TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Join Channel
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) whether the Commissioner (Appeals) could sustain recovery of the seller's central excise dues from the purchaser of assets sold by the State Finance Corporation; (ii) whether the notice demanding payment of such dues from the purchaser was sustainable in law.
Issue (i): Whether the Commissioner (Appeals) could sustain recovery of the seller's central excise dues from the purchaser of assets sold by the State Finance Corporation.
Analysis: The appeal before the Commissioner (Appeals) arose from a notice issued to recover dues said to be payable by the erstwhile unit. The assets had not been sold by the defaulting owner in a voluntary transfer, but were sold by the State Finance Corporation in exercise of statutory powers. In such circumstances, the buyer did not step into the shoes of the erstwhile owner for the seller's excise liabilities, and the demand could not be fastened on the purchaser merely because the assets were acquired.
Conclusion: The recovery of the seller's excise dues from the purchaser was not sustainable, and the order of the Commissioner (Appeals) could not be upheld.
Issue (ii): Whether the notice demanding payment of such dues from the purchaser was sustainable in law.
Analysis: Rule 230 of the Central Excise Rules, 1944 permits detention of goods and related assets in specified circumstances, including when a business is transferred by the person carrying it on. That rule did not apply to a sale by a statutory corporation of the borrower's assets free from encumbrances. The prior judicial view treating excise dues as enforceable against a subsequent bonafide purchaser in such a situation was found inapplicable. The demand notice therefore lacked legal basis, and the amount deposited under interim directions became refundable with interest according to rules.
Conclusion: The notice dated 24/8/2004 was unsustainable and was quashed.
Final Conclusion: The purchaser was held not liable for the erstwhile owner's excise dues arising from the statutory sale of assets, and the demand as well as the appellate order were set aside with consequential refund relief.
Ratio Decidendi: Excise dues of an erstwhile owner cannot be recovered from a purchaser who acquires only the assets through a statutory sale by a financial corporation, unless the statute expressly creates such liability or a first charge on the purchaser.
TaxTMI 
