TMI Blog2011 (2) TMI 1367X X X X Extracts X X X X X X X X Extracts X X X X ..... to function since long, merely because the said unit has not surrendered its registration certificate or applied for deregistration or central excise authorities have not revoked the same - the stand adopted by the respondent authority that in respect of the same premises, since the earlier registration has not been cancelled, fresh registration cannot be granted to another person is not backed by any statutory provision and as such, cannot be accepted. The action of the respondents in denying registration to the petitioner in respect of the subject property on the ground that the registration of the erstwhile unit has not been cancelled is not a valid ground for refusing registration to the petitioner - petition allowed - decided in favor of petitioner. - SPECIAL CIVIL APPLICATION No.11619 of 2000 - - - Dated:- 28-2-2011 - HARSHA DEVANI H.B.ANTANI,JJ. For The Appellant : RAKESH GUPTA WITH MR HARDIK GUPTA AND MS. POOJA GUPTA and Others For The Respondent : GAURANG H BHATT and Others JUDGMENT 1. By this petition under Articles 226 and 227 Constitution of India , the petitioners have challenged letters dated 26.9.2000 and 2.11.2000 issued by the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise Cust oms, vide letter dated 26.9.2000 called upon the petitioner co mpany to produce certain documents as stated in the said letter as well give an undertaking to the effect that the outstand ing dues against Vipulam Enterprises would be payable by the pe titioner company or any liability that would arise in future against the said M/s Vipulam Enterprises. In response thereto, the petitioner company, addressed a letter dated 29.9.2000 to the res pondent No.2 narrating the terms of the sale requesting him to take suitable action with the Central Excise authorities in that regard. The petitioner company also addressed a letter dated 6 .10.2000 to the respondent No.3, Deputy Commissioner of Central E xcise Customs, Vadodara, narrating the legal and factual pos ition and requested him to direct the Range Superintendent to issue a registration certificate so as to enable the petitioner company to commence manufacturing activities. In response to the letter dated 29.9.2000 addressed by the petitioner to the respondent No.2, the respondent No.2 addressed a letter dated 11.10.2000 to the Commissioner of Central Excise Customs, Vadodara, explaining the entire posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners submitted that the action on the p art of the Central Excise Department in not granting registration to the petitioner company and thereby withholding manufacturing activities of the petitioner company is arbitrary and bad in law. It was submitted that in fact, by doing so, the Central Excise Department is trying to recover the Vipulam Enterprises from the petitioner company, though, as per law there is no liability on the part of the petitioner company to pay the said dues. It was submitted that the petitioner company had purchased the said unit from the respondent No.2, Financial Corporation without any liability and therefore, there is no question of recovering the dues of Vipulam Enterprises from the petitioner company. Inviting attention to the affidavit-in-reply filed by the respondent No.3, it was submitted that the dues of the defaulter unit, namely, Vipulam Enterprises are prior to 28th June, 1987. Subsequently, the respondent No.2, Gujarat State Financial Corporation had taken possession of the said unit and had sold the same to the respondent No.4 by way of a public auction under section 29 of the State Financial Corporations Act in the year 1995 whereas the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of five years in seeking to recover central excise dues of the erstwhile unit from the auction purchaser was not a reasonable time for exercise of power, even if the same was not hedged in by a period of limitation; it was submitted that the action of the respondents is miserably time-barred and as such, the demand raised against the petitioners is required to be quashed on this count also. 9. Next it was contended that under the provisions of rule 174 of the Rules, which provide for registration, there is no bar against granting of registration to another unit i n case the earlier unit which was registered in respect of the same premises has stopped functioning but has not app lied for deregistration. Reliance was placed on the decisio n of the Bombay High Court in the caseTata Metaliks Limited v. Union of India [2009 (234) E.L.T. 596 [Bom.], wherein, the Court, after considering the provisions regarding registration under the Central Excise Act and the Rules framed thereunder held that under section 6 of the Act, it is the prescribed person who has to be registered. Under the Rules also, it is the person who has to get registered. The Court was of the view that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit on 28.6.1987 by issuing a certificate for recovery of the said amount under sec t ion 11 the Act. According to the respondents, there are confirmed government dues of ₹ 59,460/- which are to be re covered from the defaulter unit and that arrears are required to be recovered from the personal property of the directors or by way of detention of plant and machinery. That since 1 995, the directors are not available and therefore, action could not taken against them and as such, action had been initiated under the provisions of Central Excise Act to save the government revenue. That the petitioners have no right to take plant and machinery of the defaulter unit and therefore, even the action of the respondent No.2 of selling the property of the defaulter unit is against the law. Therefore, the respondent authorities have rightly demanded the outstanding dues of the defaulter unit from the petitioners. 12. From the facts noted herein above, it is subject property was originally owned by Vipulam Enterprises Pvt. Ltd., who availed of a loan from the respondent No.2, Financial Corporation and by way of security towards the said loan, mortgaged the subject land and building a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing amount from the petitioners is therefore, without authority of law. 13. Even otherwise, as noted herein above, the dues of the defaulter unit are of the year 1987 whereas, the said dues are sought to be recovered from the petitioners in the year 2000. As held by this Court in the Velvet P. Ltd. [supra], the respondent cannot sit on the fence and allow equities to be created in favour of third parties and then seek to recover excise duty liabilities of the erstwhile unit from unwary, unsuspecting buyer, as otherwise it would be putting premium on their own default. The Court held that the authorities cannot be permitted to wake up from their slumber and take shelter behind the amended provision of the Act, that too, an amendment which has been brought on the statute book, several years after the assets in question have been transferred. The facts of the present case are similar to the facts of the said case and as such, the action of the respondents in seeking to recover excise dues of the erstwhile unit from the petitioners is also hopelessly time-barred. 14. As regards issuance of certificate of registration to the petitioner unit, this Court is in agreement with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notification confers such power. The right of revenue however, would subsist for recovery of dues both against the defaulter or the transferee if the predicates for recovery are met. An incidental aspect of the matter would be if the licence is for a particular period, on expiry of that period, the registration certificate would cease to be operative. In such cases, there would be no question of cancelling the certificate of registration. 15. This Court is in agreement with the aforesaid view expressed by the Bombay High Court and is of the opinion that merely because the defaulter unit, though it had ceased to carry on business on the premises in question, had failed to apply for deregistration, the same should not, in any manner, come in the way of the petitioners in obtaining central excise registration in respect of the premises in question. A case where an existing unit is functioning from the same premises may stand on a different footing, but when the erstwhile unit has stopped functioning at the premises and the premises have not been transferred by the owner of the said unit but by a secured creditor in favour of a bonafide purchaser, things would stand on a diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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