PALAV SYNTHETICS Vs. COMMISSIONER OF CENTRAL EXCISE, SURAT

JUDGEMENT

(1.) THIS is a case of clandestine removal and consequential demand of duty and equal amount of penalty with interest. In this case, the demand has been made against M/s. Palav Synthetics for clandestine removal which had happened and detected in June, 2002. The present management took over the factory in September, 2002. At the time of obtaining of Central Excise registration, the appellant had given an undertaking on non -judicial stamp paper, to pay the past and future liabilities of M/s. Pawansuit Dyg. & Ptg. Mills. A show cause notice was issued on 20 -12 -2004 for clandestine removal, which culminated into demand of Rs. 4,89,914/ - with equivalent amount of penalty and interest as applicable.

(2.) HEARD both sides. Ld. Consultant states that show cause notice was issued to M/s. Pawansuit Dyg. and Ptg. Mills. However, the adjudication order and Order -in -Appeal have been issued to the appellant in view of the undertaking given by them on the stamp paper to fulfil all the past and future liabilities. Ld. Consultant further states that clandestine removal took place before the present management started running factory and they had no information whatsoever about the clandestine removal and investigations conducted by the Department. He also states that the liability of excise duty falls on manufacturer and at the relevant time when the clandestine removal took place, present management was not the manufacturer. They were compelled to given an undertaking on the stamp paper to take over the management and in any case the future liabilities would not include the liability which had not even arisen at the time of taking over and in respect of which even show cause notice was not issued. Ld. Consultant submitted that they had given the factory and the premises on rent and the party who had taken the factory and premises on rent simply left and they were compelled to take over the management and run of the factory. Further he also submits that to start the operation of the factory they had to obtain registration and because of the compulsion they had given the undertaking. He submits that the incident happened before the factory was taken over. After the factory was taken over, the statement of the previous partner was recorded and even then the demand has been confirmed against the appellant. The firm M/s. Pawansuit Dyg. and Ptg. Mills is no longer in existence and the action of the Department in issuing show cause notice to M/s. Pawansuit Dyg. and Ptg. Mills and sending copy of the same to the appellants and confirming of the demand and penalty against the appellants was totally wrong.

(3.) THE ld. DR submits that according to Section 11 of the Central Excise Act, the transferee/successor who has taken over the business of an assessee shall be liable to pay the sums due to the Government. He also submits that the appellants had given a written undertaking to the Department which has been reproduced by the Commissioner (Appeals) in para 5.4 of the order. This undertaking not only undertakes to pay the past and future liabilities of M/s. Pawansuit Dyg. and Ptg. Mills but also undertakes to file reply to show cause notice in respect of pending matters and also to answer the queries relating to the activities of the said M/s. Pawansuit Dyg. and Ptg. Mills.