Excise duty liability under sick company protection law does not halt duty payment before removal of goods.

Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not suspend the levy or collection of central excise duty on removal of excisable goods by a sick industrial company. Excise duty remains payable under the Central Excises and Salt Act, 1944 and the relevant Rules at the stage of removal, because that liability forms part of the sale transaction and is not equivalent to proceedings for winding up, execution, distress, or similar coercive action against property. The provision therefore offers no protection against insistence on duty payment before removal of goods, and the demand for excise duty remains enforceable during rehabilitation.

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Issues: Whether Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends the levy and collection of central excise duty so as to permit removal of excisable goods by a sick industrial company without payment of duty.

Analysis: Section 3 of the Central Excises and Salt Act, 1944 read with Rule 9 and Rule 49 of the Central Excise Rules makes excise duty payable on removal of excisable goods in the manner prescribed. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 stays proceedings for winding up, execution, distress, or similar coercive action against the properties of a sick industrial company, but the statutory requirement to pay excise duty on removal of goods sold to purchasers is not a proceeding for execution or distress. The duty is part of the sale transaction and is recovered from the purchaser, and the Act contains no provision suspending excise levy or collection during implementation of a rehabilitation scheme.

Conclusion: Section 22(1) does not apply to the insistence on payment of excise duty for removal of goods by the sick industrial company.

Final Conclusion: The demand for excise duty remained enforceable, and the challenge to the refusal to permit removal of goods without payment of duty failed.

Ratio Decidendi: The protective umbrella of Section 22(1) extends only to coercive proceedings of the nature of execution or distress and does not suspend a statutory duty payable on removal of excisable goods in the course of sale.

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