Liability of a person for purchasing property under SAFARAEISI Act from a bank under auction

[CLARENCE PEREIRA]

This is with reference to property with land,building,machinery,stores etc purchased from the Bank under SAFARAEISI Act. We have disposed the machinery.Central Excise authorities are demanding Central Excise Duty on the grounds that the previous owner may have taken modvat Credit.Under SAFARAEISI Act only the assets are transfered & not the liabilities.We have not purchased from the previous owner nor is it a take over of the previous business.The previous business is part of the old owner and we only have bought the assets.Hence the question of paying ED does not arize,nor reversal of MODVAT as we have no info as to whether MODVAT was taken at all.The Central Excise authorities should make a claim on the previous ownner.It is OK if we had taken over the business lock,stock&barrel from the previous owners. Kindly let us know if our stand is correct and any case law to support our claim.

AI Summary

Buyer Challenges Excise Duty Claim, Citing No Business Succession Under Section 11 of Central Excise Act, 1944 A person purchased property, including land and machinery, from a bank auction under the SARFAESI Act. The Central Excise authorities are demanding excise duty, claiming the previous owner might have taken MODVAT credit. The buyer argues that only assets, not liabilities, were transferred, and they did not acquire the previous business. A respondent suggests that Section 11 of the Central Excise Act, 1944, applies only in cases of business succession and should not be used to deny credit based on the previous owner's default. A relevant court decision is referenced to support this position.