DEVI DASS GARG Vs. UNION OF INDIA

JUDGEMENT

(1.) These three writ petitions under Article 226 of the Constitution of India have been filed challenging the legality of an order of the Customs Excise and Service Tax Appeal Tribunal dated 12.4.2006 whereby the Tribunal has directed pre deposit of a sum of rupees two crores by each one of the petitioners as a precondition for hearing the appeals against the order of Commissioner, Central Excise dated 28th October, 2005. Vide this order the Commissioner had imposed a penalty of Rs.21 crores on petitioner Devi Das Garg, Rs.25 crores on petitioner Rakesh Kumar Garg and Rs.21 crores on petitioner Santosh Kumar Garg under Rules 209 and 209A of Central Excise Rules, 1994 and Rules 25 and 26 Central Excise(2) Rules, 2001 and Central Excise Rules 2002. Apart from imposing penalties on these petitioners by this order, the Commissioner had also raised a demand of Central Excise Duty amounting to Rs.33, 20,03,239/- against M/s Amar Jyoti Packers and imposed an equivalent amount of penalty under Section 11 AC on M/s Amar Jyoti Packers.

(2.) The brief facts leading to imposition of penalties and raising of demand of excise duty are as under.

(3.) All the three petitioners namely Shri Devi Dass Garg, Shri Rakesh Kumar Garg and Shri Santosh Kumar Garg were in the business of manufacturing pan masala and 'gutkha' under a partnership firm M/s Sonal India products at Mathura. Pan masala and Gutkha were being manufactured under four different trademarks viz Raj Darbar, Rahat, Raj Tilak, Rustam. They had applied for registration of above trademarks in their names and were marketing pan masala and gutkha in pouches having above trademark. They also had an office in Delhi at G-3/4, Model Town. One Mahesh Kumar Gautam was working as Poojari of the petitioners at a temple' at the residence of these petitioners and was getting a remuneration of Rs.2000/- to Rs.3000/- per month. The three petitioners entered into a franchise agreement for manufacturing and marketing of Pan Masala and Gutka in above trade-names with pujari Mahesh Kumar Gautam, who had allegedly formed a proprietory firm namely M/s Amar Jyoti Packers. This firm ostensibly set up a pouch packing unit at 223, Village Budhpur, Post Office Alipur for manufacturing of pouches of pan masala and gutkha in trade names of Rajdarbar, Rahat, Raj Tilak and Rustam. In the franchise agreement entered into by three petitioners as partner of M/s Sonal India Products with Mahesh Kumar Gautam, their Pujari, it was stated that they were unable to manage properly and to sell their goods namely pan masala sada and gutkha under the registered trademarks and copyright throughout the country and for this purpose the franchise was being given to Mahesh Kumar Gautam, who was interested in getting the license to use their trademarks. This agreement was entered on 13.4.2000 and was effective from 1.4.2000.