2019 (12) TMI 113 - AT - Central Excise

Doctrine of merger - Proceeding against new proprietor of the company, old proprietor, being deceased - CENVAT credit in respect of input lying in stock or in process or contained in final product lying in stock on the date of surrendering of registration - HELD THAT - Tribunal has discussed the applicability of Section 11 to the successor and while observing that the provisions of Section 11 of Central Excise Act, 1944 cannot be invoked to demand duty on the successor, CESTAT has set aside the impugned order. We find that the present appeal is also against the same impugned order. When the impugned order is already set aside by the Tribunal; no application for rectification of the mistake apparent on record has been filed by the Department and as the order of the Tribunal is not negated by any higher judicial forum, we find that the impugned order is non est. Moreover, the principal on which the appeal was made, i.e., the applicability of proviso to Section 11 to the successor, before 10/09/2004 was also decided in favour of the appellants and the same was upheld by the High Court - As the impugned order has already been set aside, the present appeal gets consequentially merged with the earlier order passed by the Tribunal. The present appeal is to be held to have been allowed earlier. We find that no intervention is required by this Bench - Appeal disposed off.

Summary

Issues:
1. Liability to pay Central Excise duty on surrendered registration.
2. Successor's liability for duty liabilities of the assessee.
3. Applicability of Section 11 of Central Excise Act, 1944 to demand duty on the successor.
4. Appeal against Orders in Original dated 26/2007 and 27/2007.
5. Appeal regarding pre-deposits and subsequent rejection.
6. Appeal against de novo order no. 41/2009 dated 31/07/2009.
7. Tribunal's decision on the applicability of Section 11 to the successor.
8. Rectification of mistake apparent on record.
9. Merger of present appeal with earlier order passed by the Tribunal.

Analysis:

1. The case involved a situation where M/s. D & M Natural Fragrances surrendered their registration for manufacturing excisable goods. The department demanded payment of Central Excise duty on final products in stock and CENVAT credit on inputs. Appeals were made regarding pre-deposits, which were initially directed, but later rejected due to non-compliance. The CESTAT set aside the impugned orders and remanded the issue for a decision following principles of natural justice.

2. A subsequent de novo order confirmed a demand against the company, but the appellants argued that as the proprietor had passed away, the proceedings could not continue against the new proprietor. The Tribunal held that Section 11 of the Central Excise Act could not be used to demand duty liabilities from the successor prior to a specific date. The High Court upheld this decision, and no further appeal was filed by the department.

3. Two appeals were filed against the de novo order, with one already decided in favor of the appellants. The Tribunal found that since the impugned order was set aside and no rectification application was filed by the Department, the order was non est. The present appeal was considered to have been allowed earlier due to the earlier decision in favor of the appellants.

4. Consequently, the Tribunal found that there was nothing left to be decided in the present appeal and disposed of it accordingly. The operative portion of the order was pronounced in open court on 27/11/2019.