Excise duty recovery from transferee upheld despite financial corporation sale, as statutory revenue priority prevailed over prior mortgage.

Excise duty outstanding against the original defaulter could be recovered from the transferee of the undertaking, because section 11 of the Central Excise Act permits recovery as arrears of land revenue and rule 230(2) of the Central Excise Rules allows detention or proceeding against goods, plant, machinery and other movables in the hands of a successor or transferee where duty due up to transfer remains unpaid. A sale by the State Financial Corporation under section 29 of the State Financial Corporations Act did not extinguish liabilities attaching to the transferred business, and a prior mortgage did not defeat the Revenue's statutory claim. Excise dues were treated as debts due to the State enjoying priority over the mortgage claim, so recovery against the transferee was upheld.

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Issues: Whether excise duty dues outstanding against the original defaulter could be recovered from the transferee of the undertaking despite sale by the State Financial Corporation under section 29 of the State Financial Corporations Act, 1951, and whether the transferee could resist recovery on the footing of a prior mortgage and the provisions governing the financial corporation.

Analysis: Section 11 of the Central Excise Act permits recovery of duty as arrears of land revenue, and Rule 230(2) of the Central Excise Rules specifically enables detention of goods, plant, machinery and other movables in the hands of a successor or transferee where business has been transferred and duty due up to the time of transfer remains unpaid. The transfer effected by the Financial Corporation under section 29 of the State Financial Corporations Act does not extinguish liabilities that follow the property, and the proceeds of sale under that provision do not defeat the statutory right of the Revenue to proceed against the undertaking in the hands of the transferee. The Court also held that excise dues are debts due to the State and therefore enjoy priority as Crown debt over the mortgage claim.

Conclusion: The transferee was liable to be proceeded against for the outstanding excise duty, and the recovery action was upheld against the assessee.

Final Conclusion: The writ petition failed because the statutory recovery power of the excise authorities prevailed over the transferee's resistance based on the financial corporation sale and prior mortgage.

Ratio Decidendi: Where a taxing statute authorises recovery from the property or business in the hands of a transferee, and the public revenue debt has priority in law, a purchaser from a financial corporation cannot defeat statutory recovery by relying solely on the corporation's sale or an antecedent mortgage.

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