Successor liability for excise dues: purchaser of auctioned industrial assets can be proceeded against where business succession occurs.

Section 11 of the Central Excise Act, 1944 permits recovery of excise dues from excisable goods, materials, plant and machinery in the hands of a successor where business is transferred or ownership changes and the transferee succeeds to the business. Applying the Supreme Court's ruling on sale by a State Financial Corporation, the Tribunal treated the proviso to Section 11 as materially similar to Rule 230(2) of the Central Excise Rules, 1944 and rejected the distinction drawn by the first appellate authority. The purchaser of the industrial assets remained liable for the predecessor's excise dues, and the attachment set aside below could not stand.

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Issues: Whether excise dues of the erstwhile owner could be recovered from the purchaser of the industrial assets sold by the State Financial Corporation, and whether the purchaser's liability survived notwithstanding the transfer through auction.

Analysis: Section 11 of the Central Excise Act, 1944, together with its proviso, permits recovery of government dues by attaching excisable goods, materials, plants and machinery in the hands of a successor where business is transferred or ownership changes and the transferee succeeds to the business. The Tribunal held that the question was covered by the Supreme Court's ruling on the effect of a sale by a State Financial Corporation, and that the wording of the proviso to Section 11 was materially similar to Rule 230(2) of the Central Excise Rules, 1944. On that footing, the distinction drawn by the first appellate authority was rejected.

Conclusion: The liability to recover the excise dues continued against the purchaser, and the impugned order setting aside the attachment could not stand.

Final Conclusion: The department's appeal succeeded and the order in favour of the purchaser was reversed, leaving the recovery proceedings valid.

Ratio Decidendi: Where statutory provisions governing recovery from a successor are similarly worded, the purchaser of assets sold by a financial corporation can be proceeded against for the predecessor's excise dues if the transfer results in succession to the business or ownership.

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