TaxTMI 
TaxTMI 
2013 (8) TMI 540
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted Company known as M/s. Rana Girders Pvt. Ltd. Dated 20th March 2002 was the highest and thus, successful bidder in respect of land and building as well as plant and machinery. Sale Deed dated 8.3.2002 was executed in favour of the appellant qua the land and building. Likewise, Agreement dated 14.3.2002 was executed in favour of the appellant conveying the ownership of the plant and machinery. 3. With the aforesaid Sale Deed and Agreement, the appellant has become the owner, both of the land and building and also plant and machinery. The borrower has not questioned the validity of the said auction which has attained finality. It appears that the borrower had also to discharge the liability qua excise duty which had amounted to Rs.1,00,72,442/-. To recover that amount, the Commissioner of Customs and Central Excise, Meerut-I (respondent No.2 herein) is now pressing the appellant to discharge this liability as purchaser and successor-in-interest of the land and building plus plant and machinery of the borrower. The appellant is resisting the demand with the posture that since the aforesaid properties have been purchased by the appellant in an open auction from the UPFC, free fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r which Agreement dated 15th March 2002 was executed by the parties. This Agreement also contained both the clauses, similar to the clauses in the Sale Deed, namely, the said plant and machinery was free from all encumbrances and that all the statutory liabilities arising out of the plant and machinery of the industrial unit were to be borne by the purchaser i.e. the appellant. 8. At that time, some demands of dues on account of Central Excise payable to respondent No.2 were pending. It appears that the borrower had filed two appeals against the Order-in-Original dated 29.8.2002 in this behalf. These two appeals were dismissed by the CESTAT on 30th April 2003 on account of non-compliance of the predeposit amount directed in its stay order dated 18th March 2003. Some penalties were also imposed by the adjudicating authority, under the Central Excise Act which were appealed again by the borrower. That appeal was also dismissed on 30th April 2003 and 25th May 2004 thereby confirming the demand of Customs and Excise. 9. After the conclusion of the aforesaid legal proceedings between the respondent No.2 and the borrower, following amount became due on account of duty and penalty p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to make the payment having regard to the judgment of this Court in M/s. Macson case. The appellant, on the other hand, had argued that since the appellant had not purchased the entire unit of the principal borrower the judgment of M/s. Macson case was not applicable. On the contrary it is the law laid down in Union of India vs. SICOM Ltd. 2009 (2) SCC 121, ratio whereof was attracted. It was argued that the M/s. Macson case was specifically distinguished by this Court in SICOM Ltd. holding that the ratio of M/s. Macson case would be applicable only in transfer of "ownership of business" i.e. when there is a sale of business as an ongoing concern and not in case of mere transfer of its specified assets. Significantly, the High Court took note of this distinction by referring to various other judgments as well on the lines of SICOM Ltd. of this Court as well as some High Courts. However, leaving the discussion on this aspect inconclusive, the High Court chose to rest its decision on an altogether different foundation, namely stipulation in the Sale Deed dated 8.3.2002 to the effect that the statutory liabilities arising out of the property shall be borne by the vendee (i.e. the app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, the Court held that this provision authorises detention of all excisable goods, materials, preparations, plant, machinery, vessels, utensils, implements and articles, in the custody or possession of the person or persons carrying on such trade or business or from person succeeding the business or trade or part thereof for such time till dues are paid or recovered. However, the rule does not in any way create a charge over any of the goods enumerated therein. After explaining the term "charge" as defined in Section 100 of Transfer of Property Act, it was held that charge would be different from the word "detained". As Rule 230 only empowers detention and there was no other provision under the Central Excise Act or the Rules which envisages to create any charge over the assets of a unit to enable the realization of the Central Excise Duty on top priority. The Court held that UPFC had a priority being a secured creditor on the one hand and Central Excise having no "charge" over the property. The Court specifically took note of the fact that the petitioner in that case was not the successor of the erstwhile owner in business or trade and having acquired the property without any char....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mon law principle. When Parliament or State Legislature makes an enactment, the same would prevail over the common law and thus the common law principles which existed on the date of coming into force of the Constitution of India, must yield to a statutory provision. A debt, which is secured or which by reason of the provisions of a statute becomes the first charge over the property must be held to prevail over the Crown debt which is an unsecured one. On this reasoning, the debt payable to secured creditor like the Financial Corporation was prioritised vis-a-vis the Central Excise Dues. 19. For this principle, the Court referred to its earlier judgment in Dena Bank v.. Bhikhabhai Prabhudas Parekh & Co. & Ors. (2000) 5 SCC 694 explaining the doctrine of priority to Crown Debts, thus: "What is the common law doctrine of priority or precedence of Crown debts/ Halsbury, dealing with general rights of the Crown in relation to property, states that where the Crown's right and that of a subject meet at one and the same time, that of the Crown is in general preferred, the rule being "detur digniori (Laws of England, 4th Edn.,Vol.8, para 1076, at p.666).Herbert Broom states: "Quan....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... unit as an ongoing concern and not a person who had purchased land and building or the machinery of the erstwhile concern. This distinction is brought out and explained in paragraph 24 and 25 and it would be useful for us to reproduce herein below: "Reliance has also been placed by Ms.Rao on Macson Marbles Pvt.Ltd. (supra) wherein the dues under Central Excise Act was held to be recoverable from an auction purchaser, stating: We are not impressed with the argument that the State Act is a special enactment and the same would prevail over the Central Excise Act. Each of them is a special enactment and unless in the operation of the same any conflict arises this aspect need not be examined. In this case, no such conflict arises between the corporation and the Excise Department. Hence it is unnecessary to examine this aspect of the matter. The Department having initiated the proceedings under Section 11A of this Act adjudicated liability of respondent No.4 and held that respondent No.4 is also liable to pay penalty in a sum of Rs.3 lakhs while the Excise dues liable would be in the order of a lakh or so. It is difficult to conceive that the appellant had any opportunity to pa....