Custom, Excise & Service Tax Tribunal
M/S Parle International Ltd vs Commissioner Of Central Excise, Raigad on 25 July, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. IV Appeal No. E/889/07 (Arising out of Order-in-Original No. 40/MS(29)/COMMR/RGD/06-07 dated 13.03.2007 passed by the Commissioner of Central Excise, Raigad). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Parle International Ltd. Appellant Vs. Commissioner of Central Excise, Raigad Respondent Appearance: Shri H.G. Dharmadhikari, Advocate for Appellant Shri Ashutosh Nath, Assistant Commissioner (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 25.07.2014 Date of Decision: 25.07.2014 ORDER NO. Per: Shri Anil Choudhary
The appellant M/s Parle International Pvt. Ltd. has filed the present appeal against Order-in-Original No. 40/MS(29)/COMMR/ RGD/06-07 dated 13.03.2007 passed by the Commissioner of Central Excise, Raigad.
2. The brief facts are that one Parle Bottling Ltd. registered with Registrar of Companies (ROC) in the State of Maharashtra and one Parle International Ltd. are registered with ROC in the State of Gujarat, under the scheme of Amalgamation, Parle Bottling Ltd. (hereinafter referred to as PBL) merged with Parle International Ltd. (hereinafter referred to as PIL). Final order of merger was passed by the Hon'ble Bombay High Court on 8.6.2000 and thereafter when the certified copy of the order was made available, the same was filed with the Registrar of Company with Form No. 21 and pursuant to that the Registrar of Company issued a fresh registration certificate. Parle Bottling Ltd. as per its CENVAT account RG-23 Part-II for capital goods, as on 1.10.2000, was having opening balance of Rs.42,493/-. In October, 2000, Parle Bottling Ltd. imported washing machine and took credit of the CVD paid in its CENVAT account for capital goods in the month of October, 2000 as evident from the CENVAT Register available on record. The said Parle Bottling Ltd. was also having credit balance of Rs.1,82,845/- in its PLA as on 1.10.2000. Parle International Ltd. vide its letter dated 6.11.2000 sought permission from the Commissioner of Central Excise, Mumbai-VII to take the transfer of the accumulated balance of CENVAT Credit and PLA in its Books of Account due to merger with the Parle Bottling Ltd. That without providing any opportunity of hearing to the appellant by communication dated 17.1.2002, the Dy. Commissioner of Central Excise communicated to the appellant referring to the appellants letter that the Commissioner has rejected its application as the said capital goods will be used in the manufacture of exempted goods. As per Rule 6(4) of Cenvat Credit Rules, 2001, no CENVAT Credit shall be allowed on capital goods which are used exclusively in the manufacture of exempted goods. Being aggrieved, the appellant had preferred appeal before the Commissioner of Central Excise (Appeals), who vide its order dated 11.10.2002 was pleased to allow the appeal in favour of the appellant.
2.1 The Revenue being aggrieved, filed appeal No. E/268/2003 before the Tribunal on the ground that as the order was passed by the Commissioner of Central Excise and communicated by the Dy. Commissioner, there was lack of jurisdiction with the Commissioner (Appeals) and thus, the order is not legal in the eyes of law. This Tribunal vide final order dated 22.6.2006 taking note of the fact that there is lack of jurisdiction and further the Commissioner had rejected the claim without giving any opportunity of hearing, resulted into violation of principles of natural justice and accordingly, set aside both orders of the Commissioner (Appeals) as well as Commissioner and remanded the matter back to the Commissioner to hear the appellant and pass a speaking order.
2.2 That pursuant to the order of the Tribunal, the Commissioner has not issued any further show-cause notice or any query letter to the appellant and after giving the opportunity of hearing on 22.2.2007 has passed the impugned Order-in-Original rejecting the claim on the following grounds: -
(i) The Commissioner has considered the effective date of record and date of amalgamation is 19.7.2000 on the basis of Form 21 application made by the appellant company with the Registrar of Company. According to him, the said machine having been acquired after 19.7.2000, credit should not have been taken by the said Parle Bottling Ltd. in its CENVAT account.
