9911796707
TMI Blog1998 (3) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicants were engaged in the manufacture of bars and rods; that the raw materials for the said products being ingots and billets etc.; that the Government of India allowed deemed Modvat credit on the inputs procured by the applicants from the market. The ld. Sr. Counsel for the applicants argued the applicants have filed a copy of the Order in the case of M/s. Rathi Udyog Limited whereby the demand of duty against M/s. Rathi Udyog Limited on almost identical grounds was dropped; that the appellants wanted a date of hearing on any day after 2-11-1997 by their letter dated 20-10-1997; that this hearing was necessary to clarify the position of the applicants vis-a-vis the Order in the case of M/s. Rathi Udyog Limited. It was argued by the ld. Senior Counsel that as major amount of duty was relating to the period when the factory was owned by M/s. Rathi Alloys and Steels Limited. It was contended by the ld. Senior Advocate M/s. Rathi Alloys and Steels Limited had another factory at Rajkot which was still operating; that M/s. Rathi Super Steels Limited, the applicants in this case had nothing to do with M/s. Rathi Alloys and Steels Limited and M/s. Rathi Alloys and Steels Limited ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or the licensee shall be held responsible for such removal and shall be liable to be dealt with according to the provisions of the Act or the Rules as if he had removed the goods himself. Therefore, in the present case, the question here is who was the actual manufacturer during the period 1985-86. Surely, the present appellants were not, because they had purchased the firm only on 10-5-1986 which was clearly after the end of the financial year 1985-86. The Collector's reasoning that the appellants herein should pay the duty demanded and collect it from the erstwhile partners of the firm has omitted to consider the terms of sale because it is seen from the sale deed dated 10-5-86 that it has been specifically provided therein. The purchaser shall not be liable for any debt liabilities outstanding loans, taxes and charges standing in the name of the said firm up to this date . Apart from this, the legal position in terms of Transfer of Properties Act is that dues from the previous firm is always first charge on the immovable property of the firm and in view of this position, the Department even now is not de-barred from taking steps for the recovery of the amount due from the er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transporter's statement which had been relied upon by the Department has not proved the receipt of the goods by the applicants as no acknowledgement or receipt or payment of cost of raw materials has been proved or brought on record. 4. The ld. Senior Counsel also submitted that deemed Modvat credit taken by the applicants which has been denied by the Commissioner would be available to them either way. He submitted that M/s. Novo Udyog is the main accused and payment of duty or otherwise is the main allegation against them. He submitted that in case the case is proved against M/s. Novo Udyog, they will have to pay duty and this payment as a consequence make the applicants entitle to Modvat credit. He submitted that in the alternative, if the case is not proved against them then the duty paid character of the goods manufactured by them would be proved and in the instant case also the deemed Modvat credit would be available to the applicants. The ld. Senior Counsel also submitted that reasoning given for disallowance is based on wrong impression of the Commissioner inasmuch as deemed Modvat credit of duty on rerollable materials is covered by another letter of Government of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 8. I have carefully gone through the order proposed by my learned Brother directing the applicant to deposit only Rs. 5 lakhs against the demand of Rs. 57,68,933/- and penalty of Rs. 40 lakhs on the ground that the appellant had made out a prima facie case to pay the duty only from the date on which the unit was taken over by the applicants. At this point, I am not in a position to agree with my learned Brother. The appellants have not raised this point of taking over only assets and not the liabilities of M/s. Rathi Alloys and Steels Limited. In all the statements, even to the investigating agency they had admitted the liability. They had replied to the show cause notice and had contested the case. Even before the Commissioner this plea had not been taken up. Even in the grounds of appeals this plea has not been raised. This plea has been raised only by the Counsel and not supported by any evidence or any material evidence on behalf of the appellants. This plea cannot be considered as a legal plea which could be raised by the Counsel during the course of arguments. This plea is a plea of fact and it is required to be established by evidence. The evidence on record is contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a of disallowance of Modvat credit and also of Notification No. 202/88 while fixing the amount to be deposited. Further, financial hardships has also been considered by me while arriving at this figure. Sd/- (S.L. Peeran) Member (J) POINTS OF DIFFERENCE Whether the appellants are required to deposit only Rs. 5 lakhs on a prima facie view that the appellants are liable to pay duty only from the date on which unit was taken by them and for the reasons as held by the Member (T)? OR The appellants prima facie had not pleaded the ground that they are not liable for liabilities of transferor firm and this plea cannot be accepted, even otherwise the evidence on record prima-facie is against the appellants and therefore, they are required to deposit Rs. 35 lakhs for the reasons stated by the Member (J). Sd/- (G.R. Sharma) Member (T) Sd/- (S.L. Peeran) Member (J) [Order per : G.A. Brahma Deva, Member (J)]. - In view of the difference of opinion in between the Hon'ble Member (J) and Hon'ble Member (T), the following points have been referred to me to express my view as a third member :- Whether the appellants are required to deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that it is well settled that the liability for payment of excise duty would always be on the manufacturer only and not on the purchaser of manufactured articles. It may be true that in the instant case the appellants had undertaken, as part of their purchase agreement, the liability to pay the excise duty, on the goods already manufactured but not yet removed. That would not mean that the Department would be entitled to enforce that liability as arising under that agreement. The agreement in respect of that liability was between the appellants and M/s. ACC Ltd. If, subsequently, contrary to the terms of the agreement, the appellants do not discharge that liability and M/s. ACC Ltd. are compelled to discharge that liability, it may be open to M/s. ACC to seek recovery of the said amount through the civil court from the appellant in pursuance of the sale agreement between them. This would not mean that the Department would be equally entitled to step into the shoes of M/s. ACC Ltd. and seek recovery of that amount by taking proceedings under the Central Excises and Salt Act . 4. I have carefully considered the matter. There is lot of force in the argument advanced on b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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