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2009 (2) TMI 570 - AT - Central Excise
Issues involved: Stay petitions arising from an impugned order confirming wrongly availed Cenvat credit and imposing penalties on M/s. Santram Metals & Alloy's Pvt. Ltd. and other appellants.
The Appellate Tribunal CESTAT, Ahmedabad disposed of all stay petitions arising from the same impugned order passed by the Commissioner, confirming duty of Rs. 1,56,23,215/- as wrongly availed Cenvat credit and imposing penalties. The impugned order addressed M/s. Santram Metals & Alloy's Pvt. Ltd. as "earlier known as M/s. Omkar Metals & Alloys." The Tribunal noted that M/s. Omkar Metals & Alloy's was a proprietary firm of Shri Shivkumar engaged in manufacturing copper wires and ingots, which surrendered its Central Excise Licence in 2006. M/s. Santram Metals & Alloy's Pvt. Ltd., a corporate firm with Shri Shivkumar as a Director, came into existence in July 2006 and was granted a new license by the department. The main contention of the appellants was that the demand of duty could not be confirmed against M/s. Santram Metals & Alloy's Pvt. Ltd., which was established in July 2006, while the allegations were against the former proprietary concern, M/s. Omkar Metals & Alloys. The appellants argued that there was no conversion of proprietorship or transfer of a running business, as the proprietary concern was closed, and assets were sold to the new company. The Department argued that the new firm was liable for all past and future liabilities of the old unit, as per the bond entered into during the license transfer. However, the Tribunal observed that M/s. Santram Metals & Alloy's Pvt. Ltd. came into existence after the alleged contraventions and could not be held accountable for violations committed before its establishment. In conclusion, the Tribunal found that the demand should have been raised against the previous firm, M/s. Omkar Metals & Alloys, which was in the best position to explain the alleged discrepancies. As M/s. Santram Metals & Alloy's Pvt. Ltd. was not responsible for the actions of the former entity, the stay petitions were allowed unconditionally. *(Pronounced in the Court on 4th Feb. 2009)*
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