AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2010 (8) TMI 951
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....gran dated 25th February 2003. Petitioner a separate legal entity and a private limited company offered to purchase the aforesaid unit and its tender was accepted by the UPFC on 3rd May, 2003. In pursuance of the above acceptance, UPFC executed a sale dated 9th May, 2003 in favour of Subhash Chandra Gupta and Raj Kumar Gupta, the Directors of the Company on receiving the sale consideration of Rs. 60,000,00/-. The sale deed specifically provided that the property is being transferred free from all charges and encumbrances. Thus, the aforesaid two purchasers became the absolute owners of the unit whereon petitioner is running its business. 2. It appears that the previous owners M/S Kashi Ram Panna Lal Industries Private Limited were in arrea....
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....at the Directors of the petitioner are bonafide purchasers in good faith of the property in dispute for valuable consideration and since the property has been purchased through public sale from UPFC free from all encumbrances, petitioner or its directors are not liable for payment of any excise dues which may be outstanding against the previous owner of the unit. The decision of the Apex Court on the basis of which the impugned demand notices have been issued is not applicable in the facts and circumstances of the case especially when the petitioner/its directors have not purchased the business of the previous owner but only land and building. 6. On the other hand Sri Shambhu Chopra, learned counsel for the Central Excise has defended the ....
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.... cannot be held responsible for payment of the same when the property had fallen to his hands free of charge. 9. In the instant case there is no dispute that the petitioner/ its directors are bona fide purchasers in good faith for value of the property from the UPFC which happened to be a secured creditor vis-a-vis previous owners M/.S Kashi Ram Panna Lal Industries Private Limited and that the petitioner/its Directors before purchase had no knowledge of the outstanding Central Excise dues of the previous owner. Thus, the case of the petitioner seems to be fully protected by the aforesaid two decisions. However, some difficulty arises on account of Rule 230(2) of the Central Excise Rules, 1944 in view of which the Supreme Court in Macson M....
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....erwise disposes of his business in whole or in part, or effects any charge in the ownership thereof, in consonance Of which he is succeeded in the business or trade or part thereof by any other person or persons, all excisable goods, materials, preparations, plant, machinery, vessels, utensils, implements and articles in the custody or possession of the person or persons succeeding may also be detained for the purpose of exacting duty from the producer, manufacturer or dealer upto the time of such transfer, disposal or charge, whether such duty has been assessed before such transfer, disposal or charge, but has remained unpaid-, or is assessed thereafter. 11. A plain and simple reading of the aforesaid rule makes it clear that it only auth....
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....ty. Moreover, the petitioner had not succeeded the erstwhile owners in business or trade. The petitioner or its directors having acquired the above property without any 'charge' independent of the business or trade of previous owners is not a person in custody or possession of the above property, as the successor of the previous owner against whom there was a demand of excise duty. 12. No doubt sovereign dues/crown debts have a preferential rights of recovery over other ordinary and unsecured creditors but in the absence of any provision creating a 'charge or a first charge' in favour of central excise, the claim of the secured creditor would normally prevail over the crown debts also. 13. The Apex Court in Union of India ....