2005 (2) TMI 150 - HC - Central Excise

Summary

Issues:
Challenge to notice of demand to defaulter dated 5th January 2005 issued by Assistant Commissioner of Central Excise, Division V, Surat-1.

Analysis:
The petition challenged the notice of demand to defaulter issued by the Assistant Commissioner of Central Excise, Division V, Surat-1, calling upon the petitioner to pay a total amount of Rs. 1,38,69,343/-. The petitioner argued that they had not taken over the liabilities of another entity, M/s. Rangoli Prints, and the notice was issued without hearing them. The respondents claimed that since both the petitioner firm and M/s. Rangoli Prints had a common partner, the liabilities of the latter should be discharged by the partner, making the firm liable as well. However, the petitioner denied any undertaking by the common partner to discharge the liabilities. The court noted that there was no evidence linking the petitioner firm with M/s. Rangoli Prints other than the common partner, and it was not tenable to treat them as the same entity. Therefore, the court quashed the impugned notice as it was against the principles of natural justice.

The court found that the notice of demand to defaulter was issued without proper evidence linking the petitioner firm with the liabilities of another entity. The court emphasized the importance of natural justice and ruled that the notice was bad in law. The court held that the actions of the respondent authorities in treating all entities as one and the same were not legally acceptable. Consequently, the court quashed the notice and allowed the petition.

The court ordered the respondent to pay the costs of the petition, quantified at Rs. 5,000, considering the circumstances of the case. The court's decision was based on the lack of evidence linking the petitioner firm with the liabilities of another entity and the violation of principles of natural justice in issuing the notice of demand to defaulter. The court emphasized the distinct identities of the entities involved and ruled in favor of the petitioner, quashing the impugned notice.