2008 (8) TMI 211 - HC - Central Excise

Whether dues can be recovered from successor company - Tribunal has found that the joint venture company is a new company different from the Tubes Company and merely because the Tubes Company was initially instrumental in formation of the assessee company it was not permissible to the revenue to recover the dues of the Tubes Company from the monies due and payable to the assessee as both are different legal entities no infirmity in tribunal s order appeal of revenue dismissed

Summary

Issues:
1. Interpretation of Section 11 of the Central Excise Act, 1944 regarding recovery of dues.
2. Recovery of dues from a successor company for pending liabilities of a predecessor company.

Analysis:
1. The appellant-revenue raised questions regarding the justification of the Tribunal's decision in allowing the appeal of the respondent based on the legal entity distinction between M/s. Chokshi Tubes Company and the respondent. The appellant argued that despite mergers and de-mergers, the assets and liabilities of the Tubes Company were transferred to the respondent, justifying recovery by adjusting the rebate due to the respondent against the outstanding demand of the Tubes Company. Reference was made to the Supreme Court decision in Macson Marbles Pvt. Ltd. v. Union of India to support the applicability of Rule 230(2) of the Central Excise Rules in this case.

2. The Tribunal found that the joint venture company formed with the Tubes Company was a separate legal entity from the Tubes Company, ruling against the revenue's claim for recovery from the respondent based on the predecessor's dues. The Court held that Section 11 of the Act allowing for adjustments applies only when monies are recoverable and payable to the same person. It clarified that the Apex Court decision cited by the appellant was in a different context and that Rule 230(2) of the Rules, no longer in effect, cannot be applied in this case. The Court concluded that no legal infirmity existed in the Tribunal's order, dismissing the appeal as no substantial question of law arose from the impugned decision.