2017 (7) TMI 439 - AT - Central Excise

SSI exemption - order of amalgamation - whether SSI exemption granted therein can be extended till the date of judgment of the Hon ble High Court when the order of amalgamation has been passed? - time limitation - Held that - the Hon ble High Court has given the specific date for amalgamation which is 01.04.1991. However, the scheme of amalgamation was approved by the Hon ble High Court vide judgment dated 20.02.1992 only. On receiving the information appellants submitted the same to the department. However, the department has issued the SCN only on 27.07.1993 by invoking the extended period - Apart from alleging that the appellant is not eligible for SSI exemption after amalgamation of the two companies, there is no allegation of suppression of facts or mis-declaration - demand is barred by limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of SSI exemption post-amalgamation.
2. Allegation of limitation in raising the demand.

Analysis:
1. The case involved the denial of Small Scale Industries (SSI) exemption to M/s. Cutfast Bonded Abrasives Ltd. post-amalgamation with M/s. Cutfast Abrasives Tools Ltd. The Hon'ble Madras High Court approved the amalgamation with effect from 01.04.1991, leading to the Department disallowing the SSI benefit for the period 01.04.91 to 30.07.1991. A Show Cause Notice was issued, and after due process, the original authority confirmed a differential duty demand. The Commissioner (Appeals) upheld the decision, prompting the appeal.

2. The appellant argued on the ground of limitation, asserting that the demand was raised due to the merger of the two companies and not due to any intentional evasion. The appellant had disclosed all details to the High Court and the Department, with no allegation of suppression or mis-declaration. The appellant contended that the demand should have been raised within six months of receiving information regarding the amalgamation. The Department invoked the extended period for issuing the Show Cause Notice on 27.07.1993.

3. The Appellate Tribunal analyzed a similar case where the High Court did not specify the amalgamation's effective date, leading to a resolution by the Board of Directors. In contrast, in the present case, the High Court specified the amalgamation date as 01.04.1991, although the judgment approving the scheme was dated 20.02.1992. The Tribunal found merit in the appellant's argument that the demand was time-barred, as there was no suppression of facts or mis-declaration. Consequently, the Tribunal set aside the impugned order, allowing the appeal on grounds of limitation.

In conclusion, the Tribunal ruled in favor of the appellant, determining that the demand for differential duty was unsustainable due to being time-barred. The decision highlighted the importance of specificity in amalgamation dates and the necessity of raising demands within the statutory limitation period.