Whether registration can be granted only when previous assessee has been deregistered?

PJ/CASE LAW/2015-16/2650

Case:-MONOMER CHEMICAL INDUSTRIES LTD. VERSUSCOMMISSIONER OF C. EX., THANE-I

Citation:-2015 (316) E.L.T. 670 (Tri. - Mumbai)

Brief facts:-The appellant is in appeal against the impugned order wherein registration of Central Excise has been denied by the ld. Commissioner (Appeals).
The brief facts of the case are that the appellant purchased the premises in question from M/s. Akasha Syncotex Ltd. who initially was the lessee of the factory premises from MIDC. As M/s. Akasha Syncotex Ltd. closed the business from the said premises and applied for cancellation of Central Excise registration, the appellant being interested party for taking the said premises had entered into an agreement with M/s. Akasha Syncotex Ltd. and with due permission from MIDC, the factory premises got leased out in the name of the appellant. The appellant applied for registration under Central Excise Act for the product manufactured by them. A show cause notice was issued to deny Central Excise registration which was adjudicated and held in favour of the appellant that they are entitled for registration but on appeal by the Revenue to the Commissioner (Appeals) the registration granted to the appellant was denied. Aggrieved from the said order, the appellant is before tribunal.

Appellant’s contention:-The ld. Counsel appearing on behalf of the appellant submits that the Commissioner (Appeals) has relied on the decision of the Manibhadra Processors - 2005 (184)E.L.T.13and denied the registration. He submits that the fact that the said case was peculiar one and therefore, the Hon’ble High Court of Bombay exercising their power under writ jurisdiction had come to a conclusion that registration cannot be granted unless and until previous registration has been deregistered. He submits that the similar issue came up before the Hon’ble High Court of Bombay in Tata Metaliks Ltd. - 2009 (234)E.L.T.596 (Bom.)and in the case after considering the decision of Manibhadra Processors (supra) of their own Court, the Hon’ble High Court came to a conclusion that the registration can be granted and said decision has been affirmed by the Hon’ble Apex Court in 2010 (253) E.L.T. A51 (S.C.). He also relied on the decision of PMS Exports P. Ltd. - 2012 (285)E.L.T.82 (Tri.-Ahmd.).Therefore, he prayed that the impugned order is required to be set aside as they are entitled for Central Excise registration.

Respondent’s contention:-ld. AR opposed the contention of the counsel and submits that the fact of Tata Metaliks Ltd. are not similar to the facts of this case as the property was taken over by the financial institution and thereafter auction was taken place and the property was taken place by Tata Metaliks Ltd. Therefore, the said facts are not applicable to the facts of this case. He further submits that the facts of Manibhadra Processors are similar to the facts of this case, therefore, the order of Commissioner (Appeals) is required to be upheld.

Reasoning of judgement:-In the case ofTata Metaliks Ltd. (supra), the Hon’ble High Court has considered the issue and thereafter came to a conclusion in as under :
“A perusal of Section 6 makes it absolutely clear that who has to be registered is the prescribed person. Under the rules also, it is the person who has to get registered. The notification in Clause (2) only sets out that if such registered person has more than one premises, then each of such separate premises would require registration certificate for each of such premises. In other words, it is the person who has to obtain separate registration certificate for each of the said premises. It is open to a person who has ceased to carry on the business to apply for deregistration. Would that mean in the absence of the person who has closed or sold the business or premises, applying for deregistration, there is no jurisdiction to grant another person registration of the premises as in the case of a bona fide transferee for value or for that to the owner of the premises whose lessee has defaulted in payment of Excise dues. Section 6 and Rule 9 and the notification contemplates that it is the person who must be registered. Neither Section 6 nor Rule 9 and the Notification is a provision for enforcing the claim for dues of the department. That is contained in different provisions. An immovable property by itself cannot be sold unless the owner of the premises is defaulter and that too under a certificate as arrears of land revenue. That sale would be subject to the priority of claims. In case of a lease hold property given for a particular period, there would be no question of sale of the property except the limited interest. In our opinion, the case of bona fide transferee was not in issue in the case of M/s. Manibhadra Processors (supra) or the instances we have cited above. The Respondent No. 3 has, therefore, clearly acted without jurisdiction in refusing to grant registration on the specious plea that M/s. Usha Ispat whose assets has been sold and purchased by the Petitioners has not applied for deregistration. In the absence of a specific power to deny registration, the alternate would be whether there would be implied power. Neither Section 6 or Rule 9 or for that matter the notification confers such power. The right of revenue however, would subsist for recovery of dues both against the defaulter or the transferee if the predicates for recovery are met. An incidental aspect of the matter would be if the licence is for a particular period, on expiry of that period, the registration certificate would cease to be operative. In such cases, there would be no question of cancelling the certificate of registration.”
Although in the case, the property in question was taken by the assessee in auction done by the Financial institution, but the question remains whether the registration can be granted or not where in case the dues are pending against the producer of the premises holder. In the case of Manibhadra Processors (supra) the facts of the case are peculiar one as in the case it is a habit of the lessor to lease out the property to the lessee who defaulted the Central Excise payment and surrender the registration and thereafter another lessee came to the factory and also defaulted in Central Excise dues. If they consider the facts of the Manibhadra Processors (supra) in that case initial registration was granted and the registration holder defaulted thereafter another registration was granted which also defaulted. Therefore, in that case the Hon’ble High Court exercised their power in writ jurisdiction and stopped the granting of registration for misusing the factory premises. The issue came up before the Tribunal in PMS Exports P. Ltd. (supra), the facts of the said case are similar to the facts of the case in hand. In that case the Tribunal after considering the relevant provisions, which are incorporated in para 6 above and came to the conclusion that registration in similar facts can be granted.
Therefore, they do not find any merit in the impugnedorder, the same is set aside. The appeal is allowed with consequential relief.

Decision:-Appeal allowed.

Comment:- The analogy of the case is that the appellant was entitled to get registration in view of the decision of PMS Exports P. Ltd. - 2012 (285)E.L.T.82 (Tri.-Ahmd.)because in the present case, the previous assessee had applied for cancellation of registration and the factory premises was leased out in the name of the appellant.

Prepared by:- Monika Tak

Comments

PJ/CASE LAW/2015-16/2650

Post a Comment

Query