TEXTOPLAST INDUSTRIES Vs. ADDITIONAL COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) This appeal under Section 130 of the Customs Act, 1962, arises out of an order of the Customs, Excise and Service Tax Appellate Tribunal dated 12 February 2004. The Tribunal, while confirming the findings of fact against the Appellants, reduced the penalty to an amount of Rs. 25 lakhs on the First Appellant which is a partnership firm and Rs. 5 lakhs on the Second Appellant, who is one of its two partners. A penalty of Rs. 5 lakhs was also imposed on the second partner, who is a party to the companion Customs Appeal 30 of 2004. The appeal is admitted on the following substantial questions of law :

(2.) The First Appellant who was registered as a hundred percent export oriented unit for the manufacture of designated polyester films imported a consignment of 37,852 kgs. between May 1985 and June 1987. It is alleged that a search on 15 October 1989 revealed a shortage of 31,042 kgs. of Polyester film which had been removed from the premises. A notice to show cause was issued to the Appellants on 7 April 1988. Upon adjudication, the Additional Collector of Central Excise, Surat, by an order dated 29th November 1991 imposed a penalty of Rs. 1.25 crores on the partnership firm and a penalty of Rs. 25 lakhs on the Second Appellant. In appeal, the Tribunal reduced the penalty on the firm to Rs. 25 lakhs and upon the Second Appellant, its partner, to Rs. 5 lakhs.

(3.) The submission which has been urged before the Court is that a partnership firm has no existence in law and is not a juristic entity. Hence, there would be no occasion to levy a penalty on the firm. Alternatively, it was urged that once the firm has been penalized, there would be no occasion in law to impose a penalty upon adjudication upon a partner of the firm. In support of the submission, reliance has been placed on a judgment of a Division Bench of the Gujarat High Court in Collector of Central Excise and Customs, Surat-II v. Mohammed Farookh Mohammed Ghani, 2010 259 ELT 179 and a judgment of a Division Bench of this Court in Commissioner of Customs v. Jupiter Exports, 2007 213 ELT 641.