2023 (9) TMI 768 - CESTAT AHMEDABAD

Refund of Excess duty paid - capacity based duty - closure of factory - change in constitution of business - permanent cessation of work or not - HELD THAT:- On 25-06-2011, the respondent closed down their factory. The intimation given by the respondent to the Assistant Commissioner of Central Excise by letter dated 22.06.2011 would show that the respondent permanently ceases to work in respect of all the machines installed in the factory and it would be followed for surrender of registration due to the change of constitution of name. In such a peculiar facts and circumstances of the case, in our considered view, the refund claim filed by the respondent would come within the purview of Rule16 of Rules 2008.

The contention of the revenue that the respondent had not permanently ceased to work in as much as they had only changed the constitution of their firm and therefore, it cannot be treated as “permanently ceases to work”. It is difficult to accept the contention of the learned Authorised Representative for the Revenue, as after the change of constitution new company came into existence and respondent firm (Partnership firm) has been treated as permanently ceases to works. There is no provision in Rules 2008 that after declaring “permanently ceases to work”, the manufacturer would not be entitled to reopen his factory with new name. Rule16 would cover the situation, where a manufacturer filed an intimation to the Deputy/ Assistant Commissioner of Central Excise intimating permanently ceases to work for surrender of registration. There is no bar on reopening of the factory with new registration in Rules, 2008, which is a subsequent event.

In the undisputed facts of this case one important aspect needs to be kept in mind that the revenue gravely erred in contending that the factory was not permanently ceased to work as the changed Pvt. Ltd. Company restarted the production. On this, we are very clear in our mind that there is clear distinction in the ownership of partnership firm and a Private Limited Company. Therefore even if a partnership firm ceased their operation and in place of the same a Private Limited Company started operation, both being separate legal entities, it cannot be said that the partnership firm has not ceased it’s production permanently.

It’s very obvious that when one entity closed it’s production and surrendered the registration and a new entity obtained a fresh registration with a new PAN, the former entity became non-existent and it’s closure of production is clearly falls under the term ‘permanently’. Accordingly, the present case is clearly covered under Rule 16 of the Rules and consequently the respondent is legally entitled for the refund of duty.

There is no infirmity in the impugned order - Appeal filed by Revenue is dismissed.