2001 (10) TMI 734 - AT - Central Excise

Issues:
1. Whether M/s. Fenner India Ltd. has the right to claim a refund of duty paid by M/s. ISM Ltd.
2. Whether the refund claim filed by M/s. Fenner India Ltd. is admissible.
3. Whether M/s. Fenner India Ltd. had the locus standi to file the refund claim.
4. Whether the sale deed between M/s. Fenner India Ltd. and M/s. ISM Ltd. affects the refund claim validity.

Analysis:

Issue 1:
The Revenue contended that M/s. Fenner India Ltd. does not have the right to claim a refund of duty paid by M/s. ISM Ltd. as the two companies are separate legal entities with distinct shareholders, boards of directors, and constitutions. The Revenue argued that the transfer of assets and liabilities from M/s. ISM Ltd. to M/s. Fenner India Ltd. was on a lease basis, not a merger or amalgamation. The Commissioner (Appeals) had allowed the refund claims based on incorrect observations. The Revenue emphasized the separate legal identities of the companies and the lack of entitlement for one to claim the refund paid by the other.

Issue 2:
The learned DR reiterated that M/s. Fenner India Ltd. lacked the locus standi to file the refund claim on behalf of M/s. ISM Ltd. due to a lease agreement dated 3-11-95 and a subsequent sale deed executed on 23-4-97. The claim filed by M/s. Fenner India Ltd. was considered time-barred and inadmissible as they were only lessees until after 23-4-97. The lease agreement clauses further supported the argument that M/s. Fenner India Ltd. did not have any interest or liability towards the assets of M/s. ISM Ltd.

Issue 3:
The Counsel for the respondents argued that M/s. Fenner India Ltd. succeeded M/s. ISM Ltd. and undertook the liabilities, as evidenced by the payment of penalties and the acceptance of the same by the department. The respondents contended that M/s. Fenner India Ltd. had the right to claim the refund as the successor of M/s. ISM Ltd. and had taken over all assets and liabilities from the latter. The respondents highlighted the undertaking and the registration certificate obtained by M/s. Fenner India Ltd. as proof of their entitlement to the refund claims.

Issue 4:
The judgment concluded that M/s. Fenner India Ltd. did not have the legal standing to file the refund claim on behalf of M/s. ISM Ltd. The sale deed executed on 23-4-97 for a substantial amount established M/s. Fenner India Ltd. as the absolute owner of the assets and liabilities of M/s. ISM Ltd. from that date onwards. Prior to this sale deed, M/s. Fenner India Ltd. could not claim ownership or entitlement to the refund based on the registration certificate obtained on 29-3-96. The judgment emphasized the separate legal identities of the companies until the sale deed was executed.

In conclusion, the impugned order was set aside, and the appeal filed by the Revenue was allowed based on the findings related to the legal standing and ownership transfer between M/s. ISM Ltd. and M/s. Fenner India Ltd.

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