By TIOL News Service

NEW DELHI, MAY 15, 2017: PROCEEDINGS were initiated against the appellant for short payment of Central Excise duty by non-inclusion of transportation cost from factory to depot. The period involved is 01/09/2003 to 31/03/2006.

The demand was confirmed by the original authority along with imposition of equivalent penalty in terms of s.11AC of the CEA, 1944 r/w rule 25 of the CER, 2002.

The Commissioner (Appeals) upheld this order and, therefore, the assessee preferred appeal before the CESTAT.

It is to be noted that the short payment occurred when the unit was run by M/s Standard Electricals Ltd. However, the unit was later taken over by M/s Havells India Ltd.

While examining the liability of M/s Havells India Ltd. for penalty, the Division Bench observed that there are contrary decisions of the Tribunal in the matter of imposition of penalty on the assessee/ appellants when they had no hand in the management of the firm at the relevant period and, hence, a reference is made to constitute a Larger Bench. The purportedly competing judgments are Marcandy Prasad Radhakrishna Prasad Pvt. Ltd. 2002-TIOL-381-CESTAT- KOL and MadhoprasadMahabirprasad (Supplies) Pvt. Ltd. = 1989 (44) E.L.T. 361 (Tribunal)

The Division Bench, Chandigarh , therefore, vide order dated 06/12/2016 referred the present dispute to a Larger Bench for resolution.

The matter was heard recently.

The Larger Bench,after going through the cited decisions observed that these could not be considered as contrary decisions by different benches of the Tribunal on the same issue. Furthermore, the decision in Marcandy Prasad (supra) is by a single Member and apparently the same cannot be considered as contrary decision of a coordinate bench of the Tribunal; there is no finding at all, regarding the ratio to be followed for penalty in such situation, it was emphasized.

Inasmuch as the Bench held that there is no contrary decision of coordinate Benches for a final resolution by the Larger Bench .

The Larger Bench also observed that the Delhi High Court examined the scheme of amalgamation of the appellant with M/s Havells India Ltd. and observed that the transferor company (appellant) shall stand dissolved without winding up once the scheme comes into effect and, therefore, it was clear that M/s Standard Electricals Ltd. as a juristic person/legal entity stood dissolved, upon the scheme approved by the Delhi High Court coming into effect; that the dissolution of the company puts an end to the existence of the company; that the Central Excise duty liability is linked to the goods manufactured and cleared and the penalty is on person - juristic or natural .

In fine, the Larger Bench returned the case to the referral Bench.

(See2017-TIOL-1612-CESTAT-DEL-LB)