IN THE HIGH CORUT OF UTTARAKHAND AT NAINITAL. Review Application No. 1477/2008 Delay Condonation Application No. 8840/2008 Stay Application No. 8841/2008 In C.E. Reference No. 2/2001 P.K. Bhaatacharya … Applicant. Versus Commissioner of Customs and and Central Excise Meerut … Respondent. Sri Lokendra Dobhal, learned for the applicant. Sri Arvind Vashist, learned counsel for the respondent. Dated: 30-12-2008 Hon’ble P.C. Verma, J. Hon’ble B.C. Kandpal, J. The Review Application, along with delay Condonation application, supported by the affidavit, has been filed by the applicant against the judgment and order dated 23-5-2007, passed by this Division Bench in Reference Application No. 02 of 2001, P.K. Bhattacharya Vs. Commissioner of Customs & Central Excise. Heard Sri Lokendra Dobhal, learned counsel for the applicant and Sri Arvind Vashist, learned counsel for the respondent and perused the affidavit filed in support to the review application. From perusal of impugned judgment and order it become apparent that the essence of the questions of law framed in the Reference Application was whether the company evaded the tax and its employees took active part in tax evasion and the Appellate Tribunal was justified in imposing penalty on the Company and its employees without any specific allegation. This Division Bench has recorded a categorical finding that although the employees cannot directly be said beneficiary of the tax evasion but by their acts and conducts in the matter and enumerated in the show cause notice dated 27-10-2005, they can be held liable for tax evasion thereby liable for penalty, as they had full knowledge and reason to believe that they would be liable to confiscation under the Central Excise Rules, 1944. It has also come on record that before passing the order the applicants were served with detailed notice, enumerating therein the reasons and the Tribunal has elaborately dealt with the matter with regard to evasion of tax by the applicant. Therefore, this Court found that no substantial question of law was involved in the Reference Application and the same was dismissed vide impugned judgment and order. We do not find anything in the impugned judgment and order to review the same. It is worthy to mention here that the review application has been filed with 545 days delay and the delay Condonation application has been filed along with an affidavit. Perusal of affidavit reveals that the explanation given for Condonation of delay is not satisfactory. The only ground taken in the affidavit is that the impugned judgment and order came to the knowledge of the applicant after about one and a half year. The ground taken by the applicant cannot be said to be a reasonable and satisfactory to condone the delay and the delay Condonation application is liable to be rejected. Accordingly, the delay Condonation application is hereby rejected. Consequently the review applications also stands dismissed. The stay application also stands disposed of. (B.C. Kandpal, J.) (P.C. Verma, J.) ISB IN THE HIGH COURT OF UTTARAKHAND, NAINITAL. Reference Application No. 02 of 2001 P.K. Bhattacharya, Production Manager (Retired), M/s Mesco Pharmaceuticals Ltd. Mohebwala Industrial Estate, State Bank Road, Dehradun, At present residing at J- 133, Ashiana Colony, Lucknow … Applicant. Versus Commissioner of Customs & Central Excise, Meerut … Respondent. Sri V.K. Bisht, Senior Advocate, for the applicant. Sri Arvind Vashist, learned Standing Counsel for the respondent. Dated: May 23, 2007. Coram: Hon’ble P.C. Verma, J. Hon’ble B.C. Kandpal, J. This Reference Application, U/S 35-H (1) of the Central Excise Act, 1944, has been preferred against the judgment and order dated 12-11-1999, passed by the Customs, Excise and Gold (Control) Appellate Tribunal, West Block No2, R.K. Puram New Delhi in appeal No. E/130/98-C. 2- The following substantial questions of law have been framed in the reference application for our consideration:- 1-Whether the Appellate Tribunal erred in law by imposing penalty on the applicant, ignoring the fact that the applicant was employee of M/S Mesco Pharmaceuticals Ltd. and was not concerned with the Central Excise Duty work of the company during the relevant period? 2-Whether the Appellate Tribunal erred in law by imposing penalty on the applicant, especially when there was no evidence of tax evasion by the applicant?. 3- Whether the Appellate Tribunal was justified in imposing penalty on the applicant, inspite of the fact that applicant was not beneficiary of tax evasion and was performing his duties under the guidance and supervision of superior officers of the company?. 4- Whether the Appellate Tribunal was justified in imposing penalty on applicant without any specific allegation pointing out or elaborating as to how the applicant was liable for committing specific acts leading to any willful miss-statement or suppression of facts or contravention of any provisions of the Act by reason of fraud or collusion with intent to evade excise duty?. 3- Brief facts of the case are that P.K. Bhattacharya was the Production Manager and R.P. Kaushik was the Dy. General Manager of M/s Measco Pharmaceuticals Ltd (hereinafter referred as ‘Company’). Under show cause notice dated 27.10.95, proceedings have been drawn against the Company alleging evasion of central excise duty of Rs. 1,20,43,397/-. The matter was adjudicated by the Commissioner, Central Excise, Meetut, who under his common order dated 13-10-97 held the Company to be ineligible for small scale exemption and gave finding that the charge of suppression of the production and removal of the same with intention to evade duty was established. The Commissioner confirmed the demand of Rs. 1,20,43,397/- and imposed a penalty of Rs. 1,20,50,000/- on the Company. A penalty of Rs. 5,00,000/- each was imposed on P.K Bhattacharya and R.P. Kaushik. 