Tribunal grants refund, appellant not liable for dues, sets aside impugned order

The Tribunal allowed the appellant's appeal, setting aside the impugned order. It held that the appellant was not liable for the dues of M/s Roma Industries as per the undertaking given at the time of cancellation of Central Excise registration. The Tribunal granted a refund to the appellant along with interest, stating that the revenue had wrongly collected the dues related to M/s Roma Industries. The judgment was pronounced on 06.07.2022.

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Issues Involved:
1. Legality of the undertaking for payment of dues.
2. Interpretation of the undertaking.
3. Authority of the signatory of the undertaking.
4. Applicability of Section 11 of the Central Excise Act.
5. Applicability of Section 142 of the Customs Act.
6. Liability of the appellant for dues of M/s Roma Industries.
7. Precedent cases and judgments.

Issue-wise Detailed Analysis:

1. Legality of the undertaking for payment of dues:
The appellant argued that the refund claim was disallowed based on an alleged undertaking, which was not supported by any provision in the Central Excise Act or the Rules. The appellant contended that the department cannot enforce commitments beyond the clear provisions of the Act and Rules, and such an exercise of power is illegal.

2. Interpretation of the undertaking:
The appellant submitted that the undertaking was misinterpreted by the department. The undertaking was meant to cover old dues of the appellant, not the dues of M/s Roma Industries. The department's interpretation that the appellant would be liable for M/s Roma Industries' dues was incorrect.

3. Authority of the signatory of the undertaking:
The appellant argued that the second undertaking from 2002 was not executed by the appellant and lacked the necessary company resolution. The signatory, Vikesh Jayantilal Mandiviwala, was not a director of the appellant company at the relevant time, thus questioning the validity of the undertaking.

4. Applicability of Section 11 of the Central Excise Act:
The appellant contended that Section 11 of the Central Excise Act, which deals with the recovery of sums due to the government, did not apply as M/s Roma Industries was not a successor-in-business of the appellant. The appellant had merely leased the property to M/s Roma Industries, and there was no transfer of business or trade.

5. Applicability of Section 142 of the Customs Act:
Similarly, the appellant argued that Section 142 of the Customs Act did not apply because M/s Roma Industries had no interest in the appellant's property. The appellant had not transferred any business or trade to M/s Roma Industries, and the latter had no proprietary interest in the land, plant, and machinery.

6. Liability of the appellant for dues of M/s Roma Industries:
The Tribunal found that the undertaking given at the time of cancellation of Central Excise registration did not bind the appellant to the liability for M/s Roma Industries' dues. The Tribunal cited the Supreme Court's decision in Tata Chemicals v. CCE, which held that something illegal cannot become legal by the act of a third person. The Tribunal concluded that the appellant was not liable for the dues of M/s Roma Industries.

7. Precedent cases and judgments:
The Tribunal referred to several judgments, including Chandra Dying & Printing Mills Pvt. Ltd. v. Union of India and M/s Sahil Textiles v. CCE, which supported the appellant's position. These cases established that government dues against an assessee cannot be recovered from the property owner who leased the property to the assessee.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The Tribunal held that the revenue had wrongly collected the amount of dues pertaining to M/s Roma Industries and that the appellant was entitled to a refund along with interest as per law. The judgment was pronounced in the open court on 06.07.2022.

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