1999 (2) TMI 76 - HC - Central Excise

Authorities Cannot Refuse Transfer based on Predecessor's Arrears without Due Process

The court held that authorities cannot refuse a registration certificate to transferees based on predecessor's arrears without due process. Respondents ... Registration/Licensing Issues:Mandamus for compliance with Rule 174 of Central Excise Rules, 1944 and issuance of registration certificate.Analysis:The petitioners, as transferees, sought a mandamus to direct compliance with Rule 174 of the Central Excise Rules, 1944, for the issuance of a registration certificate. The Rule mandates a duty on the transferee to obtain a fresh certificate upon transfer of business. Sub-rule (9) outlines the procedure for granting a registration certificate within 30 days of application receipt, with a deeming provision if not granted within the stipulated period. Additionally, sub-rule (8) requires a registered person ceasing operations to surrender their registration certificate. The petitioners applied for a fresh certificate on 6-7-1998, but it was returned on 6-8-1998 due to outstanding dues from the predecessor, despite the predecessor's assurance to fulfill obligations upon notification of dues. The petitioners argued that authorities cannot refuse a registration certificate based on predecessor's arrears, as per Rule 174(9).The mechanism for issuance of a registration certificate under Chapter VIII of the Rules mandates obtaining a certificate for engaging in specified trade. The Rule prohibits conducting business without a certificate, with provisions for relaxation by the Central Board of Excise and Customs for specific persons or classes. Each premise requires a separate registration, and a transferee must obtain a fresh certificate upon business transfer. The Rule also addresses endorsements for new products and surrender of registration upon ceasing operations. Sub-rule (9) specifies the timeframe for granting a registration certificate, with a deeming provision if not issued within 30 days. The Rule does not empower authorities to decline issuance, as indicated by the deeming provision's interpretation.The respondents argued against issuing a second registration due to the existing registration not being surrendered. However, Rule 174 does not prohibit issuing a second certificate for the same premises to a different party. Sub-rule (11) allows revocation of a certificate under specific circumstances but does not authorize authorities to withhold issuance. The judgment concluded that authorities lack jurisdiction to deny a registration certificate based on predecessor's arrears without quantification or due process for cancellation or revocation. The respondents were directed to consider the petitioners' application for a certificate within 15 days, failing which the deeming provision would apply. The petitioners were permitted to resubmit their application within a week, and the writ petition was disposed of at the admission stage.