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Issues: Whether the proviso to Section 11 of the Central Excise Act, 1944 empowered recovery of the predecessor's excise dues from the petitioner in the facts of the case, and whether the impugned demand and recovery notice were sustainable.
Analysis: The main part of Section 11 permits recovery from the defaulter or from a person owing money to the defaulter. The proviso, inserted later, applies only where the defaulter, as predecessor, transfers or otherwise disposes of its business or trade, or effects a change in its ownership, and is succeeded by another person in that business or trade. On the admitted facts, the petitioner was only a licensee allotted the plot by GIDC after GIDC had recovered possession from Divya; Divya was neither the owner of the plot nor the transferor of the business or trade, and no material showed any transfer of business, trade, or ownership in favour of the petitioner. The reliance on Macson Marbles was held inapplicable because the factual and statutory setting there was materially different. The Court also noted, without finally deciding, that the intervening statutory position raised a further question regarding the amendment and the earlier rule, leaving that issue open.
Conclusion: The proviso to Section 11 was not attracted, and the petitioner could not be made liable for Divya's dues. The impugned letter and notice were unsustainable.
Final Conclusion: The demand raised against the petitioner for recovery of the predecessor's excise dues was quashed, and the writ petition succeeded.
Ratio Decidendi: Recovery of a predecessor's excise dues from another person is permissible only when the statutory conditions of succession through transfer or change in ownership of the business or trade are satisfied; mere allotment or licence of property, without transfer of the defaulter's business or ownership, does not attract the proviso to Section 11 of the Central Excise Act, 1944.
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