CESTAT, NEW DELHI BENCH
Commissioner of Central Excise, Chandigarh
Shree Ambica Steel Industries
FINAL ORDER NO. A/1168/2012-EX (BR)
APPEAL NO. E/1501 OF 2012
SEPTEMBER 13, 2012
Justice Ajit Bharihoke, President
Revenue has preferred this appeal against the order-in-appeal dated 16.04.2002 passed by the Commissioner (Appeals) whereby he set aside the order-in-original confirming the duty demand of Rs. 31,74,900 along with interest and equal amount of penalty against the respondent, M/s. Shree Ambica steel Industries, Amloh Road, Mandi Gobindgarh (Punjab).
2. Briefly stated the facts relevant for the disposal of this appeal are M/s. Ambica Steel Industries was sole proprietorship concern of one Smt. Bimla Devi. She died on 17.09.2006. Her legal heirs after her death got registration of the respondent under the Excise Act cancelled vide letter dated 18.10.2006. At the time of cancellation of registration, they submitted an undertaking to the department, which is reproduced thus:-
“That Smt. Bimla Rani W/o Sh. Mohinder Kumar who was the sole proprietor of M/s. Shri Ambica Steel Industries, Amloh Road, Mandi Gobindgarh, expired on 17.09.2006.
That we are the legal heirs of all the assets and liabilities of Late Smt. Bimla Rani.
That we un-conditionally undertake to pay all the pending Central Excise Duty liability of M/s. Shri Ambica Steel Industries, Amloh Road, Mandi Gobindgarh as and when these dues are finally settled.
That we undertake not to dispose of the assets till the Central Excise Duty liability is finally settled.”
3. Pursuant to the application and undertaking, registration of the respondent company was cancelled. Subsequently, a show cause notice dated 2.4.2009 was issued in the name of the respondent company raising a cenvat credit demand of Rs. 31,74,900 on the premise that the respondent company during the period April, 2005 to Feb., 2006 had wrongly availed cenvat credit in respect of the inputs not received in the factory. The demand was ultimately confirmed by the jurisdictional Addl. Commissioner vide order-in-original dated April, 2009.
4. The legal heirs of Smt. Bimla Rani preferred an appeal against the order-in-original and the Commissioner vide impugned order set aside the order-in-original with the observation that the death of sole proprietor of appellant firm amounted to dissolution of firm as such proposal to demand duty, interest and penalty from the legal heirs of sole proprietor of the firm was not sustainable. The Revenue is aggrieved of the aforesaid finding and has challenged the same in this appeal.
5. Ld. Shri I. Beg, DR for the Revenue had challenged the impugned order on the ground that the Commissioner (Appeals) have wrongly dropped the demand ignoring the fact that at the time of getting the registration of the respondent company cancelled the legal heirs of the proprietor of the respondent company submitted un-conditional undertaking to pay all the pending central excise duty dues of the respondent company and also not to dispose of the assets of the company till the central excise duty liability is finally settled. It is contended that by filing that undertaking the legal heirs of the respondent took upon themselves of the duty liability of the respondent company. As such, now they cannot be allowed to contend that the demand has been wrongly confirmed against them.
6. Shri Gaurav Aggarwal, ld. Advocate for the respondent on the contrary has pressed for dismissal of appeal. He contends that it is well settled that the recovery proceedings against a deceased assessee cannot be initiated and maintained. Admittedly, in this case sole proprietor of the respondent company died in September, 2006 and with her death, the company became non-functional. It is submitted that the undertaking was given by the legal heirs of the deceased Bimla Rani on the insistence of the Excise Authorities and said undertaking related only to existing excise duty liability or some pending demand under adjudication. Ld. Counsel submits that show cause notice raising demand was issued much after the undertaking given by the legal heirs of Smt. Bimla Devi, sole proprietor of the assessee firm, as such it cannot be termed as demand pending adjudication when the undertaking was given. Thus it is pleaded that the Commissioner (Appeals) have rightly allowed the appeal of the respondent company.
7. We have considered the rival contentions and perused the records. Undisputedly, late Smt. Bimla Rani was the proprietor of the respondent firm M/s Shree Ambica Steel Industries. She died on 17.9.2006 and after her death the legal heir applied for cancellation of Excise registration in the name of the firm and the registration was admittedly cancelled by the Department in October, 2006. It is well settled that a sole proprietorship concerned has no legal entity independent of its proprietor. Thus it is obvious that the death of late Smt. Bimla Rani of the respondent company ceased to exist. That being the case, the relevant show cause notice dated 2.4.2009 issued to M/s Shree Ambica Steel Industries, Mandi Gobindgarh is bad in law as it was issued against any non-existent firm. This circumstance in itself is sufficient to dismiss the appeal filed by the Department.
8. Coming to the undertaking by the legal heir of sole proprietor of the respondent firm, on perusal of the undertaking reproduced above, we find that legal heir of the deceased sole proprietor of the respondent firm had undertaken to pay all the pending central excise liability of the respondent firm as and when the dues are finally settled. From this it is evident that the undertaking was given in respect of pending dues under dispute. In the instant case, the show cause notice raising demand was issued almost three years after the undertaking on 2.4.2009. This imply that the dispute pertaining to the demand in question was raised much after the undertaking as such the demand which is subject matter of the show cause notice cannot be termed as pending as covered by the undertaking given by the legal heir. That being the case, we are of the view that there was no reason for issue of show cause notice against non-existing firm. As such, the demand confirmed on the basis of aforesaid show cause notice cannot be sustained. We do not find any infirmity in the order in appeal setting aside the order in original and dropping the demand.
9. Appeal is, therefore, dismissed.