which emphatically provides that, an inquiry requires to be made where there is abnormal delay/laches in initiating the prosecution. No reason has been spelt out as to how and why this delay occurred in filing the complaint before the Court.

Section 561-A of Cr.P.C. envisages three circumstances under which the inherent jurisdiction may be exercised, namely (i) to give an effect to an order under the code (ii) to prevent abuse of process of Court and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. Courts, therefore, have the inherent powers apart from express provisions of law which are necessary for proper discharge of functions and duties imposed upon them by law. Courts are invested with all such powers as are necessary to do right and to undo a wrong in the course of administration of justice on the principle of Quando lex aliquid alique concedit concediture et id Sine quo res ipsa esse non protest (When the law gives the person anything, it gives him that without which it cannot exist). The petition is allowed, as a consequence of which, FIR registered against the Petitioners for the commission of offences under Sections 426, 420, 467, 468, 471 & 406 of RPC, is quashed.

Relevant

'Joseph Salavaraj Vs. State of Gujrat & Ors.' reported in MANU/SC/0719/2011
: 2011 (7) SCC 59

Tags : FIR Registration Validity

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High Court of Allahabad

Ajai Kumar Chauhan Vs. State of U.P.

MANU/UP/1814/2018

03.05.2018

Criminal

Heat of passion requires that there must be no time for the passions to cool down

The Appellant has filed the present appeal against his conviction and sentence passed by Additional Sessions Judge, convicting him under Section 302 of Indian Penal Code, 1860 (IPC) and awarding sentence of imprisonment for life, along with fine of Rs. 5,000. Additional Sessions Judge by the impugned judgment found that prosecution has perfectly proved the charges against the Appellant. The incident is fully corroborated with the medical evidence. The accused is a young man of 21 years and was a student of B.Sc. Rajeev Kumar (Deceased) was also a student, who was brutally stabbed by the accused. Due to the injuries caused by the accused, he died after ten hours of the incident. The site of injury shows that, the attack was made with an intention to cause death. The injuries were sufficient to cause death in ordinary course. Thus, the Appellant has caused murder of deceased.

FIR was promptly lodged. From the statements of the witnesses of fact, date, time and place of occurrence are fully proved. In Rampal Singh v. State of U.P., held that, where the act committed is done with the clear intention to kill the other person, it will be a murder within the meaning of Section 300 of the IPC and punishable under Section 302 of the IPC but where the act is done on grave and sudden provocation which is not sought or voluntarily provoked by the offender himself, the offence would fall under the Exceptions to Section 300 of the IPC and is punishable under Section 304 of the IPC. Another fine tool which would help in determining such matters is the extent of brutality or cruelty with which such an offence is committed.

In State of M.P. v. Shivshankar, held that help of Exception 4 can be invoked if death is caused (a) without premeditation; (b) in a sudden fight; (c) without the offender's having taken undue advantage or acted in a cruel or unusual manner; and (d) the fight must have been with the person killed. To bring a case within Exception 4 all the ingredients mentioned in it must be found. It is to be noted that the 'fight' occurring in Exception 4 to Section 300 IPC is not defined in IPC. It takes two to make a fight. Heat of passion requires that there must be no time for the passions to cool down and in this case, the parties have worked themselves into a fury on account of the verbal altercation in the beginning. A fight is a combat between two and more persons whether with or without weapons. It is not possible to enunciate any general rule as to what shall be deemed to be a sudden quarrel. It is a question of fact and whether a quarrel is sudden or not must necessarily depend upon the proved facts of each case.

According to counsel for the Appellant, merely having a knife does not show that, it was a pre-meditation for causing murder of deceased. In the present case, it has come in the evidence that, the Appellant had called deceased from the roof and after 3 - 4 minutes, cries of deceased were heard by the witnesses and they went on the spot and found that, a scuffle was going on between deceased and the Appellant. Thus, the Appellant had called deceased and caused knife injuries. The site of injuries is the chest of the body, which shows that, intention was to cause death. During this period, if deceased scuffled with the Appellant to save him then no benefit can be given of the own wrong of the Appellant to him. In the facts of the case, Exception 4 of Section 300 of IPC is not attracted in this case. Appeal dismissed.

