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2017 DIGILAW 1186 (RAJ)

Natural Fillers Private Limited v. Union of India

2017-05-10

PRADEEP NANDRAJOG, PUSHPENDRA SINGH BHATI

body2017
ORDER : 1. Land, building and machinery of M/s. Unipex Bio-chem Private Limited was mortgaged/hypothecated with the Rajasthan Financial Corporation. The Corporation was thus a secured creditor. 2. The credit being in default the Corporation proceeded to exercise its statutory right under the State Financial Corporation Act. The secured assets were put to auction. The petitioner being the highest bidder and the bid being confirmed, bid amount being paid, went into possession of the land, building and machinery of M/s. Unipex Bio-Chem Private Limited. 3. Challenge is to a demand raised by the Excise Department on 27th August, 2007 concerning recovery of Central excise dues from M/s. Unipex Electrochem Private Limited. 4. From the reply filed it is apparent that the owner of the land: RIICO, had initially allotted the same to M/s. Unipex Electrochem Private Limited, but on a request made the allotment was subsequently changed in the name of M/s. Unipex Bio-Chem Private Limited. In other words, the two Companies are distinct entities and it is not a case where the name of M/s. Unipex Electrochem Private Limited was changed to M/s. Unipex Bio-Chem Private Limited. 5. On this short ground alone the demand has to be set aside for the reason excise dues of M/s. Unipex Electrochem Private Limited cannot be fastened on M/s. Unipex Bio-Chem Private Limited. 6. That apart, as per the law declared by the Supreme Court in the decision reported as AIR 2013 SC 3422 Rana Girders Ltd. v. Union of India & ors. also requires it to be held that since a secured creditor proceeding under the State Financial Corporation Act sold the secured assets, the purchaser would not be liable to pay any dues of the central excise. 7. We note that the decision of the Supreme Court noted that a proviso was inserted to Section 11 of the Central Excise Act, 1944 on 10th September, 2004. Since the Supreme Court was dealing with a case prior to the date of the insertion of the proviso, and in the instant case we are dealing with the situation post the proviso, we note the proviso added. Since the Supreme Court was dealing with a case prior to the date of the insertion of the proviso, and in the instant case we are dealing with the situation post the proviso, we note the proviso added. It reads as under:- “Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the (Principal Commissioner of Central Excise or Commissioner of Central Excise), for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.” 8. A bare reading of the proviso shows that it is applicable to a transfer inter vivos and not where a secured creditor enforces the right under a statute. 9. The writ petition is allowed. The impugned demand notice dated 27th August, 2007 is quashed. 10. No costs.