2017 (3) TMI 6 - AT - Central Excise

Valuation - inclusion of Freight charges - duty not paid on transportation cost from the factory to depot - time limitation - Held that - Plea of the appellant is that as investigation was completed on 13.11.2006. Thereafter the show cause notice was issued on 13.2.2009. Therefore the demand is barred by limitation - We find that in the facts and circumstances of the case it is not coming out whether the investigation was concluded on 13.11.2006 or not - extended period of limitation is invokable. Levy of penalty - initially the appellant was known as M/s. Standard Electrical Ltd. which are taken over by M/s. Havells India Ltd. and the appellant has merged with M/s. Havells India Ltd. - whether the penalty on M/s. Havells India Ltd. can be imposed? - Held that - as there are contrary decisions on the issue it would be in the interest of justice to refer the matter before the Larger Bench of this Tribunal.

Summary

Issues:
1. Invocation of extended period of limitation for demand of duty.
2. Imposition of penalty on the new management for activities of the old management.

Analysis:
1. The appellant contested the imposition of differential duty, interest, and penalty due to the invocation of the extended period of limitation. The appellant argued that the investigation concluded on 13.11.2006, while the show cause notice was issued on 13.2.2009, exceeding the statutory limitation period. The appellant relied on legal precedents to support their claim. However, the Tribunal found that the investigation completion date was not definitively established, rendering the cited precedents inapplicable. Citing the decision in Positive Packaging Industries Ltd., the Tribunal held that the extended period of limitation could be invoked, rejecting the appellant's plea.

2. The case involved a situation where the appellant, previously known as M/s. Standard Electrical Ltd., was acquired by M/s. Havells India Ltd. The issue arose regarding the imposition of penalty on the new management for the old management's activities. The appellant argued that since M/s. Havells India Ltd. had not defaulted on duty payments during the relevant period, the penalty should not be imposed. Citing the decision in Marcandy Prasad Radhakrishna Prasad Pvt. Ltd., the Tribunal noted the importance of distinguishing between the responsibilities of the previous and current management. However, a conflicting decision in the case of Madhoprasad Mahabirprasad (Supplies) Pvt. Ltd. raised the question of penalty imposition on the firm regardless of the management's continuity.

3. Due to the conflicting decisions, the Tribunal decided to refer the matter to a Larger Bench for clarification. The reference sought to address whether penalties could be imposed on the new management for the activities of the previous management, especially in cases of corporate mergers or acquisitions. The Tribunal directed the Registrar to present the case before the Hon'ble President for the constitution of a Larger Bench to resolve the issue effectively.