Auction purchaser not liable for predecessor excise dues absent statutory transfer of business and express fastening provision

An auction purchaser of land, plant and machinery was not liable for the predecessor unit's central excise dues where the auction conveyed only assets and not the business itself, and no statutory provision in force during the relevant period fastened prior liability on such a transfer. The court distinguished the revenue's reliance on an earlier Supreme Court ruling on the ground that it concerned a different period and did not address the absence of an enabling provision. On that basis, the demand for predecessor excise dues could not stand, and rejection of the refund claim for amounts deposited under protest was unjustified; refund with interest followed.

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Issues: Whether the petitioner, being a purchaser of auctioned land with attached plant and machinery, could be fastened with the predecessor unit's central excise dues under Rule 230(2) of the Central Excise Rules, 1944 or the proviso to Section 11 of the Central Excise Act, 1944, and whether the refund claim of the amount deposited under protest was liable to be rejected.

Analysis: The disputed liability arose in the intervening period when, on the facts found, the auction and conveyance occurred after the relevant date on which the Co-ordinate Bench had held that no provision akin to Rule 230(2) or the proviso to Section 11 existed on the statute book. The auction notice disclosed transfer of land with plant and machinery, not the business itself, so the purchaser could not be treated as having acquired the predecessor's business with its excise liabilities. The earlier Supreme Court ruling relied on by the revenue was distinguished on facts because it concerned a materially different period and did not address the absence of an enabling provision during the intervening period.

Conclusion: The demand for the predecessor's excise liability could not be sustained against the petitioner, and the rejection of the refund claim was unjustified. The issue is decided in favour of the assessee.

Final Conclusion: The writ petition succeeds, the impugned order is quashed, and the petitioner is entitled to refund with interest.

Ratio Decidendi: In the absence of a statutory provision transferring prior excise liability during the relevant period, a purchaser of auctioned assets cannot be compelled to discharge the predecessor's dues unless the transfer clearly includes the business itself and the law expressly fastens such liability.

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