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2016 (6) TMI 820 - ANDHRA PRADESH HIGH COURT

2016 (6) TMI 820 - ANDHRA PRADESH HIGH COURT - 2016 (336) E.L.T. 513 (A. P.) - Recovery of central excise duty from successor of Unit - Auction purchaser - Restriction on to deliver, or otherwise dispose of, the plant and machinery without the order in writing of the Assistant Commissioner of Customs and Central Excise. - Held that:- In the present case, while the auction notice no doubt requires the auction purchaser to ascertain whether there are any central excise dues or not, the corresponde .....

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r; as the finished goods are not charged to Exim Bank and Exim Bank is not an agent of the Customs and Central Excise Department, they were not bound to take responsibility of keeping the goods in its custody; and the Central Excise Department could take possession of the finished goods immediately. - It is evident that the impugned notices, calling upon M/s.Polisetty Somasundaram (the auction purchaser) and M/s.Kohinoor Ropes Private Limited, (which had purchased the plant and machinery fro .....

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aking possession of the finished goods, from the premises of M/s.Polisetty Somasundarm, towards recovery of the Central Excise dues. - Decided in favor of petitioner. - Writ Petition Nos.14142 & 14534 of 2015 - Dated:- 14-12-2015 - SRI RAMESH RANGANATHAN AND SRI M. SATYANARAYANA MURTHY, JJ For the Petitioner : KOTESWARA RAO For the Respondent : GOPALAKRISHNA GOKHALEY COMMON ORDER The jurisdiction of this Court has been invoked, questioning the notice dated 23.04.2015 whereby the petitioners were .....

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ement of Security Interest Act, 2002 (for short the SARFAESI Act ), and a public notice of sale was issued. M/s. Polisetty Somasundaram (petitioner in W.P.No.14534 of 2015), a partnership firm, purchased the land, buildings and plant and machinery, of the defaulting companies, in the auction. A sale certificate was issued in their favour on 05.07.2013. Thereafter, M/s.Polisetty Somasundaram sold the plant and machinery to M/s.Kohinoor Ropes Private Limited (petitioner in W.P.No.14142 of 2015) pu .....

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2.2014) in support of their submission that it is only if the business of M/s. Bommidala Filaments Limited had been transferred to M/s.Polisetty Somasundaram would the proviso to Section 11 of the Central Excise Act, 1944 (for short the Act ) be attracted; the debt of secured creditors have priority over statutory dues such as central excise; on the title, over the plant and machinery of M/s.Bommidala Filaments Limited, being transferred to M/s.Polisetty Somasundaram, by the sale certificate dat .....

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r the provisions of the SARFAESI Act, and a sale certificate was issued in their favour on 05.07.2013. On the other hand, Sri Gopala Krishna Gokhaley, learned Standing Counsel for the Central Excise Department, would submit that the auction notice requires the auction purchaser to ascertain whether there are central excise dues or not; it is evident, therefrom, that the property was transferred to the auction purchaser subject to payment of central excise dues; and as M/s.Polisetty Somasundaram .....

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es that it is a mode of recovery of the excise dues from the assets owned by a predecessor and on his liabilities being assessed could be recovered even from the successor. The argument advanced by the appellant that sale having taken place under the State Act free of encumbrances and the transferor's rights or liabilities cannot be that of transferee does not hold good. S.29(2) of the State Act makes it clear that the property pledged, mortgaged, hypothecated or assigned to the Financial Co .....

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Excise Act. Each of them is a special enactment and unless in the operation of the same any conflict arises this aspect need not be examined. In this case no such conflict arises between the corporation and the Excise Department. Hence it is unnecessary to examine this aspect of the matter. The Department having initiated the proceedings under S.11A of this Act adjudicated liability of respondent No. 4 and held that respondent No. 4 is also liable to pay penalty in a sum of ₹ 3 lakhs whil .....

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sed of accordingly.... The judgment of the Supreme Court, in Macson Marbles Private Limied 2003(158) E.L.T.424 (SC) , was considered in a later judgment of the Supreme Court in Rana Girders Limited1; and it was held that, in Macson Marbles Private Limied2, the question which arose for consideration was of the entire unit of the principal borrower having been purchased in the auction. The Supreme Court, in Rana Girders Limited1, further observed: …..A harmonious reading of the judgments in .....

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here was no such specific provision as noticed in SICOM as well. Proviso to Section 11 is now added by way of amendment in the Act only w.e.f. 10.9.2004. Therefore, we are eschewing our discussion regarding this proviso as that is not applicable in so far as present case is concerned. Accordingly, we thus, hold that in so far as legal position is concerned, UPFC being a secured creditor had priority over the excise dues. We further hold that since the appellant had not purchased the entire unit .....

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her 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 Central Excise or the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at .....

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e provio is to attach and, thereafter, sell the properties so attached. In the present case, consequent on the sale certificate issued in their favour, by way of the sale certificate dated 05.07.2013, title over the plant and machinery passed on to M/s.Polisetty Somasundaram and, thereafter, the Central Excise Department could not have attached these movable assets as they were no longer the property of M/s.Bommidala Filaments Limited. In the present case, while the auction notice no doubt requi .....

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hrough auction to the successful bidder; they had already transferred the assets to the successful bidder; as the finished goods are not charged to Exim Bank and Exim Bank is not an agent of the Customs and Central Excise Department, they were not bound to take responsibility of keeping the goods in its custody; and the Central Excise Department could take possession of the finished goods immediately. Sri Unnam Muralidhar Rao, learned counsel for the petitioner, would submit that the finished go .....

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