Auction purchaser of assets not liable for predecessor's excise dues absent transfer of business or trade

An auction purchaser of only land and other assets is not liable for the former owner's excise dues merely because recovery proceedings were pending. The proviso to section 11 of the Central Excise Act, 1944 applies only where business or trade is transferred or disposed of, in whole or in part; a sale of isolated assets does not amount to succession to the business. The text also notes that a secured creditor's claim prevails over unsecured crown debt, and that section 11E, inserted later, did not apply to the relevant period. Departmental notices seeking recovery from the purchaser therefore could not be sustained.

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Issues: Whether the Central Excise Department could recover excise duty dues from an auction purchaser of only the land and property, and whether the purchaser became liable under section 11 of the Central Excise Act, 1944 or its proviso.

Analysis: The petitioner's purchase was of the property in auction conducted in recovery proceedings, not of the borrower's business as a going concern. The distinction between purchase of mere assets and succession to business or trade was decisive. A secured creditor's claim prevails over unsecured crown debt, and excise dues cannot be fastened on a purchaser who has not succeeded to the business of the defaulting assessee. The proviso to section 11 of the Central Excise Act, 1944 applies only where business or trade, in whole or in part, is transferred or disposed of, and not where only land or other assets are sold. The later insertion of section 11E did not govern the period in question.

Conclusion: The petitioner was not liable for the excise dues of the erstwhile owner, and the departmental notices seeking recovery from the petitioner could not be sustained.

Ratio Decidendi: An auction purchaser of only the assets of a defaulting concern is not liable for the concern's excise dues unless the purchase amounts to succession to the business or trade, or a specific statutory first charge exists.

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