Successor liability for excise dues upheld, but penalty recovery from the purchaser was not permitted and interest had to be recalculated.

A purchaser of an industrial unit who gave a binding undertaking at registration could be fastened with the predecessor's outstanding excise duty and interest, as successor liability attached to the transferred unit. The interest component, however, had to be recomputed under the applicable statutory regime and correct rate of interest. Penalty imposed on the predecessor could not be recovered from the successor because penalty proceedings are personal to the person against whom they were initiated and the successor had no opportunity to contest the levy. The appeal therefore succeeded only to the extent of disallowing penalty recovery and directing recalculation of interest, while liability for the excise dues was affirmed.

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Issues: (i) Whether the purchaser of an industrial unit who had given an undertaking at the time of registration was liable to pay the predecessor's outstanding excise duty and interest, and whether the interest had to be recalculated under the applicable statutory regime; (ii) Whether penalty imposed on the predecessor could be recovered from the successor.

Issue (i): Whether the purchaser of an industrial unit who had given an undertaking at the time of registration was liable to pay the predecessor's outstanding excise duty and interest, and whether the interest had to be recalculated under the applicable statutory regime.

Analysis: The transfer of the industrial unit attracted successor liability for the excise dues of the previous owner. The undertaking given to the department at the time of registration was held to be binding, and the purchaser could not later deny liability for the predecessor's dues. However, the interest component had to be determined in accordance with the applicable law and the correct rate under the statutory interest provision.

Conclusion: The successor was liable for the outstanding excise duty and interest, but the interest was required to be recomputed as per law. This issue was decided against the assessee on liability and in its favour on recalculation of interest.

Issue (ii): Whether penalty imposed on the predecessor could be recovered from the successor.

Analysis: Penalty proceedings are personal to the person against whom they are initiated, and the successor had no opportunity to contest the penalty imposed on the predecessor. On that basis, recovery of penalty from the successor was not permissible.

Conclusion: Recovery of penalty from the successor was set aside and this issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent that penalty recovery was disallowed and the interest demand was directed to be recalculated, while successor liability for the predecessor's excise dues was affirmed.

Ratio Decidendi: A successor who purchases an industrial unit and gives a binding undertaking may be fastened with the predecessor's excise dues and interest, but penalty cannot be recovered from the successor without giving it an opportunity to contest the levy.

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