Relevant

State of M.P. vs. Shivshankar MANU/SC/0820/2014
, Rampal Singh v. State of U.P., MANU/SC/0598/2012
: (2012) 8 SCC 289

Tags : Conviction Validity Exception Benefit

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High Court of Bombay

Anila Gautam Jain Vs. Hindustan Petroleum Corporation Limited

MANU/MH/0850/2018

03.05.2018

Arbitration

A liability to pay damages must arise under the contract and not otherwise

Present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 arises from the judgment whereby the Appellant's petition under Section 34 of the Act assailing the award of the learned sole Arbitrator stands dismissed. The issue which arises for consideration in instant appeal is as to whether the counter claim as raised by the Respondent could be allowed by the learned arbitrator, and whether the learned Single Judge was justified in affirming such arbitral award.

The relevant clause in the contract in regard to reconciliation of accounts is Clause No. 27 which clearly indicate that, in the event of termination of the agreement, the accounts were required to be settled by the dealer within seven days and in the event of dealer declining or neglecting to settle the accounts within such period, the accounts certified by one of the Corporation's officers, shall be absolutely final and conclusive for all the purposes. Admittedly, there is no certification of the accounts by the officers of the Respondent nor it is a case that, the Appellant has admitted the accounts at any point of time. This necessarily required the Respondent to lead evidence, oral or documentary, and to prove said claim on accounts. The Respondent also never stepped into the witness box nor was there any attempt to prove the accounts. In regard to the stock variation also, there is no evidence led. Nonetheless, the learned Arbitrator proceeded to make the impugned order.

Present is a case where the Respondent asserted breach of contract (dealership agreement) on the part of the Appellant and as a consequence of a breach of contract, the respondent made a counterclaim inter-alia seeking penalty and other claims which pertain to variation of stock, debit balance of the account between the parties. Once a claim for penalty is made, then necessarily the provisions of Chapter VI of the Contract Act which deal with consequence of breach of contract and the provisions of Sections 73 and 74 of the Contract Act, 1872 which deal with award of compensation, when a party suffers on account of breach of contract and compensation for breach of contract when penalty is stipulated in the agreement itself respectively, are attracted. It cannot be disputed that, a liability to pay damages must arise under the contract and not otherwise. The Arbitrator has power to decide the question of liability for a particular amount as damages. In the assumption of damages, the arbitrator was required to consider the legal obligations the law would confer on the parties to prove such claims. Once there was no evidence on record, oral or documentary, which could prove the damages suffered by the Respondent, then, certainly it can be said that, there was a patent illegality on the face of the award. All these requirements have been completely overlooked by the learned Arbitrator.

The learned arbitrator has gravely faltered in overlooking the fundamental provisions under Section 73 of the Contract Act, namely unless the party proves the damages suffered by it on account of breach of contract, it is not entitled to any damages on compensation. If the counter claims of the Respondent are to be seen in the context of clauses 5, 6, 10, 11, 12, 24(a), 28B(a) and B(k), B(g), B(h), these are claims which can be only proved on evidence and in event, any claim for damages/penalty on these breaches has to be on the proof of damages suffered in the absence of any liquidated damages agreed between the parties. Even if the parties were to agree on a quantum of liquidated damages, the party claiming such damages was required to prove the actual damage suffered by it.

All the above basic illegalities in the award of the learned sole arbitrator have not been considered by the learned Single Judge. The learned Single Judge has clearly erred in making the observations. The said observations of the learned Single Judge in the impugned order are to the effect that, once there is a breach of contract, then, automatically the claim for damages would be required to be awarded without the party proving its claim for damages. Such a proposition certainly cannot be accepted in law. Thus, the impugned award was in conflict with the fundamental policy of Indian Law and being contrary to the fundamental principles of law.

The impugned order dated passed by the learned Single Judge, is set aside. Arbitration Petition allowed whereby the Award passed by the learned Sole Arbitrator, to the extent it allowed the counter claim of the Respondent stands quashed and set aside.

Tags : Award Counter-claim Validity

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