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TAXAP/1617/2007 3/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No.1617 of 2007
===================================================
COMMISSIONER
OF CENTRAL EXCISE,
AHMEDABAD
- III - Appellant(s)
Versus
M/s.
SANDVIK ASIA LIMITED - Opponent(s)
===================================================
Appearance
:
MR
RM CHHAYA, CENTRAL GOVT. COUNCEL for the Appellant
None for
Opponent(s) : 1,
===================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 13/08/2008
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE D.A.MEHTA)
The
appellant-revenue has proposed the following two questions:
[A] Whether
in the facts and circumstances of the case, the Tribunal is
justified in allowing the appeal of the respondent by holding that
it cannot be appropriate and legal to recover dues of money due to
the respondent on the ground that it has a legal entity different
from M/s. Chokshi Tubes Company, despite the provisions contained in
Section 11 of The Central Excise Act, 1944 read with Rule 230[2] of
The Central Excise Rules, 1944?
[B] Whether
the Tribunal in the facts and circumstances of the case is justified
in holding that dues pending against predecessor M/s. Chokshi Tubes
Company Ltd. cannot be recovered from its successor i.e. M/s.
Sandvik Chokshi Limited?
Heard
the learned advocate for the appellant. It was contended that
provisions of Section 11 of the Central Excise Act, 1944 (the Act)
permit deduction of the amount payable to a person from whom certain
sums of duty are required to be recovered. That in the present case
the respondent-assessee was a company who was entitled to rebate of
duty to the extent of Rs.5,91,964/- and Rs.6,81,357/- in relation to
the two consignments of goods exported in December, 2000.
Simultaneously, sums of Rs.40,70,998/- and Rs.16,52,899.60 were
pending recovery since 1998, being payable by M/s. Chokshi Tubes
Company Limited (the Tubes Company). That the Tubes Company and one
Sandvik AB of Sweden floated a joint venture on 10.09.1996 and for
the said purpose promoted a new company called Sandvik Chokshi
Private Limited wherein the Tubes Company was holding 49% shares and
Sandvik AB of Sweden was having 51% holding. Subsequently due to
mergers and de-mergers a company named Sandvik Asia Limited came
into existence w.e.f. 01.01.2002. According to the appellant,
despite all these exercises, the fact remains that the assets and
liabilities of the Tubes Company stood transferred to the
respondent-assessee. Therefore, the revenue was entitled to effect
recovery by adjusting the rebate due to the respondent-assessee
against the outstanding demand in case of the Tubes Company. In
support of the submissions reliance has been placed on Apex Court
decision in case of Macson Marbles Pvt. Ltd. Vs. Union if India,
2003 (158) E.L.T. 424 (S.C.) to submit that the principle of Rule
230(2) of The Central Excise Rules, 1944 (the Rules) can also be
made applicable to the facts of the case.
In
the impugned order dated 28.03.2007 the Tribunal has found that the
joint venture company is a new company different from the Tubes
Company and merely because the Tubes Company was initially
instrumental in formation of the respondent-assessee company it was
not permissible to the revenue to recover the dues of the Tubes
Company from the monies due and payable to the respondent-assessee
as both are different legal entities.
Section
11 of the Act can have no application in the facts of the case.
Merely because the Tubes Company was initially 49% shareholder in
the joint venture company it cannot be stated that the sums due to
the joint venture company are the sums due to the Tubes Company.
Section 11 in fact permits such adjustment only when in hands of the
same person the monies are recoverable on the one hand and monies
are also payable on the other hand to the same person. Therefore, if
any monies were payable to the Tubes Company it would be open to the
revenue to effect recovery by adjusting such payable amount. The
Apex Court decision in case of Macson Marbles Pvt. Ltd. (supra)
was in context of Section 29 of the State Financial Corporation Act,
1951 and reference to Rule 230(2) of the Rules as they then stood
(which are no longer on the Statute Book) cannot make the said
decision applicable in the facts of the present case.
In
the circumstances, in absence of any legal infirmity in the impugned
order of the Tribunal,
the appeal does not merit acceptance. No question of law, as
proposed or otherwise, much less a substantial question of law,
arises from the impugned order of the Tribunal.
The appeal is accordingly dismissed.
Sd/-
[D.A.
MEHTA, J]
Sd/-
[H.N.DEVANI,
J]
Bhavesh*
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