Case Note & Summary
The appeal arose from an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 12 February 2004, which reduced penalties imposed on the appellants under Section 112 of the Customs Act, 1962. The first appellant, M/s Textoplast Industries, a partnership firm registered as a hundred percent export oriented unit, imported a consignment of 37,852 kgs of polyester film between May 1985 and June 1987. A search on 15 October 1989 revealed a shortage of 31,042 kgs, which had been removed from the premises. A show cause notice was issued on 7 April 1988, and the Additional Collector of Central Excise, Surat, by order dated 29 November 1991, imposed a penalty of Rs.1.25 crores on the firm and Rs.25 lakhs on the second appellant, a partner. On appeal, CESTAT reduced the penalty to Rs.25 lakhs on the firm and Rs.5 lakhs on the partner. The appellants challenged this, arguing that a partnership firm is not a juristic entity and that penalty on both firm and partner amounts to double jeopardy. The court considered two substantial questions of law: whether the penalty amounts to double jeopardy in view of an earlier order of the Collector of Customs, Ahmedabad, dated 16/11/1989, and whether penalty on both firm and partners is permissible. The court noted that the earlier order was not in respect of the same goods or cause of action, and that a partnership firm is a separate entity for penalty purposes under the Customs Act. The court dismissed the appeal, upholding the penalties as reduced by the Tribunal.
Headnote
A) Customs Law - Penalty on Partnership Firm and Partners - Section 112 of Customs Act, 1962 - Double Jeopardy - The court considered whether penalty on a firm and its partners under Section 112 is permissible and whether it amounts to double jeopardy. The court held that a partnership firm is a separate entity for the purpose of penalty under the Customs Act, and imposition of penalty on both the firm and its partners is permissible. The plea of double jeopardy was rejected as the earlier order of the Collector of Customs, Ahmedabad, was not in respect of the same goods or cause of action. (Paras 1-3)
Issue of Consideration
Whether imposition of penalty on a partnership firm and its partners under Section 112 of the Customs Act, 1962 amounts to double jeopardy and is legally permissible.
Final Decision
Appeal dismissed. Penalties as reduced by the Tribunal are upheld.
Law Points
- Partnership firm is a separate entity for penalty under Customs Act
- 1962
- Double jeopardy not attracted when penalty imposed under different proceedings
- Section 112 of Customs Act
- 1962 permits penalty on firm and partners
