9911796707
TMI Blog1999 (9) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... lated and pertain to matters, which were quite old, and the proceedings themselves had a chequered history. The matters had come up before the Tribunal at different times and orders had been passed on various issues raised from time to time. The appellants had also approached the Hon'ble Supreme Court on certain issues. Ld. Counsel contends that in view of the orders already passed by the Tribunal as well as the Supreme Court, no duty demand is outstanding as far as the appellants are concerned. Instead, substantial refunds are due with interest to M/s. L.M.L. Ltd. for which no action has been taken by the respondents in spite of orders and directions given by the Apex Court as well as the Tribunal. In this connection, he refers specifically to the orders dated 12-4-1994 (Misc. No. M. 56/1994-D) passed by the Tribunal and the order dated 23-7-1997 passed by the Hon'ble Supreme Court. As regards the merits of the case according to ld. Counsel, the matter has already been decided in favour of the appellants by the Tribunal which would be clear from the aforesaid orders of the Apex Court and the Tribunal. 2. Brief background relating to the appeals are : M/s. L.M.L. Ltd., C-6 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposed of by the Tribunal by order dated 1-9-1989 by which the refund was granted by adjustment of sums against demand payable with reference to the adjudication order of the Collector of Central Excise dated 8-3-1988 which was the subject matter of Appeal No. E/1485/88-D. This refund amount was also granted and adjusted by Assistant Collector by his Order dated 29-8-1990, which was accepted by the Tribunal by Miscellaneous Order No. 245/90-D, dated 28-9-1990. Taking into account the duty of excise on split yarn which was already paid by M/s. S.S. Synthetics Ltd. During the period 20-11-1985 and 28-2-1986 aggregating to Rs. 1,47,54,558.70, and the sum of Rs. 32 lakhs paid in terms of interim orders of Tribunal as mentioned above and Rs. 5,52,610.40 on account of duty of excise on steam ordered to be refunded and adjusted against the said demand, according to the appellants, they had become entitled to receive an amount of Rs. 34,61,796.10 as per law. The appellants contend that instead of taking into account the taxes already paid and the refund granted to the appellants as per the aforesaid orders, the Asstt. Collector of Central Excise, Division-I, Kanpur had sought to enforce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., a question had arisen as to who will undertake to discharge the current and contingent Central Excise liabilities, penalties, confiscations etc. in cases pending decision before the various authorities. A supplementary agreement was therefore added to the said agreement by way of Paragraph 2(b) to the agreement specifically providing that on the sale and transfer of M/s. S.S. Synthetics Ltd., M/s. Kanpur Synthetics Ltd. will take over the current and other liabilities including the present and future contingent liabilities of Central Excise duty, confiscations, fines etc. pertaining to cases under action. Further, a declaration was also given by the Director of M/s. Kanpur Synthetics Ltd. that Kanpur Synthetics would, on take over of M/s. S.S. Synthetics and M/s. Upper India Polymers by them, undertake to bear all the existing and future liabilities which may accrue on the said units under Central Excise Act and the Rules. It was therefore held that M/s. Kanpur Synthetics Ltd. was liable to pay the Central Excise duty relating to M/s. S.S. Synthetics Ltd. M/s. Esslon Synthetics Ltd. (which was the changed name of M/s. Kanpur Synthetics Ltd.) was therefore held to be liable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in view of an amount of Rs. 37,52,610.40 already deposited as excise duty on split yarn or mono filament yarn pursuant to earlier orders of the Tribunal the said amounts be adjusted towards demand of Rs. 1,50,45,373.00. 6. Ld. Jt. CDR referred to the Papers filed by the Department and submitted that verification of production of mother yarn/split yarn was not possible and therefore the claim of the appellants that not in terms of ad hoc arrangement made by the Department by letter dated 16-9-1985 duty of excise paid on split yarn during the period by M/s. L.M.L. Ltd. to the extent of the period for which the demand was confirmed on mother yarn for the period 20-11-1985 to 28-2-1986 was Rs. 1,47,54,588.70 could not be verified. Further, the Tribunal order of 1990 had disposed of the matter on merits and no adjustments or any other amounts was permissible under law. Further, before a refund can be allowed, the assessee should have filed an application for refund in compliance with relevant rules. Such application not having been made, the claim for refund made by the appellants has no legal effect. He further submitted that the Hon'ble Supreme Court by order dated 