“A company (hereinafter called C) did a Cenvat fraud. A transporter (called T) assisted the company by providing fake Goods Receipts, when actually the goods were never transported. Original authority confirm the demand and imposed a penalty of one crore on the company. Personal penalty of 50 lakhs was imposed on the Managing Director of the company. A penalty of 10 lakhs was imposed on the transporter.

On appeal to CESTAT, the Hon’ble Tribunal said that Managing Director may not be aware of such fraud and set aside the penalty. Penalty on the company was reduced to 5 lakhs. Further the tribunal found that penalty of Rs. 10 lakhs on the transporter is justified.”

The legal position of the case is very clear. The transporter has only supplied the documents and not in any way concerned itself with the transportation of any goods liable to confiscation, and hence no penalty can be imposed on the transporter. In a pronouncement on this point the Hon’ble Tribunal, North Bench in the matter of Ruby Impex Vs Comissioner of central excise, Jalandhar/ Ludhiyana, 2004 (173) ELT.161 (Tri-Delhi) it was held as follow.

“We also agree with the submissions of the learned Advocate that penalty cannot be imposed on Milap Transport Carriers and Deepak Roadways under Rule 209A of the Central Excise Rules, 1944 as none of the ingredients mentioned in the said Rule 209A is applicable. A penalty is imposable on any person, who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Central Excise Act or Rules. They were asked to show cause as to why penal action under Rule 209A should not be taken against them for giving blank book of GRs to Shobit Impex thereby facilitating them in issuance of fake and bogus modvatable invoices in contravention of Rules 57G and 57GG and in abetting in wrongly passing of Modvat credit. The Commissioner has imposed the penalties on them in the impugned Order as they had facilitated Shobit Impex “for issuance of fake & invalid bogus modvatable invoices”. Thus they had neither acquired possession of excisable goods nor dealt with excisable goods in any manner with the knowledge that the goods are liable for confiscation under the Central Excise Act. Moreover, no excisable goods are involved as the charge and finding against them is that they facilitated the issue of fake and bogus invoices against which no goods – whether excisable or imported – were transported to manufacturers. Accordingly, we set aside the penalty imposed on Appellants Nos. 3 and 4.”

In AIA Engineering v. CCE [2006 (195) ELT 154], it was held by the Tribunal that mere issuing of transport documents is not sufficient to attract penalty under Rule 26 (erstwhile Rule 209A) of the Central Excise Rules. It held,

“As regards the penalties imposed upon the other appellants under the provisions of Rule 26, we find that the appellants reliance on the Tribunal decision in the case of Ruby Impex v. Commissioner of Central Excise [2004 (173) E.L.T. 161 (Tri. – Del.)] as appropriate. In terms of the said decision, provisions of Rule 209A cannot be invoked for imposition of penalty, when the dealers have not physically dealt with the goods and there are no goods involved which are liable to confiscation. Ld. Advocate contends that the provisions of Rule 26 of Central Excise Rules, 2002 are pari materia to Rule 209A of the erstwhile Central Excise Rules. Admittedly, there are no goods involved, which are liable to confiscation inasmuch as the Revenue’s own case is that the no inputs were supplied under the cover of the invoices. In the said scenario, the above decision of the Tribunal is fully applicable. We, accordingly set aside the penalties imposed upon the other appellants under the provisions of Rule 26 of Central Excise Rules.”

Despite such provision, penalty was imposed on the transporter. Further, the case is shocking. When the managing director of the beneficiary company is not aware of the fraud, how can the transporter be aware of the factum of cenvat fraud? Further, when only a penalty of Rs. 5 Lakh is justified on the company who committed the fraud and enjoyed the fruit of fraud, how can a penalty of 10 Lakhs be justified on the transporter? Although the tribunal is required to give reasoned order, no reason has been given by the tribunal on such points.

The transporter is a consumer of justice, who has gone to the tribunal after paying the requisite fees. Justice is his right. He feels that justice has been denied to him. Is any redressal mechanism is available to him? If not, should there be some redressal mechanism? Who is responsible for such injustice- should anybody be held accountable for such injustice?

These are certain very disturbing question which has to be answered by the judicial machinery of our country.

The law gives a simple answer for such injustices- file appeal. The error can be corrected in appeal. What if such error is not corrected in appeal? What if even the appellate authority is equally callous as original authority? Merely because the error can be corrected in appeal cannot be a ground for committing errors in the first place and not taking any corrective action so that error is not repeated. Further, the luxury of appellate remedy can be exercised only by the rich people, in a country where a large majority of population cannot afford simple legal services, talk of rectifying error in appellate remedy is adding salt to injury.

History of our justice system, like all histories excludes common man. Injustices done to individuals have never been a concern of history. We all are bothered about the cases where rich and powerful people are involved, and sometimes even lament that the law is not able to catch them; we are not able to the millions of individuals suffering the wheels of justice in an unjustified manner.

