TaxTMI 
TaxTMI 
2018 (3) TMI 183
X X X X Extracts X X X X
X X X X Extracts X X X X
....business of textiles. The petitioner was alloted an industrial plot bearing no.342, GIDC, Sachin, admeasuring 367 sq.mtrs. by GIDC on lease for a period of 99 years. The lease deed was executed on 16.01.1999. The petitioner company by raising loans from GIIC and GSFC started the dyeing unit at the said plot by constructing a shed and installing machinery in the year 1990. The business continued at the said place for few years till the company shut down the unit on 01.07.1998 and informed GIDC about closure under a letter dated 01.07.1998. The Central Excise License was also surrendered under a letter dated 08.02.1999. According to the petitioner, the dues of GIIC and GSFC were renegotiated and settled for a sum of Rs. 92 lakhs. Some of the directors also exited the company by selling all their shares to the remaining shareholders. These outgoing shareholders, according to the petitioners, were interested in carrying on the same business but in different capacity. They therefore constituted a partnership firm by the name Harshwardhan Exports in May, 1999 which was later on converted into a private company. Harshwardhan Exports then entered into a lease agreement with the petitioner ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e notice, it was conveyed to the noticee that Harshwardhan Exports had taken on lease for a period of six years the factory building and machinery of Chandra Dyeing. In relation to such premises, licenses and permissions were granted to Harshwardhan Exports to set up 100% EOU. It was subsequently found that Harshwardhan Exports was involved in illicit removal of excisable goods, for which, show cause notice was issued and adjudicated, as a result of which, a total demand of duty and penalty of Rs. 2,03,46,043/has been confirmed against Harshwardhan Exports. The notice also indicated that Harshwardhan Exports has also failed to pay such amount with interest. In terms of second proviso to Central Excise Act therefore, such dues can be recovered from the petitioner. The notice also referred to and relied upon section 142 of the Customs Act, 1962. The petitioner was therefore called upon to show cause why such sum of Rs. 2,03,46,043/be not recovered by attachment of plant and machinery and the factory building at plot No.343, GIDC, Sachin. 7. The petitioner replied to such show cause notice under a communication dated 04.03.2010. The petitioner pointed out that the property was mere....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the amount required to be paid to the credit of the Central Government under section 11D] the officer empowered by the [Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] to levy such duty or require the payment of such sums [may deduct or require any other Central Excise Officer or a proper officer referred to in section 142 of the Customs Act, 1962 (52 of 1962) to deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control or may be in the hands or under disposal or control of such other officer, or may recover the amount] by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business and the said Collector, on receipt of such certificate, shall proceed to recover from such person the amount specified therein as if it were an arrear of land revenue] A proviso ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....usiness and the said Collector on receipt of such certificate shall proceed to recover from the said person the amount specified thereunder as if it were an arrears of land revenue; or (ii) the proper officer may, on an authorisation by a [Principal Commissioner of Customs or Commissioner of Customs] and in accordance with the rules made in this behalf, distrain any movable or immovable property belonging to or under the control of such person, and detain the same until the amount payable is paid; and in case, any part of the said amount payable or of the cost of the distress or keeping of the property, remains unpaid for a period of thirty days next after any such distress, may cause the said property to be sold and with the proceeds of such sale, may satisfy the amount payable and the costs including cost of sale remaining unpaid and shall render the surplus, if any, to such person]: [Provided that where the person (hereinafter referred to as predecessor), by whom any sum payable under this Act including the amount required to be paid to the credit of the Central Government under section 28B is not paid, transfers or otherwise disposes of his business or trade i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to subsection (1) of Section 11 of the Central Excise Act as well as on subclause (ii) of clause( c) of subsection (1) of section 142 of the Customs Act. 13. We may record that proviso to subsection (1) of section 11 so also, proviso to subclause (ii) of clause( c) of subsection (1) of section 142 of the Customs Act were inserted with effect from 01.10.2004. The question of applicability of the said proviso to the transactions which may have been closed before the insertion by the legislature would be one question. For the purpose of these proceedings, however, it is not necessary to finally comment on this aspect of the matter. We shall proceed on the basis that said proviso as also the proviso to subsection (1) of section 11 of the Central Excise Act, are applicable in the present case. Under subclause (ii) of clause( c) of subsection (1) of section 142 of the Customs Act, the proper officer can bring distress on the movable or immovable property belonging to or under the control of the defaulter. Proviso to subclause (ii) would apply in a case where such person without paying such dues, transfers or otherwise disposes of his business or trade in whole or in part or affects an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent. In the present case, the property under reference is a leasehold right over the plant and machinery at GIDC, Sachin. If at all, the department could have put such right to sale for the remainder of the lease period. After the lease period was over, in any case, there would be no residue of the ownership right of Harshwardhan Exports in such property. Even ignoring the premature termination of the lease, the lease would expire upon completion of period of six years from the inception i.e. 16.01.1999. By efflux of time, the lease period would in any case, expire on 16.01.2005. Even if no other factor had intervened, Harshwardhan Exports's right in the property was limited to hold on to the possession and to utilize plant and the machinery till 15.01.2005. To realize the unpaid dues of the Harshwardhan Exports in any case, the department could not have sold what Harshwardhan Exports did not own. 17. In absence of any assertion of the department that Harshwardhan Exports and the petitioner Chandra Dyeing are the clones and the entire exercise of creating Harshwardhan Exports as a separate company was a sham transaction to defraud the Government revenue, in facts of the pres....