2010 (8) TMI 367 - AT - Central Excise

Duty liability - show cause notice issued to two different units decided by one order - demand cannot be confirmed against two different assessees against the issue - Revenue required to make up their minds as to against whom the demand is required to be confirmed - order set-aside and remand the matter to Commissioner for taking up the adjudication of the show cause notices together for fixing the liability for both the appellants accordingly

Summary

Issues:
1. Confirmation of duty demand against M/s. Santram Metal & Alloys Pvt. Limited and imposition of penalty.
2. Denial of cenvat credit on the ground that inputs did not reach the appellant's factory.
3. Allegations against M/s. Santram Metal & Alloys Pvt. Limited for the period11-9-2004 to 17-11-2004.
4. Liability of M/s. Omkar Metals & Alloys for denying credit on the same allegation.
5. Requirement to decide show cause notices issued to two different units by one order.
6. Period involved in the present appeal and the need for clarity on the demand confirmation.

Analysis:
1. The judgment confirms the demand of duty against M/s. Santram Metal & Alloys Pvt. Limited and others, along with the imposition of penalties. The basis for this decision was that the modvat credit availed by a previous unit, M/s. Omkar Metals & Alloys, was not in accordance with the law. The surrender of the license by M/s. Omkar Metals & Alloys was accepted by the Revenue, and subsequently, M/s. Santram Metal & Alloys Pvt. Limited, with common directorship, came into existence. The demand was raised against the latter for a specific period, alleging discrepancies in the receipt of inputs at their factory.

2. The appellant argued that M/s. Santram Metal & Alloys Pvt. Limited was formed after the alleged period in question, and as a separate legal entity from the previous proprietary concern. The advocate contended that the company could not be held accountable for the actions of the former proprietorship, especially since the license surrender was accepted by the Revenue. The appellant emphasized that the company's formation post-dated the period under scrutiny and should not be liable for the prior concerns of the proprietary firm.

3. Following a stay order, the Revenue issued a show cause notice to M/s. Omkar Metals & Alloys, proposing a similar denial of credit. The Tribunal noted the necessity to address both show cause notices in a single order to determine the liability of the respective entities. It was clarified that the period under consideration for the present appeal was distinct from the period covered by the notice issued to M/s. Omkar Metals & Alloys.

4. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Commissioner for a consolidated adjudication of the show cause notices concerning both appellants. The decision aimed to resolve the issue of liability for both entities collectively, considering the common directorship and the sequential formation of the entities. The Tribunal highlighted the need for a coherent decision on the demands raised against the two units to avoid duplicity and ensure clarity on the liability aspect.