(ii) The second amount of rejection is as regards the opening balance of Rs.42,493/- as on 1.10.2000, he referred to correspondence made by PBL and jurisdictional Commissioner dated 21.3.2001, wherein it has been stated that they have discontinued the production from 28.8.1999. Further, the Commissioner called upon the report from the concerned Division Office and as per the report dated 9.3.2000 (subsequent to the date of hearing), it was indicated that unit was lying closed since 28.8.1999 and all the machinery and capital goods were sold to M/s Hindustan Coco Bottling Pvt. Ltd. to which the Superintendent has also enclosed a copy of the letter of Parle Bottling Ltd. dated 10.10.2009 addressed to Superintendent, Central Excise, Khopoli-III intimating the sale of machinery to M/s Hindustan Coco Bottling Pvt. Ltd.
2.3 That without giving any opportunity of further hearing to the appellant and relying on the report collected at the back of the appellant, the Commissioner was pleased to reject the taking of CENVAT Credit for both the amounts. Being aggrieved, the appellant have filed the present appeal.
3. The learned Counsel for the appellant draws my attention to the provisions of Rule 57AF of the Central Excise Rules, 1944 which read as under: -
(1) If a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory.
(2) The transfer of the CENVAT credit under sub-rule (1) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred along with the factory to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the Commissioner.
(emphasis supplied) From the plain reading of the Rule, it is evident that scope of enquiry is whether the relevant event has happened due to which the request has been made whether the assets and/or liabilities have been transferred to the amalgamated company, whether the concerned capital assets or the inputs for which transfer of CENVAT Credit is sought to have been transferred along with factory to the new company owner, to the satisfaction of the Commissioner.
3.1 The learned Counsel further states that there is no dispute with regard to the fact of merger of Parle Bottling Ltd. with Parle International Ltd. He draws my attention to the final order of merger passed by the Honble Hon'ble Bombay High Court, wherein it is mentioned that w.e.f. the appointed date, all debts, liabilities and duties or obligation of every kind, nature and description of petitioner company, if any shall without any further Act, instrument or deed be and stand transferred to and vested in and/or deemed to be transferred to/or vested in transferee company pursuant to the provisions of Section 391/394 of the Companies Act, 1956 so as to become the Debts, liabilities, duties and obligations of transferee company. So far as the effective date of amalgamation is concerned, there is no scope of enquiry with regard to this date. The merger finally takes effect pursuant to the order of the Hon'ble High Court where in the compliance thereof, the Registrar of Companies strikes out the name of merged company and issues a fresh registration number to the amalgamated company. Thus, the appellant contends that on the date, the asset was acquired in October, 2000, Parle Bottling Ltd. was in existence and was also paying Central Excise duty regularly. Further, the date its Central Excise registration was cancelled is 11.11.2000 and accordingly, the taking of credit by it is correct and legal under the provisions of Cenvat Credit Rules, 2004.
3.2 He also emphasizes that Rule 57AF clearly provides that in case of merger or amalgamation under the Companies Act, manufacturer is allowed to transfer the CENVAT Credit lying unutilized in its account or books to such merged or amalgamated company. Accordingly, the taking of credit is also in order and also its application for permission for taking credit of the balance lying unutilized in terms of Rule 57AF is also correct and within the scope of Section 57AF. The learned Counsel further states that the whole order is vitiated as the appellant was not put to notice on the grounds taken for rejection in the impugned order by the Commissioner. At the time of personal hearing on 22.2.2007, the appellant had only notice of one objection that the credit is not available in view of Rule 6(4) of the Cenvat Credit Rules, 2001, which provides no CENVAT Credit shall be allowed on capital goods, which are used exclusively in the manufacture of exempted goods. The appellant says that this Rule has no relevance as it came in force subsequently and on the date of taking credit in October, 2000, the credit was legal and proper.
3.3 Further he states that at the time of seeking transfer of the credit, there is no scope for enquiry as to whether on the date of transfer having been sought whether the appellant is manufacturing exempted or excisable goods. There is no dispute, as it is evident from the impugned order that the credit taken was permissible in October, 2000, in view of the objection discussed herein above, with regard to amalgamation.
