Appellant's Appeal Upheld: Flats Not Liable for Excise Dues

The appellant's flats were sought to be attached by the Excise department for recovery of Central Excise dues related to her late husband's firms. The High Court directed the Commissioner to verify if the flats were purchased from the appellant's personal income, not inherited from her husband, emphasizing that government dues could only be recovered from inherited properties. Despite the appellant's evidence, the Commissioner upheld the encumbrance, but the Tribunal overturned this decision, ruling that the flats were purchased from the appellant's own income. The encumbrance was quashed, and the appeal was allowed, setting aside the initial order.

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Issues Involved:
1. Whether the flats purchased by the appellant can be attached by the Excise department for recovery of Central Excise dues of her late husband's firms.
2. Whether the flats were purchased from the appellant's own source of income or inherited from her late husband.

Issue-wise Detailed Analysis:

1. Attachment of Flats for Recovery of Central Excise Dues:
The primary issue is whether the flats purchased by the appellant can be attached by the Excise department for recovering dues confirmed against the proprietary firms of her late husband. The Excise department issued a letter on 09.02.2011 to the Superintendent, City Survey, Vadodara, contemplating the attachment of the flats for realizing government dues. This led to the issuance of a notice prohibiting the transfer of the said flats.

2. Source of Income for Purchase of Flats:
The appellant challenged the notice of encumbrance, asserting that the flats were purchased from her own source of income, specifically gifts from her mother-in-law and father-in-law, and not inherited from her husband. The Hon’ble Gujarat High Court remanded the matter to the Commissioner to verify the source of income used for purchasing the flats. The appellant provided a Chartered Accountant’s Certificate and supporting documents, including income tax returns, capital accounts, and bank statements, to substantiate that the funds were gifts from her mother-in-law and father-in-law.

Findings and Judgment:

1. High Court's Directions:
The Hon’ble High Court directed the Commissioner to determine whether the flats were purchased from the appellant’s own source of income and to withdraw the encumbrance if so. The High Court emphasized that government dues could only be recovered from properties inherited from the appellant’s husband, not from her personal properties acquired independently.

2. Commissioner’s Decision:
Despite the appellant's submissions, the Commissioner upheld the encumbrance, asserting that the flats were purchased using funds from her late husband’s income. The Commissioner based this on the initial payments made by Zenith Chemicals Pvt. Limited and the appellant’s daughter, Shivangi Agarwal, which were later returned by the builder.

3. Tribunal’s Analysis:
The Tribunal found that the Commissioner exceeded the High Court’s directions by considering extraneous factors and unsubstantiated grounds. The Tribunal noted that the registered sale deeds and the appellant’s documented source of income (gifts from her in-laws) were sufficient to establish her ownership. The Tribunal emphasized that the initial payments by Zenith Chemicals Pvt. Limited and Shivangi Agarwal, which were returned, bore no relevance to the appellant’s subsequent purchase of the flats.

4. Legal Precedents:
The Tribunal referenced legal precedents, including the Supreme Court’s decision in Gapadibai vs. State of Madhya Pradesh and the Madras High Court’s decision in A.G. Krishnamoorthy vs. V. Kannammal, which upheld the sanctity of registered sale deeds as evidence of ownership.

Conclusion:
The Tribunal concluded that the appellant purchased the flats from her own source of income and not through inheritance from her late husband. The Commissioner’s order was found to be unsustainable, and the encumbrance on the flats was quashed. The appeal was allowed, and the impugned order was set aside.

Final Order:
The Tribunal set aside the order dated 09.02.2011 issued by the Assistant Commissioner of Central Excise, quashing the encumbrance on the four flats. The appeal was allowed, with the order pronounced in the open court on 04.03.2021.

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