TMI Blog2008 (2) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ation so that the Petitioner may be allowed to remove the goods manufactured from the factory at Redi on payment of the usual excise duty as leviable on the goods so manufactured and in accordance with law. The order, confirming the ad interim of 27.3.2006 also imposed some additional conditions directing the Petitioner to deposit a sum of Rs. 5 Crores (Rupees Five Crores) with further direction that if ultimately, the Petitioner succeed in the writ petition, the Respondent No. 2 was to restitute the said amount along with simple interest of 6% per annum from the date of deposit untill payment. There was a restraint order against the Petitioner not to create any third party right or encumber the assets which they had purchased from Respondent No. 6 being the assets of Respondent No. 7 without prior permission from this court. 2. The Respondent No. 7 had been operating a Pig Iron factory at Redi and had run up huge debts to Banks and other Financial Institutions. The Industrial Development Bank of India (IDBI) one of the banks issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (For short "SA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs remitted the agreed amounts to SASF aggregating upto Rs.100,00,000/-(Rupees One Hundred Crores only). A sale certificate for the immovable properties of Redi Plant was issued in favour of the Petitioners along with possession certificate. The sale certificate for the remaining amount was to be issued once all payments required to be made to SASF was made by the Petitioners in full and final settlement of the dues. 3. At this stage, a demand notice dated 25.1.2006 was issued to the Petitioners by the Superintendent of Central Excise, demanding the sum of Rs. 12,98,00,000/- plus further interest due from Respondent No. 7. The Petitioners on 01.02.2006 applied for registration to the Assistant Commissioner of Central Excise, Ratnagiri in terms of Rule 9 of the Central Excise Rules, 2002. In terms of the said Rules, a manufacturer engaged in the manufacture of excisable goods is statutorily required to apply and obtain registration from the officer of Central Excise. Petitioners were informed by letter dated 1.2.2006 that an order had been passed refusing to grant registration, on the ground that in the said premises there is already an existing Central excise registration in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and moveable assets of M/s. UIL and have neither acquired nor succeeded in the business of Respondent No. 7 nor taken over the business or central Unit of UIL. The Petitioners have only acquired certain assets of UIL free from all encumbrances and as such there is no statutory obligation on the Petitioners to discharge liability of outstanding dues towards excise authorities. Distinguishing the case of M/s. Manibhadra Processors (supra), it is set out that M/s. UIL has surrendered its registration by cancellation to the department. 5. We shall first consider the issues in Writ Petition No. 759 of 2006 in the matter of registration of the establishment of the Petitioners. . Section 6 of the Central Excise Act reads as under : "6. Registration of certain persons - Any prescribed person who is engaged in - (a) the production of manufacture or any process of production or manufacture of any specified goods included in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), or (b) the wholesale purchase or sale (whether on his own account or as a broker or commission agent) or the storage of any specified goods included in the First Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise. . These are some of the requirements as set out under the rules. 6. A combined reading therefore, of Section 6 of the Act read with Rule 9 as also the notification shows that the registration must be by the "Person". . Our attention is however, invited to the judgment of this court in Manibhadra Processors Vs. Additional Commissioner of C. Ex. 2005 (184) E.L.T. 13 (Bom.) to contend that if there be an earlier holder of the registration certificate who has not paid the outstanding excise duties and fails to surrender registration certificate with respect to the same factory premises, no other unit in the same premises can be registered under the Rules unless earlier registration is deregistered or cancelled or surrendered by such registrant and all excise dues are cleared. On behalf of the Revenue, the learned counsel has relied on this judgment to contend that in the instant case, there is a subsisting registration in favour of Respondent No. 7, Usha Ispat and once there be registration in their favour, the Registrar was right in rejecting or returning the application for registration made by the Petitioner herein. . Let us consider the ratio of the said judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of that case. 7. A perusal of Section 6 makes it absolutely clear that who has to be registered is the prescribed person. Under the rules also, it is the person who has to get registered. The notification in Clause (2) only sets out that if such registered person has more than one premises, then each of such separate premises would require registration certificate for each of such premises. In other words, it is the person who has to obtain separate registration certificate for each of the said premises. It is open to a person who has ceased to carry on the business to apply for deregistration. Would that mean in the absence of the person who has closed or sold the business or premises, applying for deregistration, there is no jurisdiction to grant another person registration of the premises as in the case of a bona fide transferee for value or for that to the owner of the premises whose lessee has defaulted in payment of excise dues. Section 6 and Rule 9 and the notification contemplates that it is the person who must be registered. Neither Section 6 nor Rule 9 and the Notification is a provision for enforcing the claim for dues of the department. That is contained in differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jumder, Commissioner, C. Ex. Pune II. It is set out that the Petitioner is incumbent owner of the fixed assets including Plant and machinery and the manufacturing premises, owned earlier by their predecessors M/s. Usha Ispat Ltd. at Terekol, Redi, which assets they have taken over from M/s. UIL at Terekol, Redi. In Para 12, it is set out that it is immaterial whether the Petitioner has taken over the entire business of M/s. UIL as the Petitioner's have taken over the assets of M/s. UIL at Terekol, Redi and consequently are the legal successors of M/s. UIL and hence are bound to fulfil the legal obligations cast upon them under the Customs Act, 1962. To the contention raised by the Petitioners that the Predecessor is holding and carrying on the business in various other locations and is very much available for payment of dues, it is set out that no such facility of the predecessor is available under the jurisdiction of the respondents and that the Petitioners contention that respondent should have recovered customs dues from the sale proceeds of Satarda plant is irresponsible and misconstrued. The respondents do not have control over the Satarda Plant. As there are demands of custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 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 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 the proper officer, after obtaining written approval from the Commissioner or Customs, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change. (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the provisions of Section 35 of the SARFAESI Act is it open to Respondent Nos. 1 to 3 to recover the dues as preferential dues of the Union of India as having priority of claim over other secured creditors? The other relevant issue for consideration would be whether the sale by SASF of the asset of R. No. 7 would result in the transfer of assets by Respondent No. 7 in favour of the Petitioners herein and whether such transfer is voluntary? Yet other issue would be whether the transfer of assets in terms of proviso to Section 142 would amount to transfer or disposal of business or trade in whole or in part? We may at this stage note that under the proviso what can be sold are the goods, plant and machineries as described therein. There is no power of sale of immovable property. The immovable property of the tax defaulter can only be sold by issuance of the certificate and the Collector of District acting on the certificate can recover it as an arrears of land Revenue. Similar is the position under the Central Excise Act. 11. In our opinion, these issues are similar to the issues which arose in Writ Petition No. 4171 of 2007 decided on 5.2.2007 in Krishna Life Style Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to Section 142 of Customs Act and relying on the judgment of Mascon Marbles Pvt. Ltd. Vs. Union of India 2003 (158) E.L.T. 424 S.C. the transfer can be said to be transfer which is voluntary. 12. In so far as Issue No. 4 is concerned, it is not possible to record a finding that the Petitioners have succeeded to the business of M/s.Usha Ispat Ltd. Ordinarily therefore, we would have left the issue for consideration in appropriate proceedings before Respondent Nos. 1 to 3 or other competent authority. However, considering our finding that under the SARFAESI Act, Government dues whether it be excise and in the present case also customs, do not have priority over dues of secured creditors, the issue stands answered in favour of the Petitioner. . We are clearly therefore, of the opinion that considering the provisions of the SARFAESI Act, the provisions of the said Act will prevail over the provisions of the Customs Act and Central Excise Act. Once the Petitioner had purchased the assets in an auction held under the SARFAESI Act, they will hold the assets free from any encumbrances. It is, therefore, not open to Respondent Nos. 1 to 3 to demand dues of Respondent No. 7 from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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