3.4 As regards the reliance placed by the Commissioner from the report of the Superintendent/Assistant Commissioner dated 9.3.2007, the same cannot be relied upon as the same was collected at the back of the appellant and the appellant was never put to notice. The appellant further relies upon the ruling of this Tribunal in the case of Commissioner of Central Excise, Bhubaneswar Vs. Aluminium Industries Ltd. 1995 (80) ELT 283 (Tri), wherein it was held that Modvat/Proforma credit benefit is admissible to assessee as on the date applied for by it. The assessee cannot be denied the benefit in case of subsequent change in law i.e utilization of CENVAT Credit. The appellant further relies on the ruling in the case of K.M. Sugar Mills Ltd. Vs. Commissioner of Central Excise, Allahabad 2001 (133) ELT 567 (Tri-Del), wherein the Division Bench of the Tribunal in a case where the Commissioner had denied the request of the assessee for transferring credit from Distillery Division to Sugar Division of the factory by following the Rule 57AA(d) wherein input is defined to mean all goods used in or in relation to the manufacture of final products, it was held that since molasses is not used as an input in the manufacture of sugar, as such, accumulated Modvat credit of molasses cannot be utilized for debit of duty at the time of clearance of the goods. Such interpretation by the Commissioner in view of the Tribunal was flawed. The appellant further relies the ruling of the Tribunal in the case of Palani Andavar Cotton & Synthetic Spinners Ltd. Vs. Commissioner of Central Excise, Trichy 2010 (252) ELT 127 (Tri-Chennai), wherein in case of amalgamation of unit claiming exemption, the scheme of amalgamation as envisaged on 1.4.2000 but stating that the same subject to approval by High Court and other authorities. Thereafter, the High Court sanctioning it on 28.7.2000 pursuant to which Registrar of Companies allowing it by issuing a new certificate of incorporation w.e.f. 16.1.2001, in such case the assessee had availed exemption upto 23.9.2000. It was held by the Tribunal that exemption could not be denied for the limited period, without having actually availed the same till 23.9.2000 in view of the amended certificate of incorporation issued on 16.1.2001. Thus, he accordingly, prays for allowing the appeal.
4. The learned AR relies on the impugned order and states that pursuant to order of amalgamation of High Court dated 8.6.2000, the record date taken by the Commissioner as 19.7.2000 is correct. The learned AR further says that with respect to the balance of Rs.42,493/-, the finding of the Commissioner relying on the report of the Assistant Commissioner/Superintendent dated 9.3.2007 based on the letter of Parle Bottling Ltd. dated 10.10.1999, such act of the Commissioner is correct and should not be faulted. He further states that the appellant has not produced the effective date as per certificate of the Registrar of Companies. The learned AR also states that on the earlier date when the matter was heard, the appellant was directed to produce a copy of letter dated 10.10.1999, which has not been produced by the appellant.
5. Having considered the rival contentions, I find that taking of record date as 19.7.2000 is flawed and wrong. As per provision of Rule 57AF, there is no such requirement or scope of enquiry as to what is the effective date of amalgamation. So far as the next ground of rejection is concerned, I find that the machinery concerned which was imported in October, 2000 and credit for the same was taken in the month of October, 2000 as evident from the copy of the certificate of registration, is legal and proper as the appellant company was having the valid registration certificate and was also paying the Central Excise duty under the Act till the date of cancellation of its registration on 11.11.2000 by the Central Excise department. Thus, taking of CENVAT Credit by assessee having valid registration is legal and proper and the objection taken by the Commissioner is flawed and as such the assessee is entitled to avail the credit.
5.1 Further, as regards the opening balance of Rs.42,493/- + Rs.532/- is concerned, I find that there was no objection raised in the earlier letter of rejection and further there is no fresh show cause to the appellant on the grounds taken for rejection in the impugned order and also the Commissioner has relied upon the material collected at the back of the appellant for rejecting the same, which is gross violation of principles of natural justice. Accordingly, I hold that the said disallowance of the credit is bad in law. I further hold that the appellant have satisfied the conditions as required by Rule 57AF of the Central Excise Rules, 1944 for taking credit of the CENVAT Credit lying in balance of the Parle Bottling Ltd. and is eligible to take credit in its Books of Account by virtue of merger or amalgamation as permitted under the Companies Act.
5.2 The objection of the Revenue regarding non-production of letter dated 10.10.1999 is not relevant in view of my finding aforementioned.
6. Thus, the appeal is allowed with consequential benefit, if any, in accordance with law.
(Dictated and pronounced in Court) (Anil Choudhary) Member (Judicial) Sinha 9