Successor liability for central excise dues arises only on transfer of business as a going concern, not mere sale of secured assets.

Liability for outstanding central excise dues cannot be fastened on an auction purchaser where only secured assets are sold and the business is not transferred as a going concern. The proviso to section 11 applies only when the defaulter transfers the business or trade, or changes ownership, and the transferee succeeds to that business; a mere sale of land, plant, machinery and other assets does not create successor liability. The existence of a statutory charge under section 11E does not alter that result. A show cause notice for suspension or revocation of excise registration was also unsustainable where it rested on alleged breach of sale-certificate conditions and on the earlier registration of the same premises in the defaulting company's name, since registration is person-specific and contractual sale conditions do not bind the excise authorities.

---

---

Issues: (i) Whether the auction purchaser of secured assets, who acquired only the assets and not the business as a going concern, could be fastened with the outstanding central excise dues of the defaulting company under the proviso to section 11 of the Central Excise Act, 1944. (ii) Whether the show cause notice proposing suspension or revocation of the petitioner's central excise registration could be sustained on the ground of alleged non-compliance with the terms and conditions of the sale certificate issued by ARCIL and on the ground that the same premises already stood registered in the name of the defaulting company.

Issue (i): Whether the auction purchaser of secured assets, who acquired only the assets and not the business as a going concern, could be fastened with the outstanding central excise dues of the defaulting company under the proviso to section 11 of the Central Excise Act, 1944.

Analysis: The proviso to section 11 applies only when the defaulter transfers or otherwise disposes of his business or trade in whole or in part, or effects a change in ownership, and the transferee succeeds to such business or trade. The record showed that the sale by ARCIL was only of the land, building, plant and machinery and other secured assets, and not of the undertaking as a going concern. The transfer was therefore of discrete assets and not of the business itself. The Court also applied the principle that mere transfer of assets does not amount to transfer of ownership of business, and that excise dues cannot be recovered from a purchaser unless the statutory conditions for successor liability are satisfied. The existence of a statutory charge under section 11E did not assist the Revenue because the foundational requirement for invoking the proviso to section 11 was absent.

Conclusion: The petitioner was not a successor in business and could not be made liable for the outstanding central excise dues of the defaulting company.

Issue (ii): Whether the show cause notice proposing suspension or revocation of the petitioner's central excise registration could be sustained on the ground of alleged non-compliance with the terms and conditions of the sale certificate issued by ARCIL and on the ground that the same premises already stood registered in the name of the defaulting company.

Analysis: The Court held that breach of the sale certificate conditions was, at best, a matter between ARCIL and the purchaser and did not confer any independent power on the excise authorities to cancel or suspend the petitioner's registration. The cited sale-certificate conditions were treated as contractual and indemnificatory in nature, lacking privity with the Revenue. The further objection that the same premises were already registered in favour of the defaulting company was rejected as misconceived, since the excise regime registers the person and not the premises, and the continued subsistence of the earlier registration could not by itself defeat the petitioner's fresh registration. The notice was therefore unsustainable to that extent.

Conclusion: The proposed action for suspension or revocation of the petitioner's registration was unsustainable on both grounds.

Final Conclusion: The Revenue could not recover the defaulting company's excise dues from the petitioner, and the impugned notice and demand were quashed to the extent challenged.

Ratio Decidendi: Liability for central excise dues can be foisted on a transferee only where there is transfer of the business or trade as a going concern and the transferee succeeds to that business; a mere sale of secured assets does not attract successor liability or justify cancellation of registration on contractual sale-certificate conditions.

---