23-7-1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... embers had again however, rejected the request for adjustment of duty on split yarn. The order was restricted for consideration of prayer made in paragraph 8 relating to adjustment of duty already paid. It was, therefore, wrong on the part of the present appellants to contend that the Miscellaneous Order had granted any other reliefs. Ld. Jt. CDR contended that the Bench having rejected the request for adjustment of duty paid on split yarn on four previous occasions, it cannot refer the matter back to the Commissioner on a subsequent occasion since that would have amounted to a review by the Tribunal of its own order which was not permissible. He relied on the following judgments in support of his contention : (a) Kuntesh Gupta v. Management [1987 (32) E.L.T. 8 (S.C.)], and (b) Bala Murugan v. Collector [1989 (44) E.L.T. 591 (Tribunal)]. 7. As regards the submissions of the appellants in Appeal Nos. E/1623/94-D and E/1626/95-D, ld. Jt. CDR contended that the Commissioner has already allowed adjustments of duty as per the Stay Orders and had also calculated the excise duty payable on mother yarn for the relevant period. The appellants' claim for adjustment of duty paid on spli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready generated a series of proceedings, viz., three Appeals before the Commissioner (Appeals), 5 Appeals before the Tribunal, 4 ROM Applications before the Tribunal, 2 Writ Petitions filed in Allahabad High Court and one Appeal before the Hon'ble Supreme Court. He submitted that it will be in the interest of all the parties that the issues are finally decided at the level of the Tribunal and the multiplicity of litigation concluded once and for all. 13. We now proceed to discuss the contentions raised in each of the four Appeals. In Appeal No. E/554/94-D, Appellants M/s. L.M.L. Ltd. are challenging the order of the Collector of Central Excise (Appeals), Allahabad dated 24-2-1994 confirming a duty demand of Rs. 1,50,45,373.00 for the period 20-11-1985 to 28-2-1986 against M/s. Esslon Synthetics Ltd., Kanpur and dismissing the claim of M/s. L.M.L. Ltd. that they were concerned with the demand of Rs. 1,50,45,373.00 and that certain amounts were refundable to M/s. L.M.L. Ltd. after adjustment of amounts paid by them. (M/s. L.M.L. Ltd). The Collector (Appeals) had dismissed L.M.L's claim on the ground that M/s. L.M.L. Ltd. had no locus standi in the matter since M/s. L.M.L. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. or to consider any refund application filed by M/s. L.M.L. Ltd. It was when coercive measures for recovery of the duty demand of Rs. 1,50,45,373.00 was sought to be taken by the Asstt. Collector in 1991, M/s. L.M.L. Fibres Ltd. as well as the present appellants, M/s. L.M.L. Ltd. had challenged the said action before the Hon'ble High Court, Allahabad in Writ Petition. The Hon'ble High Court was pleased to direct the Asstt. Collector to pass a speaking order after hearing the assessees in accordance with the requirements of the principles of natural justice. When the Asstt. Collector passed an order confirming the demand pursuant to the direction of the Hon'ble High Court of Allahabad in the Writ Petition, the matter was taken up again before the Hon'ble High Court by the assessees seeking a direction on the assessing authorities for adjustment of duty already paid. Hon'ble High Court was pleased to direct the petitioners to file appeals against the orders challenged under the Writ Petition. The matter was thereafter taken up with the Central Board of Excise and Customs by the appellants pursuant to which the C.B.E.C. directed the Asstt. Collector to revoke the order of detention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having regard to the terms of the Sale Deed dated 30-7-1987 and the supplementary agreement thereto referred to in the impugned order, we do not also find any infirmity in the order of Collector (Appeals) rejecting the locus standi of M/s. L.M.L. Ltd. and their claim relating to the quantification of the demand. 17. In the above view of the matter we find that Appeal No. E/554/94-D filed by M/s. L.M.L. Ltd. has no merit and the same has to be dismissed. We do so accordingly. 18. As regards Appeal No. E/84/94-D filed by M/s. Esslon Synthetics Ltd., we find that the said appeal is against the order of the Collector (Appeals), Allahabad dated 7-1-1994 holding that recovery of Rs. 1,50.45.373.00 from M/s. Esslon Synthetics Ltd. under Rule 230 of the Central Excise Rules was legal and proper. 