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2016 (8) TMI 291 - CESTAT KOLKATA

2016 (8) TMI 291 - CESTAT KOLKATA - TMI - Who is liable to pay duty - conversion of proprietorship to partnership firm and then from partnership firm into company - the offence was committed when the unit was existing as a proprietorship - Whether of predecessor or of present appellant - Held that:- as per assignment of Business agreement, entered between M/s. Laxmi Electronics (Partnership concern) and M/s. Laxmi Electrovision Private Limited (the present appellant), the entire business of M/s. .....

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a charge on them. - Liability gets fixed on a person who takes responsibility to obtain central excise licence/Registration. - In the present case there is no evidence on record that a new Central Excise licence/Registration was obtained by the present appellant. On the contrary transfer of licence/Registrations to the successor are also transferred which will legally mean the responsibilities/liabilities casted under Central Excise licence/Registration also gets transferred to the present .....

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11 first appellate authority has upheld Order-in-Original No. 58/Additional Commissioner/CE/Kol-III/07-08 dated 20/3/2008. 2. Shri Shyamal Dey (Advocate) appearing on behalf of the appellant argued that the period involved in this of the case is from 10/08/2002 to 3/2/2003. That when shortages were detected Mrs. Shashi Malik was the sole proprietor of M/s. Laxmi Electronics upto 1/4/2004. From 1/4/2004 to 9/7/2006 M/s. Laxmi Electronics worked as a partnership where Mrs. Shashi Malik & Mr. A .....

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se of Freezair India (P) Ltd. Vs. CCE, Delhi-I [2013 (11) LCX 0079]. 3. Shri A. Roy, Supdt. (AR) appearing on behalf of the Revenue argued that Show Cause Notice demanding duty from the appellant was issued on 7/6/2007 when amended provisions of Section 11 of the Central Excise Act, 1944 were existing. That the proviso added to Section 11 (2) of the Central Excise Act, 1944 was effective from 10/9/2004 and any duty/sum recoverable from the predecessor can be recovered from the transferee i.e. th .....

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pheld the order of the Adjudicating authority on merits.On the issue of taking over the all rights and liabilities by the partnership first appellate authority gave following observations :- The appellants have contended that the liability of the proprietorship firm cannot be bestowed on them. I, on the other hand find that the proprietorship firm converted itself into a partnership firm of the same name by inducting son of the proprietor as another partner. In the partnership clause it has been .....

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rietor with its Head Office at New Delhi and works at Kolkata . From above it is clear that it was agreed upon to continue to carry on the same business in partnership. How the partnership can now firm absolve of the liability owned by the proprietorship firm is not clear. No clause is there and also cannot be there in the partnership deed announcing bar on passing of liability. Now, in the Assignment of Business entered into by the Partnership Firm (The Assignors) and the appellants (The Assign .....

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tatus could have offered freedom from the liability of taxation in respect of the company of the earlier status, it would have been a weapon in the hand of the intending evaders to go for it as and when required. In fine, the argument of the appellants that they are not the bearer of the liability of M/s. Laxmi Electronics, the proprietorship firm, does not stand. 4.1 It is further observed that as per assignment of Business agreement, entered between M/s. Laxmi Electronics (Partnership concern) .....

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scribed in SCHEDULE- A at a price of ₹ 1,58,881.14 hereto to be satisfied partly in cash/cheque and partly by allotment of fully paid up shares in the Assignee Company to the partners of LAXMI ELECTRONICS . 4.2 The words morefully described in Schedule A has to be understood as, including the liabilities specified in Schedule A to this agreement but cannot be limited to only those liabilities. Further all the registrations, licenses of the earlier manufacturers, including machinery stand t .....

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rightly relied upon the proviso to Section 11 (2) of Central Excise Act, 1944 which reads as follows: 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 any other person, all excisa .....

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