KUMAR BROTHERS Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THE following questions are referred to the Larger Bench for decision by order, dated 21 -2 -1997 by the Referral Bench.

(2.) THE Additional Collector of Customs, New Delhi passed a single Order -in -Original No. 214/91, dated 11/20 -9 -1991 confiscating zip fasteners of market value at Rs. 4,87,250/ - and C.I.F. value of Rs. 1,92,000/ - under Section 111(d) and (p) of the Customs Act, 1962. He also imposed penalty of Rs. 25,000/ - on Shri Bulaki Ram of M/s. Kumar Brothers, of which, Shri Bulaki Ram was stated to be a partner of the appellants in the present case. The Customs Officers carried out a check on 2 -8 -1989 of the business premises of M/s. Kumar Brothers. Shri Bulaki Ram was present at the time of search which was also witnessed by two independent persons. On search 53856 zip fasteners of YKK brand of 8" in length and 12 Nos. of zip fasteners of YKK brand of 7" were recovered. The Officers found 96,000 zip fasteners of YKK brand of 8" and 12,000 Nos. of YKK zip fasteners of 9" collectively valued at Rs. 4,06,000/ -(market value) in excess than the recorded balance in the Stock Register, which was seized by the Officers. Shri Bulaki Ram could not produce any documentary evidence in support of their legal acquisition. Show Cause Notice, dated 31 -1 -1990 was issued to S/Shri Bulaki Ram, Sarwan Kumar and Ashok Kumar, all brothers, the first two being partners of M/s. Kumar Brothers, calling upon them to show cause why the seized goods should not be confiscated and why penalty should not be imposed on them. After hearing the parties, the Additional Commissioner vide his Order -in -original, dated 11/20 -9 -1991 ordered absolute confiscation of the seized goods foreign origin. He also imposed a penalty of Rs. 25,000/ - on Shri Bulaki Ram under Section 112 of the Customs Act, 1962.

(3.) SHRI Naveen Mullick, ld. Counsel appeared before the referral Bench for both the appellants namely M/s. Kumar Brothers and Bulaki Ram. He submitted that the Show Cause Notice (SCN) was issued to the appellants Shri Bulaki Ram and other two persons and not to the firm. He contended that since the notice was not issued to the firm to which the goods belonged, the seized goods are liable to be returned. He stated that the serving of notice to the partners of the firm did not constitute service of a notice on the firm. For this proposition he relied upon the decision of the Tribunal in the case of Hindustan Foam Industry v. Collector of Central Excise reported in 1990 (48) E.L.T. 33. Referral Bench has taken note of the above decision of the Tribunal which has taken into consideration several decisions including the one in Mukha Mai Cokal Chand v. Collector of Central Excise, New Delhi reported in 1987 (32) E.L.T. 163 (Tribunal) and a decision of the Hon'ble Madras High Court in Additional Collector of Central Excise v. Kathiresan Pillai 1989 (42) E.L.T. 189. Ld. Referral Bench referred to the plea advanced before them that the appropriated goods in question belonged to the firm M/s. Kumar Brothers to which no notice had been issued. It is observed that the notice issued to the partners will not constitute notice to the firm and on that account it is contended that the goods are liable to be returned. Emphasis was particularly placed on the judgment of the High Court of Madras in Additional Collector of Central Excise v. Kathiresan Pillai (supra), in which it is held that issue of show cause notice to the firm has no legal consequence whatever, as the firm was not the licence holder nor had it applied for renewal. Therefore, the notice issued to the firm was held to be non est in law. In the case of Hindustan Foam Industry v. Collector of Central Excise (supra) the position was reversed as the notice was issued to the partners whereas the charge of undervaluation, imposition of penalty and the demand of duty was made on the firm. It is contended that the present case is similar to the one in Hindustan Foam Industry. The Referral Bench has taken note of the plea made before them that Shri Bulaki Ram was responsible for running the firm as given in the voluntary statement in the matter. He also admitted that he was a notified dealer and was maintaining the prescribed register. He had stated that he and his brothers, Sarwan Kumar and Ashok Kumar were the partners of the firm of M/s. Kumar Brothers. The Department also searched the premises of M/s. Kumar Brothers and made the seizure from the premises of the firm. It is also observed that despite the letter, dated 15 -2 -1990 written by their Counsel, Shri N.C. Chawla to the Additional Collector requesting for waiver of the requirement of a show cause notice vide his letter, dated 7 -9 -1989, the notice had been issued. The letter was written by the Counsel as reply on behalf of Shri Bulaki Ram of M/s. Kumar Brothers. The ld. Bench has noted that Shri Bulaki Ram was taking responsibility on himself for the dealings with the department in this case. He had waived the issue of the show cause notice though it was issued to him as well as the other partners.