Customs, Excise and Gold Tribunal - Delhi
Commissioner Of Central Excise vs Aditi Foams (P) Ltd. on 4 September, 2002
Equivalent citations: 2002(84)ECC883, 2003(159)ELT305(TRI-DEL)
ORDER K.K. Bhatia, Member (T)
1. The respondents manufacture Flexible P.V., Foam Blocks falling under Chapter Heading 3909. They were issued a show cause notice by the Asstt. Commissioner of Central Excise, Aligarh in which it was alleged that their unit is situated in the same premises as that of M/s. Wadhwa Poly Foam (P) Ltd., Mathura and they had taken over all liabilities of the said company. They applied for a fresh registration on 27-3-96 and they were issued the same on 8-4-96. It is however observed that they transferred the Modvat credit totally amounting to Rs. 4,16,899.97 from the old unit - M/s. Wadhwa Poly Foam (P) Ltd. to the credit of their own Modvat account on 1-4-96, even prior to the registration of the new unit which is irregular and inadmissible. It is further alleged that they availed the Modvat credit of Rs. 2,27,762.00 during the period from 15-4-96 to 25-4-96 on the invoices which were in the name of the erstwhile unit - M/s. Wadhwa Poly Foam (P) Ltd. which is in violation of the provisions of Rule 57G of Central Excise Rules, 1944. They therefore have been called upon to show cause why the total amount of Modvat credit of Rs. 6,44,661.87 wrongly taken by them should not be recovered and why a penalty should not be imposed on them. On considering the reply of the party, the Deputy Commissioner of Central Excise, Aligarh vide his Order dated 28-4-2000 confirmed the above said amount of duty on them and further imposed a penalty of Rs. 3,25,000/-. The party filed an appeal and the same is allowed by the Commissioner (Appeals), Ghaziabad vide his Order dated 26-11-2001.
2. This is a Revenue appeal against the impugned order of Commissioner (Appeals). I have heard Sh. H.C. Verma, JDR for the appellants and Shri S.C. Kamra, Advocate for the respondents. I have considered the submissions made before me. In the order of the Original Authority, it is stated that the respondents transferred the Modvat credit from the erstwhile unit to their own account even prior to the registration of the new unit under Rule 174 of the Central Excise Rules, 1944 and thus they failed to fulfil the conditions of Rule 174 and Rule 57F(20). (Sh. H.C. Verma, JDR for the appellants submits that it is Rule 57F(7) and not 57F(20) as mentioned in the Order-in-Original). It is submitted that as per the provisions of this rule, on an application made by a manufacturer of the final products, the Commissioner may subject to such conditions and limitations as may be imposed, permit the manufacturer having credit in his account in Form RG 23A maintained under Rule 57G and lying unutilized on account of shifting of the factory belonging to the manufacturer to the other site on account of change in the ownership or change of site of the factory resulting from sale, merger, amalgamation or transfer to joint venture with the specific provisions for transfer of liabilities of the old factory, to transfer such un-utilised credit to such transferred, sold, merged or amalgamated factory. It is observed that the transfer of credit under this sub-rule can be allowed only if the stock of input as such or in process is also transferred along with the factory to the new site of the ownership and the inputs on which credit has been availed of and duly accounted for to the satisfaction of the Commissioner. The Original Authority in his order has observed that the party neither obtained any permission from the Commissioner nor did they account for the transfer of goods in respect of which they had taken the Modvat credit which is irregular and inadmissible under Rule 57G. With regard to the Modvat credit availed on the documents issued in the name of erstwhile unit M/s. Wadhwa Poly Foam (P) Ltd., the Original Authority has observed that even after the certificate of incorporation with new name was issued to them, the invoices have been issued with the old name and accordingly the Modvat credit on such invoices is not admissible. The Commissioner (Appeals) in his order on the contrary has observed that in this case, only the name of Wadhwa Poly Foam (P) Ltd. was changed to Aditi Foams (P) Ltd. with effect from 1-3-96; that the appellants approached the Range Superintendent vide their letter dated 27-3-96 to make necessary amendment in their registration certificate but their request was not acceded to. Therefore, they filed another letter dated 3-4-96 requesting for the issue of a fresh registration certificate and consequently a fresh registration certificate was issued in the name of M/s. Aditi Foams (P) Ltd. on 8-4-96. Referring to the provisions of Rules 174(5} and 174(6), the lower appellate authority in his order has observed that in the instant case, there was no transfer of business to any person and so the provisions of these rules as also Rule 57F(7) are not applicable and there was no change in the constitution of the company, therefore, there was no need for the issue of a fresh certificate and the denial of the Modvat credit to them is not justified. I agree with these findings. The Original Authority in his order has himself recorded that the appellants have submitted before him that M/s. Aditi Foams (P) Ltd. and M/s. Wadhwa Poly Foam (P) Ltd. are one and the same firm and only the name of the Company has been changed with effect from 1-3-96. They submitted a certificate from the Registrar of Companies, Kanpur along with the permission of the Central Government for the change of the name. There are no contrary findings in the order of the Original Authority to these averments of the appellants. Since this is only a case of change of the name of the party with no shifting of the factory, no change in the machinery or constitution of the company, they could continue functioning with the same statutory records even after the change of the name. The case of the appellants is not governed by the restrictions specified under Rule 57F(7) or 57F(20). The same observations hold good in respect of the availment of the Modvat credit on the strength of the invoices issued in the name of the erstwhile company. So long as the goods are meant for the same factory and they are duly duty paid, merely not mentioning the new name of the firm in the invoices, in-itself could not be the ground to deny them the Modvat credit, I therefore find no merit in this appeal and the same is, accordingly, dismissed.