Auction purchaser not liable for predecessor's excise dues where only assets were bought, not the business as a going concern.

Mere purchase of a defaulting unit's assets in auction does not make the buyer liable for the former owner's Central Excise dues. The auction purchaser had acquired only assets from a State financial corporation and had not taken over the business as a going concern or the ownership of the business, so successor liability was not attracted. The Tribunal also applied the principle that dues do not have priority over secured creditors' claims in this context. Recovery of the predecessor's excise dues from the auction purchaser was therefore unsustainable and was set aside.

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Issues: Whether Central Excise dues of the former owner could be recovered from the auction purchaser on the footing that it was a successor to the business or ownership of the defaulting unit.

Analysis: The Appellant had purchased only the assets of the unit in auction from a State financial corporation and had not taken over the business as a going concern or acquired the ownership of the business. The Tribunal followed the principle that government dues do not enjoy priority over secured creditors' claims and that mere purchase of assets in auction does not amount to transfer or disposal of business so as to attract successor liability. On that basis, the recovery sought from the auction purchaser could not be sustained.

Conclusion: The demand for recovery of the predecessor's Central Excise dues from the auction purchaser was unsustainable and was set aside in favour of the assessee.

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