Penalty dies with deceased – no cause of recovery from legal heirs – As for duty liability, same is recoverable from legal representative to extent of property of deceased coming to hands of legal representative – Stay granted: CESTAT
MUMBAI, AUG 27, 2010: IN the case of Mrs. Nidhi N.Gupta vs. CCE, Mumbai-V, [2008-TIOL-597-CESTAT-MUM] the CESTAT had held thus – "Attachment of property - legal heir of the deceased Director claims that the property is in the name of the late Director and not the company & hence cannot be attached - Tribunal restrains the Dept. from taking further action ."
So also, in the case of Manjit Sethi vs. Collector of Customs, Chandigarh, the Tribunal had in its Order No. 259/94-A, dated 14-9-1994 observed thus -
"Generally penalty dies with the deceased. It is settled principle that penalty cannot be imposed after death and even if it was imposed but not recovered during his life time, the same cannot be recovered from the legal heirs. In other words, penalty cannot be imposed after death of the concerned person and if imposed the same cannot be recovered from the legal heir."
The present application/appeal consists of a mix of the aforesaid legal situations.
The original appellant died during the pendency of the appeal and his wife is now prosecuting the appeal in terms of an order passed by this Bench under rule 22 of the CESTAT (Procedure) Rules, 1982.
The present application seeks waiver of pre-deposit and stay of recovery in respect of the duty and penalty involved in this case. In adjudication of a show-cause notice, the Commissioner confirmed demand of duty of over Rs.5.46 crores against the original appellant and also imposed on him equal amount of penalty under section 114A of the Customs Act, besides a penalty of Rs.2.5 crores on him under section 112 of the Act.
The counsel for the appellant submitted that there can be no penal liability on the legal heir/representative of the deceased appellant.
To this, the Bench observed that in view of the Order of the Calcutta High Court in the case of Taraknath Gayen and others vs. CEGAT [C.O. No. 10344(W) of 1986, issued on 7-5-1987] penalty amount is not recoverable from the legal representatives of accused; imposition of penalty is intended to penalise the accused, therefore, recovery of penalty from the legal representatives would amount to punishing the legal representatives. The Bench, therefore, opined that that the appellant is entitled to waiver of pre-deposit and stay of recovery in respect of the penalties imposed by the Commissioner.
In relation to duty liability, the Counsel claimed support from a Stay Order of the Tribunal vide Raj & Co. vs. Commissioner 2006-TIOL-1607-CESTAT-MAD, wherein waiver and stay were granted to the legal representative of the deceased-assessee considering the submission of amicus curie to the effect that, where the assessee had died before the finalization of the assessment, the duty liability did not survive. It was also submitted that the present appellant (wife of the deceased) had, in an affidavit, affirmed that no estate was left by the deceased. This affidavit was filed in July, 2009. It was further submitted that the Patna High Court decision in Civil Writ Jurisdiction, Case No. 2905 of 1980, decided on 20-11-1985, Bhagwan Devi Banka & Others vs. R.B.Sinha and Others had held that duty recoverable from a person, who was no more, was recoverable from his legal representative to the extent of property of deceased coming to the hands of the legal representative. Inasmuch as since in the present case, no property of the deceased husband has come to the appellant's (wife) hands, nothing is recoverable from her towards the duty liability of the deceased. Moreover, an amount of ` 34 lakhs paid by the deceased was lying with the department and in view of the above it is prayed that waiver of pre-deposit and stay of recovery be granted in respect of the duty amount as well.
The Bench was satisfied with the submissions and while noting that no "counter" had been filed by the Revenue vis-à-vis the affidavit filed by the deceased's wife, it opined that it had no option but to grant waiver and stay of recovery in respect of the duty amount as well.
And, it was ordered accordingly.
In this world, nothing can be said to be certain except death and taxes – Benjamin Franklin, Nov, 13, 1789.
MUMBAI, AUG 27, 2010: IN the case of Mrs. Nidhi N.Gupta vs. CCE, Mumbai-V, [2008-TIOL-597-CESTAT-MUM] the CESTAT had held thus – "Attachment of property - legal heir of the deceased Director claims that the property is in the name of the late Director and not the company & hence cannot be attached - Tribunal restrains the Dept. from taking further action ."
So also, in the case of Manjit Sethi vs. Collector of Customs, Chandigarh, the Tribunal had in its Order No. 259/94-A, dated 14-9-1994 observed thus -
"Generally penalty dies with the deceased. It is settled principle that penalty cannot be imposed after death and even if it was imposed but not recovered during his life time, the same cannot be recovered from the legal heirs. In other words, penalty cannot be imposed after death of the concerned person and if imposed the same cannot be recovered from the legal heir."
The present application/appeal consists of a mix of the aforesaid legal situations.
The original appellant died during the pendency of the appeal and his wife is now prosecuting the appeal in terms of an order passed by this Bench under rule 22 of the CESTAT (Procedure) Rules, 1982.
The present application seeks waiver of pre-deposit and stay of recovery in respect of the duty and penalty involved in this case. In adjudication of a show-cause notice, the Commissioner confirmed demand of duty of over Rs.5.46 crores against the original appellant and also imposed on him equal amount of penalty under section 114A of the Customs Act, besides a penalty of Rs.2.5 crores on him under section 112 of the Act.
The counsel for the appellant submitted that there can be no penal liability on the legal heir/representative of the deceased appellant.
To this, the Bench observed that in view of the Order of the Calcutta High Court in the case of Taraknath Gayen and others vs. CEGAT [C.O. No. 10344(W) of 1986, issued on 7-5-1987] penalty amount is not recoverable from the legal representatives of accused; imposition of penalty is intended to penalise the accused, therefore, recovery of penalty from the legal representatives would amount to punishing the legal representatives. The Bench, therefore, opined that that the appellant is entitled to waiver of pre-deposit and stay of recovery in respect of the penalties imposed by the Commissioner.
In relation to duty liability, the Counsel claimed support from a Stay Order of the Tribunal vide Raj & Co. vs. Commissioner 2006-TIOL-1607-CESTAT-MAD, wherein waiver and stay were granted to the legal representative of the deceased-assessee considering the submission of amicus curie to the effect that, where the assessee had died before the finalization of the assessment, the duty liability did not survive. It was also submitted that the present appellant (wife of the deceased) had, in an affidavit, affirmed that no estate was left by the deceased. This affidavit was filed in July, 2009. It was further submitted that the Patna High Court decision in Civil Writ Jurisdiction, Case No. 2905 of 1980, decided on 20-11-1985, Bhagwan Devi Banka & Others vs. R.B.Sinha and Others had held that duty recoverable from a person, who was no more, was recoverable from his legal representative to the extent of property of deceased coming to the hands of the legal representative. Inasmuch as since in the present case, no property of the deceased husband has come to the appellant's (wife) hands, nothing is recoverable from her towards the duty liability of the deceased. Moreover, an amount of ` 34 lakhs paid by the deceased was lying with the department and in view of the above it is prayed that waiver of pre-deposit and stay of recovery be granted in respect of the duty amount as well.
The Bench was satisfied with the submissions and while noting that no "counter" had been filed by the Revenue vis-à-vis the affidavit filed by the deceased's wife, it opined that it had no option but to grant waiver and stay of recovery in respect of the duty amount as well.
And, it was ordered accordingly.
In this world, nothing can be said to be certain except death and taxes – Benjamin Franklin, Nov, 13, 1789.
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