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Kwality Zipper Ltd. Vs. Commissioner of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Judge
Reported in(2002)(145)ELT296TriDel
AppellantKwality Zipper Ltd.
RespondentCommissioner of Central Excise
Excerpt:
.....of slide fastner and parts thereof. the amalgamation of the company took place with m/s.shamil industries (p) ltd. an intimation regarding this amalgamation was given by the appellant-company to the excise department vide letter dated 27-12-99. but after examining the copy resolution of amalgamation, it revealed that the amalgamation of the two companies was effective from 1-4-99. therefore, the clearances of the company m/s. shamil industries were to be clubbed with that of the appellant-company, from 1-4-99. but the appellant company concealed this fact from the department and continued to avail benefit of notification no. 9/99, dated 28-2-99 and thereby paid short duty to the tune of rs. 2,87,435/- between the period 1-4-99 and 24-12-99. show cause notice was accordingly.....
Judgment:
1. This appeal has been filed by the appellants against the impugned Order-in-appeal dated 14-8-2001 passed by the Commissioner (Appeals) vide which he had affirmed the order-in-original dated 27-2-2001 passed by the Joint Commissioner who confirmed the duty demand of Rs. 2,87,435/- along with equal amount of penalty and also imposed personal penalty of Rs. 50,000/- on the appellants.

2. The appellant-company is engaged in the manufacture of slide fastner and parts thereof. The amalgamation of the company took place with M/s.

Shamil Industries (P) Ltd. An intimation regarding this amalgamation was given by the appellant-company to the excise department vide letter dated 27-12-99. But after examining the copy resolution of amalgamation, it revealed that the amalgamation of the two companies was effective from 1-4-99. Therefore, the clearances of the company M/s. Shamil Industries were to be clubbed with that of the appellant-company, from 1-4-99. But the appellant company concealed this fact from the department and continued to avail benefit of Notification No. 9/99, dated 28-2-99 and thereby paid short duty to the tune of Rs. 2,87,435/- between the period 1-4-99 and 24-12-99. Show cause notice was accordingly served on the appellant-company who contested its correctness and maintained that amalgamation of the appellant company with M/s. Shamil Industries took place only on 24-12-99 when the order of the Hon'ble High Court dated 14-12-99 sanctioning the amalgamation, was got entered with the Registrar of Companies, under Section 391(3) of the Companies Act and as such, the clearances of both these companies could not be clubbed from any prior date. The demand was also pleaded to be time, barred by the appellant-company. The adjudicating authority did not agree with the plea of the appellant-company and confirmed the duty and also imposed penalty, as detailed above.

3. The Commissioner (Appeals) had affirmed the above said order-in-original of the adjudicating authority, through the impugned order.

4. The learned Counsel has contended that the amalgamation of the company M/s. Shamil Industries with the appellant-company took place only on 24-12-99 when the sanction order of the Hon'ble High Court dated 14-12-99 was got entered with the Registrar of Companies under Section 391(3) of the Companies Act. Therefore, the clearances of the transferor company (M/s. Shamil Industries) could not be clubbed with that of the appellant-company, from 1-4-99 legally, so as to deny the benefit of SSI exemption to them. He has also contested that duty demand raised is time-barred as there was no suppression of facts regarding amalgamation of the two companies with effect from 24-12-99, from the excise department, by the appellant-company. The impugned order of the Commissioner (Appeals) deserves to be set aside.

5. The learned SDR simply reiterated the correctness of the impugned order of the Commissioner (Appeals).

7. The facts are not much in dispute. Admittedly, the amalgamation of the company M/s. Shamil Industries with the appellant-company took place. The appellant-company became the transferee company while the other company became the transferor. The Hon'ble High Court sanctioned the amalgamation scheme of these two companies vide order dated 14-12-99. In that order, as its persual shows, the date of transfer has been defined as 1-4-99 or such other date as the High Court of Allahabad may direct. But it remain undisputed that no other date of transfer had been specified by the Hon'ble High Court, in its order.

