2007 (9) TMI 150 - AT - Central Excise

Credit denied on stock transferred to newly formed company after merging of company If dept. has not disputed assets & liabilities taken over by new company then it cannot deny the benefit which had already accrued before merger Credit admissible

Summary

Issues:
Appeal to deny benefit of first appellate order in respect of stock transfer involving Cenvat credit.

Analysis:
The appeal before the Appellate Tribunal CESTAT KOLKATA involved the denial of the benefit of a first appellate order concerning a stock transfer that included Cenvat credit. The Revenue's argument was based on Rule 8(2) of the Cenvat Credit Rules, 2002, stating that the denial was justified due to the lack of accounts for the newly formed company that took over the stock. The Revenue contended that the first appellate order was erroneous, justifying the appeal based on material irregularities and breaches of the law committed by the first appellate authority.

Analysis:
On the other hand, the respondent, represented by Advocate Shri K. K. Banerjee, argued that in cases of merger where entire assets and liabilities merge, including benefits accrued prior to the merger, the benefit should not be denied. Citing the case of M/s. Solaris Bio Chemicals Ltd. v. Commissioner of Central Excise, Vadodara, the respondent emphasized that denial of the benefit would contradict previous Tribunal decisions. The respondent highlighted that the first appellate authority had passed a reasoned order, finding that the respondent was entitled to Cenvat credit based on an intimation regarding the stock of inputs.

Analysis:
After hearing both sides and reviewing the records, the Tribunal found that the Revenue's contention lacked evidence to refute the findings of the first appellate authorities. The Tribunal noted that the reasoned order and submissions by the respondent's advocate did not provide sufficient grounds to reverse the first appellate authority's findings. Consequently, the Tribunal upheld the first appellate order, stating that the Revenue's appeal should fail due to the absence of contrary evidence brought to the record.

This judgment highlights the importance of presenting substantial evidence to support an appeal and the significance of reasoned orders in legal proceedings.