19. The case of the appellants is that the agreement for transfer of M/s. S.S. Synthetics Ltd. by agreement dated 30-7-1987 to M/s. Kanpur Synthetics did not result in duty liability of M/s. S.S. Synthetics Ltd. prior to 30-7-1987 being transferred to M/s. Kanpur Synthetics Ltd. and subsequently to M/s. Esslon Synthetics Ltd. It is contended that it was not permissible to negotia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs. 2 lakhs had been deposited. Thus, an amount of Rs. 32 lakhs had already been deposited by the appellants in terms of the various Stay Orders. Ld. Counsel has argued that as a result, a sum of Rs. 37,52,610.40 had already been paid towards the alleged demand against M/s. Esslon Synthetics Ltd. Further, the duty of excise paid on split yarn during the period by the assessee of that time and for the period for which the demand had been confirmed on mother yarn as per Tribunal order for the period 20-11-1985 to 28-2-1986 was Rs. 1,47,54,588.70 and the said amount had been paid in terms of the ad hoc arrangement made by the Department by its letter dated 16-9-1985 binding on both the assessees and the Revenue. Thus, according to the appellants, taking account the aforesaid payment, the Department was to refund an amount of Rs. 34,61,796.10 to the appellants. Instead of granting refund, the Department was seeking to enforce an illegal demand of Rs. 1,47,54,588.70 against M/s. Esslon Synthetics Ltd., which was altogether a different legal entity, separate and distinct from the assessee/manufacturer. Ld. Counsel has contended that the said demand was wholly illegal and misconceiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1944." Relying on the terms of the said agreement, the Collector (Appeals) had held that since the contingent liability on M/s. S.S. Synthetics Ltd. a Division of M/s. L.M.L. Ltd. was taken over by M/s. Kanpur Synthetics Ltd. by the agreement dated 30-7-1987 read with Para 2(b) thereof and M/s. Kanpur Synthetics Ltd. was renamed subsequently as M/s. L.M.L. Fibres Ltd. and thereafter as M/s. Esslon Synthetics Ltd. The liability of M/s. Kanpur Synthetics Ltd. for contingent liabilities of Central Excise duty had clearly been undertaken by M/s. Esslon Synthetics Ltd. and therefore, binding on them. 22. On a careful reading of the terms of the agreement, we do not find any reason to disagree with the conclusions of the Collector (Appeals) especially in view of the provisions of Rule 230(2) of the Central Excise Rules which provides that where any person transfers or otherwise disposes of his business in whole or any part or effects any change in the ownership therein in consequence of which he has succeeded in business or trade or part thereof by any other person or persons, all excisable goods, materials, preparations, plant, machinery, vessels, utensils, implements and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nued to be in the custody of the Department. When the question regarding demand of duty on mother yarn ignoring duty already paid on split yarn came up before the Tribunal, the Hon'ble Tribunal had directed verification of the said records which had not been done by the Respondent Collector. Further, during the relevant time, the unit was under physical control and AR1s had been duly assessed and RG 1 Register had been duly verified and complete accountal of split yarn had been disclosed therein. Therefore, there could be no dispute about the manufacture and accountal of split yarn and duty of Rs. 1,47,54,559.00 on a quantity of 2,10,779.410 kgs accounted for in the RG 1 register during the relevant period had been paid by the manufacturer at the relevant time. The Department, therefore, cannot make a further demand of over Rs. 1.5 crores against the present appellants ignoring the duty already made on split yarn. The impugned order had not taken into account the duty already paid on the same account. The authorities below had also not allowed adjustment of the said amount on the ground that there was no specific provision in the Act to require an adjustment to be made in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CDR submitted that the impugned order had been passed pursuant to the Tribunal's Miscellaneous Order dated 12-4-1994 by which, the Department was directed to consider the plea made by M/s. Esslon Synthetics Ltd. in their Miscellaneous Application pleading that an amount of Rs. 37,52,610.40 had already been paid by them pursuant to an earlier order of the Tribunal and that the excise duty paid on split yarn or Mono Filament yarn should be allowed to be adjusted against the demand of duty of Rs. 1,50,45,373.00 leviable on mother yarn or Multi Filament yarn demanded by the Department pursuant to order-in-original dated 8-3-1988. Ld. Jt. CDR referred to the finding in the impugned order and submitted that the Collector had given the finding that in the month of November, 1985, the production of mother yarn was recorded as 6,644.20 kgs. whereas the quantity of split yarn that was manufactured was 77,697.750 kgs. It was therefore, clear that there is no relation between the quantity of mother yarn manufactured and the quantity of split yarn manufactured out of the said mother yarn. Collector had also given a finding that for the three months of December, 1985 to February, 1986, the figu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kgs. of yarn