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M/s Jai Jagdamba Malleables Pvt. Ltd. Versus CCE, Kanpur

Recovery of tax dues of the defaulter - Liability of the auction purchaser of the assets - Held that:- the erstwhile owner, Hans Pharmaceuticals & Chemicals, had not sold the unit directly to the appellant. It was the ‘pickup’ which auction sold the unit in exercise of their statuary power under Section 29 and 30 of the State Finance Corporation Act. Accordingly I allow the appeal and I also quash the notice dated 24/8/2004, issued by the range Superintendent, Jhansi. The appellant will be entit .....

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missioner (AR) ORDER The appellant is in appeal against Order-in-Appeal dated 31/8/2012 passed by the Commissioner (Appeals) Customs, Central Excise and Service Tax, Kanpur. 2. The appellant a Private Limited Company, purchased the assets of one M/s Hans Pharmaceutical & Chemical Private Ltd. from the Pradeshik Industrial Corporation Ltd. U.P., (PICUP for short) (state Finance Corporation) which sold the assets of the said Hans Pharmaceutical Chemicals exercising - Statutory powers under sec .....

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ty etc. would not be borne by the purchaser company. 3. The appellant was granted fresh registration under the Central Excise Act and Rules, sometime in 1996-1997. A notice dated 24/8/2008 was issued by the Range Superintendent Jhansi Calling upon the appellants to deposit tax dues amounting to ₹ 21,97,506/- pending for realisation against Hans Pharmaceutical and Chemicals Private Ltd . Further stating that the said unit was taken over by pickup for default in the payment of loans to the C .....

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purchased the assets and have not acquired the business of Hans Pharmaceuticals and Chemicals, as a going concern. Further, the tax dues of Hans Pharmaceuticals and Chemicals, cannot be collected from them and the Revenue may pursue the matter with pickup or Hans Pharmaceuticals. 4. Thereafter on being so advised the appellant preferred a Writ Petition before the Honourable Allahabad High court being Writ Petition Number 4444 of 2004. In terms of the Interim Order, the appellant deposited ₹ .....

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efective number 373 of 2011, which was also dismissed granting liberty to prefer appeal, within a period of one month from the date of order dated 28/5/2012. In response thereto the appellant preferred an appeal before the Commissioner (Appeals), who vide the impugned order held that the confirmed dues of the seller Company (Hans) are recoverable from the buyer company, that is appellant and accordingly, rejected the appeal. Being aggrieved the appellant is before this Tribunal. 5. Heard the par .....

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herein under similar facts and circumstances, vide the Final Order dated 06/08/2010 the Honourable High Court held that Central Excise Department have only 2nd charge over the property and have not right to recover such dues from subsequent bonafide purchaser of PICUP, the 1st charge holder. The Honourable High Court referring to the ruling of the Apex Court in Macscon Marbles Pvt. Ltd. (supra) held is distinguishable and observed that the said ruling nowhere held that Rule 340 of the Rules, cre .....

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also having the stipulation that all these statutory liabilities arising out of the land, shall be borne by the purchaser in the sale deed and all the statutory liabilities arising out of the said properties shall be borne by the vendee, and vendor shall not be held responsible, in the agreement of sale. It was held that Excise Duty were not statutory liabilities which arise out of land and building or plant and machinery and thus did not arise out of the properties. Further held that the dues .....

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first charge on the purchaser . It was further held that State Finance Corporation, being secured creditor, had priority over Excise dues. 8. The Ld. A.R. for Revenue relies on Rule 230 of Central Excise Rules 1944 which reads as follows: Rule 230 Goods, plant and machinery chargeable with duty and not paid. (1) When the duty leviable on any goods is owing from or by any person carrying on trade or business, whether as a producer, manufacturer or as dealer in such goods, all excisable goods, and .....

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ned for the purpose or exacting such duty; and any officer duty authorised by general or special order of the Central Board of Excise and Customs or the Collector may detain such goods, materials, preparations, plant, machinery, vessels, utensils and articles until such duties or any sums recoverable in lieu are paid or recovered. (2) Where any such person transfers or otherwise disposes of his business in whole or in part, or effects any change in the ownership thereof, in consequence of which .....

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