Statutory excise liability survives transfer of industrial assets, and private sale terms cannot defeat recovery against the successor.

Statutory excise liability attached to transferred industrial assets was treated as continuing despite a private sale agreement between the successor and the Corporation. Rule 230(2) of the Central Excise Rules, 1944 was applied to hold that transfer of the undertaking did not extinguish dues linked to the plant, machinery and other excisable assets. The Court distinguished electricity-dues authorities on the basis that tax liability stands on a different footing from contractual charges, and private arrangements cannot override taxing law. Any dispute over ultimate burden between the successor and the Corporation was held unsuitable for resolution in writ proceedings. Recovery against the successor was therefore permitted.

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Issues: Whether excise duty dues of the predecessor-in-interest could be recovered from the petitioner as successor to the industrial facility despite the terms of the sale agreement.

Analysis: The facility had been taken over by the Corporation under Section 29 of the State Financial Corporation Act, 1951, and later transferred to the petitioner under an agreement. The Court held that the agreement between the petitioner and the Corporation could not displace a statutory excise liability. Rule 230(2) of the Central Excise Rules, 1944 was applied to hold that transfer of the undertaking did not affect the liability attached to the plant, machinery and connected excisable assets. The Court distinguished the reliance on electricity dues cases on the ground that a tax stands on a different footing from contractual charges, and that private arrangements cannot exclude the operation of taxing law. The Court also noted that any dispute as to ultimate burden between the petitioner and the Corporation could not be resolved in writ proceedings under Article 226 of the Constitution of India.

Conclusion: The petitioner was held liable to face recovery of the excise duty dues as successor to the undertaking.

Final Conclusion: The writ petition failed because the statutory excise liability continued notwithstanding the transfer and the private agreement, leaving the Department entitled to proceed against the assets.

Ratio Decidendi: A statutory excise liability attaching to transferred industrial assets is not extinguished by a private sale agreement, and the successor in possession may be proceeded against under the applicable excise rules.

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