2007 (11) TMI 147 - AT - Central Excise

Revenue contended that consequent to merger of the transferor company, the transferee (appellant co.) would not be entitled for credit - liability to pay duty has arisen before the merger - differential duty was paid after merger - fact of merger cannot obliterate or extinguish the rights and liabilities of the transferor company - appellant is entitled to the credit on the duty paid on the basis of the supplementary invoice - appellant company gets all the rights of the transferor company also

Summary

Issues:
1. Recovery of differential duty and penalties due to wrong valuation.
2. Irregular availment of Cenvat credit on supplementary invoice.
3. Validity of imposition of penalty and interest.

Issue 1: Recovery of differential duty and penalties due to wrong valuation
The appeal was filed against the Order-in-Original confirming the demand for differential duty due to wrong valuation of goods cleared by the appellant to their sister unit. The Commissioner imposed penalties, which were set aside by the Tribunal in a previous order. The department initiated proceedings again for irregular availment of credit, leading to the current appeal.

Issue 2: Irregular availment of Cenvat credit on supplementary invoice
The Adjudicating Authority held the credit taken by the appellant as irregular and ordered recovery under Rule 14 of the CENVAT Credit Rules. The appellant argued that there was no suppression of facts as they had paid the differential duty before the show cause notice was issued. The appellant also contended that post-merger, they were entitled to the Cenvat credit of duty paid on the supplementary invoice issued to the sister unit.

Issue 3: Validity of imposition of penalty and interest
The Commissioner imposed a penalty and demanded interest, which the appellants strongly challenged. The Revenue argued that suppression of facts invalidated the Cenvat credit availed on the supplementary invoice. However, the Tribunal found that there was no suppression of facts as the duty was paid before the show cause notice. The Tribunal also held that the appellant was entitled to the Cenvat credit post-merger, as the rights and liabilities of the transferor company were not extinguished by the merger.

In the final judgment, the Tribunal allowed the appeal, stating that the appellant was entitled to the Cenvat credit of duty paid on the supplementary invoice. The Tribunal emphasized that the rights and liabilities of the transferor company were not extinguished by the merger, and there was no suppression of facts. The impugned order was found to lack merit, and the appeal was allowed with consequential relief, if any.