of 300/15 deniers and on 9-9-1985, 509.330 kgs. of yarn of 225/15 denier was accounted for in the RG 1 Register as packed production and the same has ultimately been removed on payment of duty. Thus, it can be seen that only those unworkable yarns were disposed of as mother yarn by the company and all such yarns are duly accounted for in RG 1 Register and appropriate duty at the highest rate has already been paid on such mother yarn" Therefore, the removal of mother yarn to the splitting machines for the purpose of production of mono-filament yarn would attract dutiability under Rules 9 and 49 of Central Excise Rules, as held by the Supreme Court in the J.K. Spinning & Weaving Mills case. In fact, in the letter of the department to the appellants dated 16-9-1985, on which they had so much relied itself also provides for the procedure to be followed when mother yarn is cleared as such which is another indication that there were such clearances. The party has also admitted the fact. I do not find any provisions in the Central Excise & Salt Act and under Central Excise Rules, as per which duty paid on one excisable goods can be adjusted against the duty demanded on ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l had in the Miscellaneous Order dated 20-12-1991 directed the Respondent Collector to consider the claim of the assessee about payment already made on split yarn during the relevant period on verification of the records available with the Department. To the extent the said verification has not been made and the reasons given in the impugned order for failure to do so is far from convincing in the facts of the case, we have to hold that the confirmation of duty demand of Rs. 1,50,45,373.00 (subject to adjustment of Rs. 37,52,610.40 allowed by the impugned order) cannot be sustained. 30. We therefore set aside the impugned order and remand the matter to the jurisdictional Commissioner for considering the matter afresh in the light of the Tribunal's order. The jurisdictional Commissioner is accordingly directed to verify the correctness of the claim of the present appellants that Central Excise duty to the tune of Rs. 1,47,54,559.00 had been paid by the manufacturer towards production of mother yarn during the relevant period viz., November, 1985 to February, 1986, from the records seized by the Department. The Officer concerned with such verification is at liberty to obtain a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt time. It is the case of the appellants that since the production of split yarn/Mono filament yarn was preceded by production of mother yarn/multi filament yarn, they had sought permission of the Superintendent having jurisdiction over the factory for recording the production in a private register and the production of split yarn alone in the RG 1 register as per letter dated 6-9-1985 subject to the final decision of the jurisdictional Commissioner. No such final decision had, however, been communicated to the appellants. The Commissioner of Central Excise, Kanpur had however, by SCN dated 19-5-1986 sought to raise demand of duty on mother yarn for the period 31-1-1985 to 28-2-1986. The matter was adjudicated by Order-in-Original dated 8-3-1988 against the appellants. In appeal proceedings before the Tribunal and in terms of the Stay Order passed by the Tribunal pre-deposit of Rs. 30 lakhs was directed to be deposited in installments. Appellants maintain that they had deposited the entire amount of Rs. 30 lakhs pursuant to the Stay Orders passed by the Tribunal. Simultaneously, in two separate Orders-in-Original passed by the Commissioner for the preceding period in relation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Stay Orders and refund claim by the appellants allowed under other orders of the Tribunal. 35. It is the contention of the appellants that the Collector by the impugned order had failed to carry out the said directions of the Tribunal in various orders and had arbitrarily held that M/s. Esslon Synthetics Ltd. would be liable to pay an amount of duty of Rs. 1,50,45,373.00 on mother yarn after adjusting an amount of Rs. 37,52,610.40. 36. Ld. Jt. CDR had, defending the impugned order reiterated the Department's position that M/s. L.M.L. Ltd. did not have any locus standi in the matter and the appeal filed by M/s. L.M.L. Ltd. against the impugned order was not maintainable. 37. The submissions have been considered. Having regard to the fact that M/s. Esslon Synthetics Ltd. have by virtue of the Sale Deed dated 30-7-1987 undertaken the duty liability of M/s. S.S. Synthetics Ltd. who were the manufacturers of split yarn during the relevant period, we are unable to accept the contention of the ld. Counsel for M/s. L.M.L. Ltd. that M/s. L.M.L. Ltd. would be entitled to seek the setting aside of the impugned order. We also observe that the appellants themselves have in P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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