There are certain basic problems in judiciary in general and CESTAT in particular. The problems can be classified in two groups broadly, “accountability” and “efficiency”. Both the issues are intermingled and overlapping. A widespread movement is going all over the world to enforce judicial accountability. The former Chief Justice of India, J.S. Verma, has called for legislation on judicial accountability, based on the resolutions passed by the Supreme Court, to check the erosion of people’s trust in the judiciary and to effectively probe charges of judicial corruption.”Time has come for enforcing judicial accountability, but it should be done by the judiciary itself. Any external effort would be dangerous for the judiciary’s independence,” Mr. Justice Verma said in the BBC Hindi special programme, Aapki Baat BBC Ke Saath. The Supreme Court passed the three resolutions on May 7, 1997 and they were sent to the Prime Minister on December 1, 1997 for making a law on judicial accountability. “Unfortunately it has not happened so far,” Mr. Justice Verma said.

The Bill for Judicial Accountability is pending in parliament. However, the diluted nature of the bill is being opposed by several peoples right advocacy group. Judicial Corruption is in no way non-existent and many litigants face the burnt of such corruption. A survey of the “Transparency International” shows that,

“Judicial corruption usually falls into two categories: political interference in the judicial process by the legislative or executive branch, and bribery. The importance of an independent judiciary cannot be overemphasised. Everyone loses when justice is corrupted, particularly the poor, who are forced to pay bribes they cannot afford. Transparency International’s latest “global survey” of attitudes towards corruption reveals that in more than 25 countries, at least one in 10 households had to pay a bribe to get access to justice. Corruption in the judiciary includes any inappropriate influence on the impartiality of judicial proceedings and judgements and can extend to the bribing of judges for favourable decisions, or no decision at all.”

“Transparency International’s (TI) Global Corruption Barometer 2006, released in December 2006, explores how corruption affects the lives of citizens, by assessing both the form and extent of corruption, and which sectors of society they perceive as the most corrupt. In 2006, the legal system/judiciary was identified as the most corrupt sectors and the third most common recipient of bribes. Worldwide, 8 percent of Barometer respondents who had contact with the legal system/judiciary paid a bribe. The experience of bribery was particularly high in Bolivia, Cameroon, Gabon, India, Mexico, Morocco, Pakistan and Paraguay – where more than one in three court users admitted to paying a bribe. The Barometer also broke this down by region to better assess trends. In Africa and Latin America, about one in 5 people paid a bribe, compared to 15 percent in Newly Independent States and the Asia Pacific, 9 percent in South East Europe, 2 percent in North America and 1 percent in the European Union and other Western European countries. Perceptions of judicial corruption vary greatly across the region. According to TI’s Global Corruption Report 2006, Hong Kong and Singapore have low perceived levels of judicial corruption while India and Pakistan fare badly, with 77 percent and 55 percent of poll respondents respectively describing the judicial system as corrupt.”

A former High Court Judge, Justice Setana says,

“Former judge of Gujarat High Court Justice B J Sethna said corruption had started raising its ugly head even in the judiciary of our country. He went on to say that earlier there were ways to keep tabs on judiciary but unfortunately today there are none and the ratio of people misusing the judiciary has only been escalating. Talking about the dismal situation he said, “Sometimes there are cases wherein two benches of judges take contradictory decisions in a case which only leads to confusion. There are also times when one judge remains common in both benches and the judges end up questioning the judgement and saying they will not follow it. This is a serious issue and must be considered.”

The time has come to realize that law administration cannot be above law. When we says everybody is equal before the law, the “everybody” does include judges and judiciary. Further, public scrutiny of judicial action cannot be brushed aside. The judicial organ of the state controls neither the purse nor the sword, it is only faith of the people which strengthened the judicial authority. If that faith is shaken, the authority will fall. Thus it is necessary for us to create a atmosphere where consumer of justice do get justice in the courts of law.

How can we ensure that?

There are various suggestions relating to appointment of judges, independence, judicial commission etc. Without undermining the efficacy of such suggestion, the author pleads that all such suggestion are based on the assumption that an outside controlling authority can regulate the behaviour of judicial officers. However such scrutiny is defective, for sooner than later we will require another agency to scrutinize the behaviour of persons manning those agencies. Power corrupts and absolute power corrupts absolutely. Give power to any person, and he will be corrupted. No power should be given to any person without accountability and responsibility attached. We have given power to our judges, but there is no code which codifies there responsibilities!

Every judicial officer must be made responsible for his judgments. Thus if he does not listen and consider the points raised by the litigant- he should be held responsible. If he doesn’t give an speaking order, he should be held responsible. If he abuses his discretion he should be held responsible. And such responsibility must be directly to the litigating public for which the whole judicial structure exists. The litigants must be allowed to raise the question of responsibility of judicial officers in appellate proceeding. And the appellate court must be obliged to give its finding on such questions raised.

Some time I feel that even simple things that can be done to serve the litigating public is not done by the judiciary. For example the court always summons people at 10.30 in the morning, even if the case will be called in the afternoon. How can we justify the wastage of one full day for a hearing that doesn’t last more than a few minutes. With some amount of time management and sticking to schedules, it is possible to summon people at different times so that litigating public does not waste their whole day. However, such changes can come only after it is realized that courts exist for people. Just imagine what will happen if your train ticket says that your train is on such and such day, without giving the time. Everyday, the similar result is seen in all courts in India at 10.30 in the morning. Why?

This author is sure that such changes will come. It is inevitable. It is impossible to stop an idea whose time has come. I just wish that such changes come without any further loss of public faith.

(Views expressed are personal views of the author.)

Written by:- Advocate Rajesh Kumar. The author can be contacted on The author can be contacted on custom.excise@gmail.com , Web: www.rajeshkumar.co.in

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