TMI Blog2022 (7) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual meaning of said para is that if the dues related to Appellant i.e. arise after the surrender of registration certificate was not paid by M/s Roma Industries, than the same will be paid by the Directors /Partners of M/s Shaniyal Dying and Printing Mills. The said undertaking nowhere state that dues related to M/s Roma Industries will be paid by the Appellant or for the dues of M/s Roma Industries appellant will be responsible. Clearly, in the present matter entire undertaking has been misinterpreted by the department. In the present matter section 11 of the Act can have no application in the facts of the case. In the present disputed matter appellant have not succeeded or acquired the business or trade of the arrears holder (M/s Roma Industries) and even have not purchased any property of the arrears holder (M/s Roma Industries). M/s. Roma Industries cannot treated as predecessor and the appellant cannot be treated as successor in the business of M/s Roma Industries. Between both of them there is relationship of lessor and lessee - Further as per the said agreement, M/s Roma Industries was absolutely liable for all the government dues for the period during which they were h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property Plot No. 8206, GIDC, Sachin, Surat (Land and Building) owned by the Appellant were attached under Panchnama dated 19.07.2013. Appellant made payment of Rs. 1,40,48,110/- against the outstanding dues pending against M/s Roma. Thereafter, Appellant filed the refund claim for said amount on the ground that they have paid the above amount which were not legally liable to be paid by them only to save their property from the possible auction by the department. The payment were made by them are require to be refunded to them. A show cause notice was issued proposing to reject the refund claim and the adjudicating authority after due process, rejected the appellant s claim for refund amount. Aggrieved by the said order, the appellant preferred an appeal before the Commissioner (Appeals) of Central Excise and Central Tax, Vadodara who vide impugned Order-In-Appeal dated 26.05.2016 rejected the Appeal and, against which, the present appeal is filed. 02. Shri S. Suriyanarayan, Learned Counsel appearing on behalf of the appellant submits that refund claim is disallowed on the ground of alleged undertaking. However, neither the provisions of the Central Excise Act, nor the Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of 2002 is concerned, the same is not even executed by Appellant. There is no resolution of the appellant company permitting anyone to give such an undertaking. The said undertaking is given by the Vikesh Jayantilal Mandiviwala. Now, at the relevant time, he was not even director of the Appellant company. 2.4 He further submits that leave and licence does not create any interest in M/s Roma Industries, question of enforcing the demand of M/s Roma Industries against the assets of the appellant under Section 11 also cannot arise. M/s Roma Industries has no interest, whatsoever, on land, plant and building given to them under a leave and licence. Hence provisions of Section 11 can never apply. For the same reason, there can be no question of attaching the said properties, in as much as, the said properties do not belong to M/s Roma Industries at all. It is also pertinent to note that name of Roma Industries has never been entered in the record of the GIDC. There is no application made for transferring the unit to them, nor any application was made for leasing out the premises to them by way of lease or transfer. Thus even otherwise, M/s Roma Industries have absolutely no propri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inting Mill, Sachin will be responsible and pay the government dues. From the plain reading of above undertaking it is clear that the said undertaking was given by the Appellant in respect of dues of M/s Shaniyal Dying and Printing mills only. The last para 5 of undertaking was wrongly interpreted by the department in the present matter. The actual meaning of said para is that if the dues related to Appellant i.e. arise after the surrender of registration certificate was not paid by M/s Roma Industries, than the same will be paid by the Directors /Partners of M/s Shaniyal Dying and Printing Mills. The said undertaking nowhere state that dues related to M/s Roma Industries will be paid by the Appellant or for the dues of M/s Roma Industries appellant will be responsible. Clearly, in the present matter entire undertaking has been misinterpreted by the department. 4.1 We also hold that the undertaking given at the time of cancellation of Central Excise registration does not ipso facto bind the appellant with the liability which is otherwise not present. The Hon ble Supreme Court in the case of Tata Chemicals v. CCE [2015 (320) E.L.T. 45 (S.C.)] held that something illegal canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of such transfer or otherwise disposal or change.] In the present matter section 11 of the Act can have no application in the facts of the case. In the present disputed matter appellant have not succeeded or acquired the business or trade of the arrears holder (M/s Roma Industries) and even have not purchased any property of the arrears holder (M/s Roma Industries). M/s. Roma Industries cannot treated as predecessor and the appellant cannot be treated as successor in the business of M/s Roma Industries. Between both of them there is relationship of lessor and lessee. The appellant have simply given Factory Plot on lease and later on under Leave Licence Agreement to M/s Roma Industries for their business use. This cannot make the appellant liable for any Central Excise dues standing in the name of the M/s. Roma Industries. Further as per the said agreement, M/s Roma Industries was absolutely liable for all the government dues for the period during which they were having possession of the said plot. 4.3 We also find that in the matter of Chandra Dying Printing Mills Pvt. Ltd. Vs. Union of India 2018 (361) E.L.T. 253 (Guj.) the Hon ble High court also observed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificate 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 to said sub-section (1) of Section 11 was added with effect from 10-9-2004 which 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 Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall 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 Principal Commissioner of Customs or Commissioner of Customs, for the purposes of recovering the amount so payable by such predecessor at the time of such transfer or otherwise disposal or change; (d) (i) the proper officer may, by a notice in writing, require any other person from whom money is due to such person or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the credit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 sub-clause (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 any change in ownership thereof. In such a situation, the property in possession of the transferee may also be attached and sold by the proper officer after following the prescribed procedure. 14 . For various reasons, in the present case, invocation of the said provisions by the department is defective. We proceed on the basis that the central excise dues are that of Harshwardhan Exports. The department has not set up any case of Harshwardhan Exports and the petitioner Chandra Dyeing being one and same entity though on paper, separate companies. In other words, it is not the case of the department that entire creation of Harshwardhan Exports as the company was a sham transaction only with a view to defraud the Government revenue or other creditors and in fact it was behind the scene that the petitioner alone was operating the entire business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 present case, there is no possibility allowing the respondents to sell the property of the petitioner for the unpaid dues of the Harshwardhan Exports. Even in the show cause notice dated 4-2-2010, the department has not built any such case. Case of the department merely was that Harshwardhan Exports had defaulted in paying a sum of Rs. 2.03 crores (rounded off), that Harshwardhan Exports had set up its manufacturing unit on the plot of land leased by the petitioner to Harshwardhan Exports and that the petitioner should therefore pay up such sum. Significantly, such notice referred to one of the conditions for granting permission to Harshwardhan Exports to set up a 100% EOU at the said place. This condition provided that the lease would last till 15-1-2005 and in any case, the factory would not be vacated till the export obligation of the Har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts has left their premises before completion of export obligations and expiry of lease period of six years. I find that on the very same issue, the Tribunal has discussed in detail, the legality of the recovery of the outstanding dues from the lessor when the lessee, an 100% EOU, vacated the premises before fulfillment of the export obligations in Rajabali Ismail Rajbara case(supra) and by majority held that recovery cannot be made from the Lessor by attachment of the property. In view of the above judgments, it is settled that the government dues against the assessee cannot be recovered from the owner of the property which was leased out to the assessee against whom the dues are pending accordingly, the revenue has wrongly collected the amount of dues pertaining to M/s. Roma Industries consequently, the said amount is required to be refunded to the appellant along with interest as per law. 05. Thus, following the precedent laid down in above judgments and as per our above discussion and finding we do not find merit in impugned order and accordingly, the same is set aside and the appeal is allowed with consequential relief, if any, as per law. (Pronounced in the open cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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