1989 (2) TMI 246 - AT - Central Excise

Successor entitled to proforma credit based on predecessor's permission. Technical omissions shouldn't disqualify.

ASHAPURA ELECTRICALS LTD. Versus COLLECTOR OF C. EX.

The successor company was entitled to avail proforma credit based on permission granted to the predecessor partnership firm. The Tribunal found that the ... MODVAT - Proforma Credit Issues:1. Entitlement to avail proforma credit by successor company.2. Consideration of technical omission in compliance with Rule 56-A.3. Time bar for the demand.4. Legality of proceedings under Rule 10 when it was deleted.Analysis:Issue 1:The appeal involved the entitlement of the successor company to avail proforma credit based on the permission granted to the predecessor partnership firm. The Articles of Association indicated that the successor company acquired the assets and liabilities of the partnership firm, making it liable for any obligations and entitled to benefits. The Tribunal noted that the department did not issue a fresh license treating the company as a new entity but made amendments to the existing license. The Tribunal concluded that the permission granted to the partnership firm extended to the successor company, and with substantial compliance with Rule 56-A, the proforma credit should not be denied solely on the basis of not obtaining fresh permission.Issue 2:The Tribunal considered whether a technical omission in complying with Rule 56-A could still warrant the extension of credit. It was argued that non-compliance with procedural requirements should not automatically deny the manufacturer proforma credit. The Tribunal agreed, emphasizing that the denial of credit on technical grounds was unwarranted and legally untenable, especially considering the substantial compliance with the rules.Issue 3:Regarding the time bar for the demand, the appellant contended that all relevant information was available to the department, and no material facts were suppressed. The Tribunal acknowledged that a portion of the demand might be time-barred due to the available information and lack of suppression of facts by the appellants.Issue 4:The legality of proceedings under Rule 10, which was deleted at the time of conclusion, was also deliberated. The Tribunal cited relevant judgments to support the argument that the demand might not be legally sustainable due to the deletion of Rule 10 when the adjudication was concluded. However, the Tribunal primarily based its decision on the first issue, rendering further discussion on the other issues unnecessary. Consequently, the appeal was allowed, and consequential relief was directed to the appellants.