Auction purchaser protection against prior excise dues upheld where secured creditor's sale preceded crystallisation and attachment.

Excise dues could not be recovered from an auction purchaser of a defaulting unit's movable and immovable assets sold by a secured creditor under the Securitization Act, because the sale was not of the running business, the dues were neither attached nor crystallised before the auction, and the sale papers disclosed no excise encumbrance. Section 11E of the Central Excise Act was subject to the Securitization Act's overriding priority scheme, Section 37 did not alter that position, and the later Section 26E amendment was inapplicable. The recovery communications were therefore liable to be quashed and amounts already recovered refunded.

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Issues: Whether the Central Excise Department could recover the erstwhile owner's excise dues from the auction purchaser of movable and immovable assets sold by the secured creditor under the Securitization Act.

Analysis: The sale was of the movable and immovable assets of the defaulting unit, not of its running business. The sale certificate and tender terms did not disclose any excise encumbrance, and the excise dues were neither attached nor crystallised when the assets were auctioned. Section 11E of the Central Excise Act creates a first charge, but it is expressly subject to the Securitization Act, whose overriding provision gives the secured creditor priority. Section 37 does not assist the department, and the later amendment introducing Section 26E was not applicable. On these facts, the auction purchaser could not be saddled with the predecessor's excise liability.

Conclusion: The department was not entitled to recover the excise dues from the petitioner, and the impugned recovery communications were liable to be quashed.

Final Conclusion: The auction purchaser was protected against recovery of the prior excise dues, and amounts already recovered were directed to be refunded.

Ratio Decidendi: Excise dues cannot be recovered from an auction purchaser of assets sold by a secured creditor under the Securitization Act where the dues were neither attached nor crystallised prior to the sale and the statute then governing confers priority on the secured creditor.

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