4- Thereafter the matter was heard by Customs, Excise and Gold (Control) Appellate Tribunal, West Block No2, R.K. Puram New Delhi (hereinafter referred as the “Tribunal’). The Tribunal confirmed the order of the Commissioner demanding Rs. 1,20,43,397/- and imposing penalty of Rs. 1,20,50,000/-. However the penalty imposed on P.K. Bhattacharya and R.P. Kaushik was reduced from Rs. 5,00,000/- each to Rs. 2,50,000/- each. Against the order of the Tribunal, reference application has been preferred before this court. 5- Heard learned counsel for the parties and perused the record. 6- The essence of the above questions of law is as to whether the Company evaded the tax and its employees Sri P.K. Bhattacharya and Sri R.P. Kaushik, Production Manager and Dy. Manager of the Company respectively took active part in tax evasion and the Appellate Tribunal was justified in imposing penalty on the Company and its employees without any specific allegation. 7- The allegation of the respondent was that huge evasion of central excise duty was effected by the Company, its directors and the responsible officers of the company. The modus operandi adopted by the applicant in collaboration with others had been detailed in the show cause notice issued to the applicant on 27-10-95. In the show cause notice it was alleged that both the above persons among others had concerned themselves in dealing with the excisable goods viz. patent and proprietary medicines. On the Shipping Bills, the MESCO Lab. Ltd. Srinagar had indicated that the exported goods were manufactured by Dhana Pharmaceuticals Pvt. Ltd. as it was evident from the letter dated 17-9-1990 in which there was a mention about monthly production report for July, August, 1990 and instructions to make the draft of all the documentation to be at Dehradun. It was clearly indicated that the production of medicament in the name of MESCO Lab. Ltd. Srinagar was being undertaken in Dhana Pharmaceuticals Pvt. Ltd during 1990-91. Various medicines were dispatched through Sri R.P. Kaushik as is mentioned in adjudication order. The adjudicating authority on the basis of the correspondence papers- show cause notices have concluded that production programme of Dhana Pharmaceuticals Pvt. Ltd. was controlled by the Corporate Office of MESCO Group through R.P. Kaushik. Other shipping bills showing export of Analgin tablets, Chloroquine phosphate tablets, Ampicilling capsules, Rifampicin capsules indicate that export have been made in pursuance of discharge of export obligation under Advanced Licence issued by the Dy. Chief Controller of Imports and Exports, Srinagar. These have all been shown as manufactured at Srinagar but records resumed from the Factory premises of DPPL on lease with MLL at Dehradun clearly indicate that all these exported goods were actually manufactured by DPPL as is evident from letter of Mr. Kaushik to Mr. Bhattacharya. Office memos show that the labels showing all the products in the name of DPPL and marketed by M/s MLL were being printed indicating that the goods manufactured up-to June, 1990 were manufactured in the name of M/S Masco Lab. Ltd. Srinagar. The Commissioner, Central Excise, Meerut, fixed the duty liability during the year 1990-91 and 1991-92 to the tune of Rs. 1,20,43,397/- and penalty of Rs. 1,20,50,000/- under Rule 173Q of the Central Excise Rules, 1944 for evasion of central excise duty. From the above facts it becomes clear that the Company willfully suppressed the liability of excise duty on the value of clearances worked out by the Commissioner, Central Excise, Meerut vide order dated 13-10-95. 8- The applicants P.K. Bhattacharya and Sri R.P. Kaushik, Production Manager and Dy. General Manager of the Company respectively and other officials held liable for penalty had concerned themselves in dealing with the excisable goods. Although the employees cannot directly be said beneficiary of the tax evasion but by their acts and conducts in the matter and enumerated in the show cause notice dated 27-10-95, they can be held liable for tax evasion thereby liable for penalty. They had full knowledge and reason to belief that they would be liable to confiscation under the Central Excise Rules, 1944. Before passing the order, the applicants were served with detailed notice, enumerating therein the reasons. The Tribunal has elaborately dealt with the matter with regard to evasion of tax by the applicant. We are in full agreement with the finding recorded by the Tribunal. 9- For the above reasons, the substantial questions of law framed in the reference application are decided in favour of the revenue and against the Company. 10- The reference applications stands disposed of. (B.C.Kandpal, J.) (P.C. Verma, J.) ASWAL