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2021 (4) TMI 1052 - HC - Central ExciseSale of mortgaged property for recovery of excise dues - priority of secured debt over excise duty dues - Petitioner has purchased all the security that was owned by borrowers - HELD THAT:- In the present case as well there is only purchase of land by Petitioner in the auction conducted by DRT, Kolkata and not transfer or disposal of business or trade in whole or in part but only a transfer or disposal of mere landed asset, the proviso to section 11 of the Excise Act would not be attracted. A secured creditor has priority over crown debts/excise dues. Going forward, this is a case where petitioner has purchased land in an auction conducted pursuant to proceedings under the RDDB Act by the Debt Recovery Tribunal Kolkata of the property belonging to the Respondent No. 3 company. Petitioner is not a successor of the business of the erstwhile owner in business or trade viz: of Respondent No.3, having acquired the property without any charge independent of business or trade of the previous owner, nor the Petitioner is in custody or possession of the said property as a successor of the previous owner against whom there was a demand of excise duty. This is also not a case where the entire unit, i. e. the entire business itself was purchased by the Petitioner - Excise duty liability can be fastened only on that person who had purchased the entire unit as a going concern and not on a person who had purchased land and building or machinery of the erstwhile concern. It is only in such cases that the buyer would be responsible to discharge the liability of Central Excise. Otherwise the purchaser cannot be fastened on the liability relating to the dues of the government unless there is a specific statutory provision to that effect. Petitioner is an auction purchaser of the said property and has not acquired the business of the Respondent No.3- borrower. True also that the said purchase as per the order of Confirmation of Sale is subject to worker’s liability and other existing liabilities of the owners of the said property. Admittedly, the worker’s dues have been settled. Excise dues are not dues which arise out of land or building. Such liabilities could be in the form of property tax, municipal tax, other types of cess relating to property etc. but cannot mean excise duty dues, which arise out of manufacture - the language in the confirmation of the Sale is with reference to the liabilities relating to the said property and not with reference to the business of the Respondent No.3- borrower; we therefore hold that since Petitioner has not purchased the entire unit with business, it is not liable for the dues of the Excise Department. As far as the reliance of the learned Counsel for the Petitioner on the decision of this Court in the case of STATE BANK OF INDIA VERSUS THE STATE OF MAHARASHTRA AND ORS. [2020 (12) TMI 1214 - BOMBAY HIGH COURT] is concerned, there appears to be no doubt about the conclusion in the said decision that if any Central Statute creates priority of a charge in favour of a secured creditor, the same will rank above the charge in favour of a State for a tax due thereunder. That the mortgage of the secured creditor will get prior charge over the revenue. The impugned notices dated 29th / 30th January, 2008, 17th October, 2008 and 14th May, 2009 relating to excise duty dues are quashed and set aside - Petition allowed - decided in favor of petitioner.
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