TaxTMI 
TaxTMI 
TaxTMI 
2012 (6) TMI 556
X X X X Extracts X X X X
X X X X Extracts X X X X
.... department by his son Sri. Dhiren Gandhi. Sri. Dhiren Gandhi took over the business on the basis of no objection given by his family members to carry on the business of the family as sole proprietor. The internal audit party, attached to the Central Excise Bangalore III Commissionerate, during the course of audit on the records of the assessee, observed that the assessee was availing Cenvat credit on the inputs/capital goods received into the factory for use in the manufacture of the aforesaid goods. On the date the registration certificate was surrendered, there was a stock of cenvat credit availed inputs/raw materials valued at Rs.25,24,887/-. The audit party was, of the view that, by surrendering the central excise registration, the assessee opted out of cenvat scheme or for that matter from the whole of the provisions of the Central Excise Act and the Rules made thereunder. Therefore the assessee was liable to reverse the cenvat credit relating to the inputs, held in stock valued at Rs.25,24,887/- as on the date of surrendering the registration certificate ie., on 13/10/2003 and the cenvat credit attributable, works out to Rs.4,03,982/-. A show cause notice came to be issued t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the rates prevalent during the said periods till the payment. Thus he confirmed, the demand of Rs.4,03,982/- from M/s. D&M Naturals & Fragrances being the cenvat credit availed on the stock of inputs/raw materials held on the date of surrender of registration certificate and also confirmed the demand for interest, imposed penalty of equal amount and also a sum of Rs.5,000/- under Rule 13(1) of the Rules. Aggrieved by the said order, the assessee preferred an appeal. The Commissioner of Central Excise (Appeals), upheld the order of the adjudicating authority and dismissed the appeal. Against the said order, the assessee preferred an appeal to the Tribunal. The Tribunal, relying on the judgment of this court in the case of CCE, Bangalore vs. Press Fab Precision Components Pvt. Ltd. 2007 (207) ELT 207 (Kar), held there is no provision to demand duty from the successor, therefore the provisions of Sec.11 of the Central Excise Act, 1944, to demand duty from successor cannot withstand the test of law. Accordingly he allowed the appeal, set aside the impugned orders and granted relief to the assessee. Aggrieved by the said order, the Revenue is in appeal. 3. The learned Counsel for the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot paid or short levied or short-paid or erroneously refunded -(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder), a Central Excise Officer may, within (one year) from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not-been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rides made thereunder with intent to evade payment of duty, by such person or his agent, the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... own account. Therefore, primarily the person who is chargeable with duty under the Act, is the manufacturer Sec. 11 of the Act deals with recovery of sums due to the government. If any duty or other sums of any kind is due to the government under the Act, the officer empowered under the said provision has been vested with the power to levy such duty or require the payment of such sums and deduct the amount so payable from any money, owing to the person from whom such sums may be recoverable or due, which may be in his hands or under the disposal or control or may recover the amount by attachment or sale of excisable goods belonging to such person. It is in the nature of a garnishee order. By an amendment to Sec. 11 by Act No.2 of 2004 which came into effect from 10/9/2004, a proviso is added, which reads as under: Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded, in such business or trade by an....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any interruption. In the case of an individual, on his death, the manufacturing activity comes to an end. To hold his legal heirs liable for the dues under the Act from the manufacturer who is the person who is charged with the duty to pay tax would be unreasonable. If his family members were to take over the business after his death, continued to carry on the very same business, probably they would comply with the requirements of the statute. If they do not take over the business or comply with the provisions of the Act, they cannot be held liable of the dues of the deceased. That appears to be the principle underlining these two provisions. 9. In the instant case, admittedly father was carrying on the manufacturing activity. He had obtained a registration certificate in his favour. He had purchased raw material worth Rs.25,24,887/-. In order to purchase that raw materials, he had paid input tax. Having paid input tax, he had availed cenvat credit by making appropriate entry in the books of accounts. But he had not used or utilised the said cenvat credit. Once the legal heirs surrendered the certificate of registration, with such surrender, they are also precluded from using and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion. We have to read the words 'legal representatives' into the said section which is totally impermissible in law. In fact the Apex Court in the case of The State of Punjab vs. JULLUNDUR Vegetable Syndicate 1996 (17) STC 326 (SC) while interpreting a fiscal legislation, have held as under: "It is a settled rule of construction that in interpreting a fiscal statute the court cannot proceed to make good the deficiencies, if there be any, in the statute. It shall interpret the statute as it stands and in case of doubt it shall interpret it in a manner favourable to the taxpayer. See C.A.Abraham vs. Income-tax Officer Kottayam [1961](41 ITR 425) (S.C). in considering a taxing-Act, the court is not justified in straining the language in order to hold a subject liable to tax." 11. Further, dealing with the sales tax act, they held as under: "The scheme of the Act is a simple one. A firm is a dealer the said dealer is assessable to tax on his turnover, if its turnover exceeds the prescribed limit. It cannot do business while being liable to pay tax under the Act without getting itself registered and possessing a registration certificate. It is assessed to tax under Sec. 11 of the Act ....