2009 (9) TMI 810 - AT - Central Excise

Tribunal grants small-scale exemption extension post-amalgamation, emphasizing approval dates.

PALANI ANDAVAR COTTON & SYNTHETIC SPINNERS LTD. Versus CCE., TRICHY

The Tribunal ruled in favor of the appellant, allowing the small scale exemption until 23-9-2000 following an amalgamation with another company. Despite ... SSI exemption - denial of exemption on the ground that the scheme of amalgamation was subject to approval by the Hon’ble High Court and other statutory authorities - Held that: - the scheme of amalgamation was sanctioned by the High Court only on 28-7-2000, and the Registrar of Companies has allowed the amalgamation with effect from 16-5-2001 - the appellants have availed the small scale exemption only upto 23-9-2000 and thereafter, they have paid the normal duly - the appellants cannot be denied SSI exemption for the limited period they have actually availed the same till 23-9-2000 - appeal allowed - decided in favor of appellant. Issues:1. Disallowance of small scale exemption due to amalgamation with another company.2. Effective date of amalgamation for the purpose of exemption.Analysis:1. The appellant's unit availed small scale exemption until 23-9-2000, but the department disallowed the exemption upon amalgamation with another company. The appellant argued that the scheme of amalgamation specified 1-4-2000 as the date, subject to approval by the High Court and other authorities. The High Court approved the scheme on 28-7-2000, and the application to the Registrar of Companies was made on 28-9-2000. The appellant requested the exemption until the effective date of amalgamation, citing a previous Tribunal decision. The Tribunal noted the conditions in the scheme and the subsequent approvals, ruling in favor of the appellant based on the previous decision, allowing the exemption for the period until 23-9-2000.2. The respondent contended that the appellant had consolidated clearances from 1-4-2000 and should not be allowed exemption from that date. However, the Tribunal considered the delayed approvals by the High Court and Registrar of Companies, determining that the appellants had only availed the exemption until 23-9-2000. Following the previous Tribunal decision and considering the approval dates, the Tribunal held that the appellants should not be denied the SSI exemption for the period they had legitimately availed it, setting aside the impugned order and allowing the appeal.3. The Tribunal's decision was based on the conditions in the scheme of amalgamation, the delayed approvals by the High Court and Registrar of Companies, and the appellant's utilization of the exemption until 23-9-2000. The Tribunal referenced a previous decision to support their ruling, emphasizing the importance of the approval dates in determining the effective date of amalgamation for exemption purposes. The appeal was allowed, and the additional grounds submission was dismissed as the appeal was disposed of accordingly.