Liability of partners in a business under the Central Excise Act and Rules.

The brief facts of the case are as follows:-The respondent herein / The Assistant Commissioner of Central Excise has filed a complaint in C.C.No.388 of 1998, on the file of Judicial Magistrate-I, Vellore, against the four accused, stating that the accused are charged for the offence of manufacture of biris and the removal of the same, illicitly, to the tune of Rs.15,50,88,000/- biris (inclusive of 86,400/-biris under seizure) and evasion of payment of central excise duty to the tune of Rs.5,76,726.15/- in contravention of Rule 9(1), 52-A, 53, 94 and 226 of the Central Excise Rules 1944. The complainant has listed six witnesses and annexed 14 documents in order to prove the prosecution case.

2. In the said prosecution case, P.W.1, P.W.2, P.W.3 and P.W.4 were examined. Under the circumstances, the accused has filed discharge petition under Section 245 of Cr.P.C., to discharge them from the proceedings and the same has been resisted by the complainant/Assistant Collector, Central Excise, after filing detailed counter statement. The learned Magistrate after hearing the arguments of both sides and on perusing the records and on considering the averments made by the parties, dismissed the said discharge petition in Crl.M.P.No.2746 of 2008.

3. Against the dismissal of the said discharge petition, the third and fourth accused have filed the above revision.

4. The learned counsel for the revision petitioners, argued that there is absolutely no evidence against the revision petitioner warranting framing of charges under Section 246 of Cr.P.C. Actually, no case has been made out against the revision petitioners herein. P.W.1 had adduced evidence that he did not know who are all the parties of the first accused company and had also stated that he is not aware of who is managing the day to day affairs of the company and as such, there is lacuna in the prosecution case. Actually, there is no prima facie case against the revision petitioner herein and they have been falsely implicated in the case. P.W.1 had admitted that the prosecution against the revision petitioners herein under Section 9AA of the Central Excise and Salt Act is not maintainable. As per the evidence of P.W.1, no charge can be framed against the petitioners herein. The evidence of P.W.2, P.W.3 and P.W.4 had also not implicated the petitioners in the prosecution case. The petitioners have no role to participate in the business of the first accused company. As per the partition deed, the petitioners are not active participants of the affairs of the first accused company. As per Ex.P2, viz., statement of Mohammed Ishaq Sheriff, who is the main accused, it is evident that the revision petitioners herein are not necessary parties. As such, the original complaint is not maintainable against the accused 3 and 4 and the same was not considered by the learned Magistrate.

5. The learned counsel for the revision petitioners further contended that authorization letter given by Commissioner, Central Excise to P.W.1 for laying the complaint, refers that the second accused, viz.,Mohammed Ishaq Sheriff alone should be prosecuted along with first accused Company. M/s.M.S.Abdullah Sons beedi factory. According to 9AAof the Central Excise and Salt Acts, in case, a company is prosecuted, the person, who is incharge of the day to day affairs of running of the firm alone should be arrayed as an accused, along with the firm. The proviso to the Section contemplates that any person, who is a partner of the firm is not liable for prosecution, provided he proves that the offence was committed without his knowledge or that he had exercised due care to prevent such offence. The learned competent counsel vehemently argued that in the prosecution case, the prosecution witnesses viz., P.W.1 and P.W.2 have admitted that they are not aware as to who is in charge of day to day administration of the affairs of the first accused company. There is no discussion in the ingredients of the complaint abo