2018 (10) TMI 210 – CESTAT NEW DELHI – TMI – Clandestine removal – proceedings were initiated against one M/s Diwan Industries, a partnership firm – Revenue’s stand is that since the proprietor of the present unit is a partner in M/s Diwan Industries and the arrears against the partnership firm can be recovered from the partners, the appropriation of the refund sanctioned to the proprietary unit is legal and proper.
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Held that:- A proprietary unit is an individual legal entity and any refunds due to the proprietary unit cannot be adjusted or appropriated towards the demand which may be pending recovery against an another independent legal entity, of which the proprietor of unit is a partner. It has to be kept in mind that the present proceeding are not recovery proceeding against the partnership firm so as to make the recoveries independently from the partners also.
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The dispute relates to the refund of the duty deposited by a proprietary unit and on success of their appeal
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of identical amount of ₹ 36 lakhs and demand to the tune of ₹ 75,444/- was confirmed against M/s Mahavir Industries along with imposition of penalty of identical amount. 2. The matter was taken up by both the assessees before Commissioner (Appeals), who confirmed the order in original impugned before him. On subsequent appeals filed before Tribunal, it is seen that both the assessees were directed to deposit a part amount, as a condition of hearing of their appeal in terms of the provisions of Section 35F. As M/s Diwan Industries did not deposit, their appeal was dismissed for default. 3. As far as the present appellant is concerned, they took up the matter before the Hon ble High Court of Delhi, by way of filing a writ petition which was rejected, and as a consequence, the appellant deposited the directed amount in question. On such deposit, their appeal was taken up for final disposal and vide Final Order No. 50135/2017 dated 6.1.2017, their appeal was allowed. 4. As a co
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d from the partners, the appropriation of the refund sanctioned to the proprietary unit is legal and proper. However, I find that there is no dispute about the fact that proceedings were initiated against M/s Mahavir Industries by treating the same as an individual manufacturer. On success of their appeal before Tribunal, such proprietary unit is admittedly entitled to the refund of the amount pre-deposited by them before the Tribunal. A proprietary unit is an individual legal entity and any refunds due to the proprietary unit cannot be adjusted or appropriated towards the demand which may be pending recovery against an another independent legal entity, of which the proprietor of unit is a partner. It has to be kept in mind that the present proceeding are not recovery proceeding against the partnership firm so as to make the recoveries independently from the partners also. The dispute relates to the refund of the duty deposited by a proprietary unit and on success of their appeal befor
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