TMI Blog2010 (8) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 the Excise Department is entitle to recover the dues from the assets of the previous owners which had come to the successor. Held that: - The only power given in Rule 230(2) of the Central Excise Rules, 1944 is to detain the goods which are in custody or possession of the person carrying on such trade or business. Apart from the above rule, there is no other provision under the Central Excise Act or the Rules which envisages to create any charge over the assets of a unit to enable the realization of the excise duty on top priority - No doubt sovereign dues/crown debts have a preferential rights of recovery over other ordinary and unsecured creditors but in the absence of any provision creating a 'charge or a first charge' in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Chandra Gupta and Raj Kumar Gupta, the Directors of the Company on receiving the sale consideration of ₹ 60,000,00/-. The sale deed specifically provided that the property is being transferred free from all charges and encumbrances. Thus, the aforesaid two purchasers became the absolute owners of the unit whereon petitioner is running its business. 2. It appears that the previous owners M/S Kashi Ram Panna Lal Industries Private Limited were in arrears of excise dues also and as such the department of Central Excise vide letter dated 27.5.2003 called upon the UPFC to clear the aforesaid dues. The response of the above letter, if any, is not available on record. However, when the sale deed was executed, two demand notices dated 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of any excise dues which may be outstanding against the previous owner of the unit. The decision of the Apex Court on the basis of which the impugned demand notices have been issued is not applicable in the facts and circumstances of the case especially when the petitioner/its directors have not purchased the business of the previous owner but only land and building. 6. On the other hand Sri Shambhu Chopra, learned counsel for the Central Excise has defended the notices on the ground that the petitioner is a successor of the previous owners and in view of Rule 230 of the Central Excise Rules, 1944 the Excise Department is entitle to recover the dues from the assets of the previous owners which had come to the successor. He has als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which happened to be a secured creditor vis-a-vis previous owners M/.S Kashi Ram Panna Lal Industries Private Limited and that the petitioner/its Directors before purchase had no knowledge of the outstanding Central Excise dues of the previous owner. Thus, the case of the petitioner seems to be fully protected by the aforesaid two decisions. However, some difficulty arises on account of Rule 230(2) of the Central Excise Rules, 1944 in view of which the Supreme Court in Macson Marbles Private Limited v. Union of India, AIR 2004 SC 4927 observed that the aforesaid rule provides for a mode of recovery of excise dues from the assets owned by the predecessor which could be recovered from such assets even from the successor. 10. We have caref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant, machinery, vessels, utensils, implements and articles in the custody or possession of the person or persons succeeding may also be detained for the purpose of exacting duty from the producer, manufacturer or dealer upto the time of such transfer, disposal or charge, whether such duty has been assessed before such transfer, disposal or charge, but has remained unpaid-, or is assessed thereafter. 11. A plain and simple reading of the aforesaid rule makes it clear that it only authorises detention of all excisable goods, materials, preparations, plant, machinery, vessels, utensils, implements and articles in the custody or possession of the person or persons carrying on such trade or business or from person succeeding the business or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in custody or possession of the above property, as the successor of the previous owner against whom there was a demand of excise duty. 12. No doubt sovereign dues/crown debts have a preferential rights of recovery over other ordinary and unsecured creditors but in the absence of any provision creating a 'charge or a first charge' in favour of central excise, the claim of the secured creditor would normally prevail over the crown debts also. 13. The Apex Court in Union of India and others v. SICOM Limited and another, 2009 (2) SCC 121 while considering the doctrine of priority in the matter of realization of dues under the Central Excise Act vis-a-vis secured debts under the State Financial Corporation Act, 1951 held that a de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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