CESTAT sets aside property attachment where defaulter owned only 20% share, brothers held 80% under Recovery Rules 1995 Rule 10

CESTAT Mumbai allowed the appeal and set aside the attachment of immovable property. The court held that attaching entire property where appellant held only 20% share while 80% belonged to non-defaulting brothers was improper under Recovery Rules 1995. Rule 10 permits attachment only of defaulter's specific share in jointly owned property. Additionally, interest under Section 11AB of Central Excise Act 1944 was wrongly imposed as duty became payable in 1993 but the section was enacted in 1996, with express exclusion for pre-enactment cases.

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Issues Involved:
1. Whether the Department can attach a jointly owned immovable property for recovery of its dues when 80% of the share belongs to persons not involved in the government recovery.
2. Whether the attachment of the entire property is valid when the appellant's share is only 20%.
3. Whether the interest imposed u/s 11AB of Central Excise Act, 1944 is applicable when the duty became payable before the enactment of the said section.

Summary:

Issue 1: Attachment of Jointly Owned Property
The Department issued an order for attachment of the property owned jointly by the appellant and his brothers for recovery of dues from M/s. Turbo Micro Systems. The appellant argued that his share in the property is only 20%, and the remaining 80% belongs to his brothers, who have no connection with the firm or the recovery. The Commissioner rejected the appeal, upholding the attachment.

Issue 2: Validity of Attachment of Entire Property
The Tribunal noted that Rule 10 of the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995, stipulates that attachment should be confined to the share of the defaulter. The Commissioner's decision to attach the entire property was found to be violative of the Rules of 1995. The Tribunal held that recovery should be limited to the appellant's 20% share in the property, as his brothers, who own the remaining 80%, are not involved in the defaulting firm.

Issue 3: Applicability of Interest u/s 11AB
The interest was imposed u/s 11AB of the Central Excise Act, 1944, which was not in force during the period when the duty became payable. The Tribunal observed that Section 11AB was introduced later and was not mentioned in the show-cause notice. Invoking Rule 41 of the Customs, Excise & Service Tax Appellate Tribunal (Procedure) Rules, 1982, the Tribunal set aside the demand of interest confirmed against M/s. Turbo Micro Systems u/s 11AB.

Conclusion:
The Tribunal set aside the attachment of the immovable property and the impugned order, allowing the appeal with consequential relief. The Tribunal also directed that the Revenue authorities are at liberty to initiate recovery proceedings against the defaulting partners who have not yet paid the personal penalty.

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