The perusal of the Hon'ble High Court order further shows that from the transfer date i.e. 1-4-99, the entire business and undertaking of the transferor company (M/s. Shamil Industries), all the properties, assets, work-in-progress, current assets, investments, powers, authorities, allotments, approvals and consents, licences, registrations, contracts, engagements, arrangements, rights, titles, interests, benefits and advantages of whatever nature, patents, trade marks, trade names, etc., stood vested in the transferee company i.e.

appellant. All debts, liabilities, duties and obligations as per clause (f) of the scheme sanctioned by the Hon'ble High Court also stood transferred or deemed to be transferred, without further act, instruments or deed, to the appellant-company. Clause (9) of the amalgamation scheme further shows that with effect from the transfer date i.e. 1-4-99, the transferor company i.e. M/s. Shamil Industries was deemed to had been carrying on all their business activities only on behalf of the appellant-company, the transferee, up to the effective date and all the profits and incomes accruing or arising to the transferor company was to be treated to be profits or incomes or expenditure or losses of the transferee company i.e. appellant-company.

It is thus quite evident from the above referred clauses of the amalgamation scheme which had been incorporated in the order of the Hon'ble High Court while disposing of the petition of the appellant-company under the Companies Act, that the amalgamation between the appellant- company and the company M/s. Shamil Industries took place w.e.f. 1-4-99. Therefore, the clearances of both the companies had been rightly clubbed from that date.

8. The argument of the Counsel that amalgamation should be deemed to had been effective from 24-12-99 when the order of the High Court dated 14-12-99 sanctioning the amalgamation scheme, was got registered under Sub-section (3) of Section 391 of the Companies Act, with the Registrar of Companies, is wholly misconceived and cannot be accepted. The duty liability, for the clearances of the transferor company i.e. M/s.

Shamil Industries, became that of the appellant-company from 1-4-99, as per amalgamation scheme sanctioned by the Hon'ble High Court.

Therefore, the clearance of that company from that date till 24-12-99, the date when the amalgamation was got registered with the Registrar of Companies, had been rightly clubbed with that of the appellant-company.

The date of registration of the amalgamation with the Registrar of Companies, by the appellant, has nothing to do with their duty liability. The impugned order of the Commissioner (Appeals) affirming that of the adjudicating authority regarding clubbing of the clearances of both the companies from 1-4-99 and confirmation of duty on the appellant-company being the transferee company, having taken over all the assets and liabilities of that company from 1-4-99, is perfectly valid and does not suffer from any legal infirmity.

9. Another contention raised by the Counsel is that demand raised is time-barred as the excise department knew about the amalgamation of two companies earlier to the issuance of the show cause notice. There had been no suppression of facts with a view to evade excise duty, on the part of the appellant-company. In support of this contention, the Counsel has referred to the decision in the case of Collector of Central Excise, Kanpur v. U.P. Lamination - 1997 (89) E.L.T. 440, wherein the Apex Court had observed that in the absence of allegations in the show cause notice regarding contravention of relevant provisions with intent to evade duty, the extended period cannot be invoked.

Another case, referred to by the Counsel is Gufic Pharma Pvt. Ltd. v.CCE, Vadodara -1996 (85) E.L.T. 67, wherein the Tribunal had taken the view that failure to disclose details about the financing of the units would not attract the extended period there being no provision under which the source of finance was required to be declared. But, in our view, the contention of the learned Counsel is wholly mis-conceived and cannot be accepted. There is nothing on record to show that the resolution of the Board regarding amalgamatin of the companies w.e.f.

1-4-99 was ever brought to the notice of the excise department. The scheme of amalgamation put-forth before the Hon'ble High Court on the basis of the resolution, was sanctioned by the High Court through order dated 14-12-99. The appellant-company was duty bound to inform about the amalgamation scheme which was to take effect from 1-4-99 for the purpose of discharging the duty liability, regarding the clearances of the transferor company i.e. M/s. Shamil Industries, from that date, but they did not do so. There was apparently suppression of material facts resulting in evasion of duty by the appellant-company from the excise department. In the show cause notice, it has been categorically alleged that the suppression of material facts regarding amalgamation, was with intent to evade duty. Therefore, the ratio of law laid down by the Apex Court in Collector of Central Excise, Kanpnr v. U.P. Lamination, referred to above, is not attracted to the present case. Similarly, the ratio of law laid down by the Tribunal in Gufic Pharma Pvt. Ltd. v.CCE, Vadodara, referred to above, is also of no avail to the appellant, in view of the facts and circumstances narrated above. The extended period of limitation had been rightly invoked against the appellant-company.

10. In the light of the discussions made above, the impugned order of the Commissioner (Appeals) is perfectly legal and the same is upheld.The appeal of the appellant is ordered to be dismissed being without merit.


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