COMMISSIONER OF C. EX. Vs. SANDVIK ASIA LTD.

JUDGEMENT

(1.) THE appellant -revenue has proposed the following two questions:

(2.) HEARD the learned advocate for the appellant. It was contended that provisions of Section 11 of the Central Excise Act, 1944 (the Act) permit deduction of the amount payable to a person from whom certain sums of duty are required to be recovered. That in the present case the respondent -assessee was a company who was entitled to rebate of duty to the extent of Rs. 5,91,964/ - and Rs. 6,81,357/ - in relation to the two consignments of goods exported in December, 2000. Simultaneously, sums of Rs. 40,70,998/ - and Rs. 16,52,899.60 were pending recovery since 1998, being payable by M/s. Chokshi Tubes Company Limited (the Tubes Company). That the Tubes Company and one Sandvik AB of Sweden floated a joint venture on 10 -9 -1996 and for the said purpose promoted a new company called Sandvik Chokshi Private Limited wherein the Tubes Company was holding 49% shares and Sandvik AB of Sweden was having 51% holding. Subsequently due to mergers and de -mergers a company named Sandvik Asia Limited came into existence w.e.f. 1 -1 -2002. According to the appellant, despite all these exercises, the fact remains that the assets and liabilities of the Tubes Company stood transferred to the respondent -assessee. Therefore, the revenue was entitled to effect recovery by adjusting the rebate due to the respondent -assessee against the outstanding demand in case of the Tubes Company. In support of the submissions reliance has been placed on Apex Court decision in case of Macson Marbles Pvt. Ltd. v. : 2003ECR810(SC) to submit that the principle of Rule 230(2) of The Central Excise Rules, 1944 (the Rules) can also be made applicable to the facts of the case.

(3.) SECTION 11 of the Act can have no application in the facts of the case. Merely because the Tubes Company was initially 49% shareholder in the joint venture company it cannot be stated that the sums due to the joint venture company are the sums due to the Tubes Company. Section 11 in fact permits such adjustment only when in hands of the same person the monies are recoverable on the one hand and monies are also payable on the other hand to the same person. Therefore, if any monies were payable to the Tubes Company it would be open to the revenue to effect recovery by adjusting such payable amount. The Apex Court decision in case of Macson Marbles Pvt. Ltd. (supra) was in context of Section 29 of the State Financial Corporation Act, 1951 and reference to Rule 230(2) of the Rules as they then stood (which are no longer on the Statute Book) cannot make the said decision applicable in the facts of the present case.