2008 (4) TMI 602 - AT - Central Excise

Summary

Issues involved: Refund claim rejection, adjustment of amount towards predecessor company's dues, liability of successor company, validity of adjustment, ownership of assets and liabilities.

Refund claim rejection: The appeal arose from the rejection of the appellant's refund claim of Rs. 51,00,000/- on the basis that the amount was required to be adjusted towards the outstanding demand of the predecessor company, M/s. New Tobacco Ltd. The appellant contended that they were not connected to the outstanding dues of the predecessor company and that the amount pre-deposited before the Tribunal should be refunded as per the law.

Adjustment of amount towards predecessor company's dues: The Revenue proceeded to adjust the refund amount towards the dues of Rs. 35 crores by M/s. New Tobacco Ltd., claiming that the appellant was the successor to the company and had taken over its assets and liabilities. However, the appellant argued that they had not purchased the company nor taken over its assets and liabilities, but had only taken it on lease for one year as per the High Court's order for 1994-95. They denied any liability for the dues of the predecessor company.

Liability of successor company: The appellant maintained that they had not taken over the assets and liabilities of the predecessor company and had only leased it for a limited period. They argued that there was no provision for the Department to adjust the dues of the predecessor company with the pre-deposit made by them before the Tribunal. The appellant sought a refund of the pre-deposited amount along with interest.

Validity of adjustment: The Department contended that the appellant had admitted the liability and had taken over the predecessor company along with its assets and liabilities, justifying the adjustment of the refund amount. However, the appellant refuted this claim, stating that they had not admitted any liability and had only leased the company for a specific period.

Ownership of assets and liabilities: The Tribunal observed that the appellant had pre-deposited the amount for refund, which was adjusted by the Revenue towards the dues of the predecessor company. It was noted that the appellant had not taken over the assets and liabilities of the predecessor company and had only leased it for a limited period as per the High Court's order. The Tribunal held that the demand outstanding against the predecessor company could not be imposed on the appellant, and the adjustment was not valid. The Revenue was directed to refund the pre-deposit amount along with interest within one month from the date of the order, allowing the appeal with consequential relief.