TMI Blog2017 (7) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... sale had purchased such properties from the Bank. Whether as purchaser of the assets of the assessee can the first petitioner be said to be a person liable to pay the amount defaulted by the assessee? - Held that: - section 11E of the Act of 1944 will apply and will create a first charge on the property of the assessee or the purchaser of such property as the case may be in the event, the same is not contrary to the provisions of the Act of 2002. In the present case, the Bank claims first charge over the properties put up for sale. Moreover, as noted about, the entire business was not put up for sale. Only the assets of the assessee were put up for sale. Central Excise authorities have acted without jurisdiction in proceeding against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold. The first petitioner purchased the assets only without the business of such company. The liability on account of central excise cannot be foisted upon the petitioners. He relies upon 2013 (295) E.L.T. 12 (S.C.) (Rana Girders Ltd. vs- Union of India) in support of the contention that, there is a distinction between a purchase of assets and a purchase of the business. He submits that, the Hon ble Supreme Court noticing such distinction did not fasten the liability on a purchaser of assets. He further submits that a review petition directed against Rana Girders Ltd. (supra) was rejected by the Hon ble Supreme Court, reported in 2015 (320) E.L.T. A175 (S.C.) (Union of India vs- Rana Girders Ltd.). He refers to 2016 (332) E.L.T. 601 (Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claims against one of its assessees. Such assessee is a borrower of a Bank. The Bank had proceeded under the provisions of the Act of 2002 against its security interest. It had put up the assets belonging to the defaulter/borrower for sale. The first petitioner had participated in such sale. The sale was on as is where is and whatever there is basis as appearing in the sale notice. The first petitioner being successful in the auction sale had purchased such properties from the Bank. Upon such purchase being completed, Central Excise authorities had proceeded against the first petitioner for default of the assessee/borrower. No doubt, the Central Excise authorities had informed the Bank as to the liability of its borrower on account of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct is concerned, there 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 insofar as present case is concerned. Accordingly, we thus, hold that insofar 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 as a business, as per the statutory framework he was not liable for discharging the dues of the Excise Department. 22. With this, we now revert to the first issue, namely interpretation of the clause in the Sale Deed for land and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of the land and building could be in the form of the property tax or other types of cess relating ton property etc. Likewise, statutory liability arising out of the plant and machinery could be the sales tax etc. payable on the said machinery. As far as dues of the Central Excise are concerned, they were not related to the said plant and machinery or the land and building and thus did not arise out of those properties. Dues of the Excise Department became payable on the manufacturing of excisable items by the erstwhile owner, therefore, these statutory dues are in respect of those items produced and not the plant and machinery which was used for the purposes of manufacture. This fine distinction is not taken note at all by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 529A of the Companies Act, 1956 (1 of 1956), the Recovery of Debts Due to Banks and the Financial Institutions Act, 1993 (51 of 1993) and the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 (54 of 2002), be the first charge on the property of the assessee or the person, as the case may be. In my view, section 11E of the Act of 1944 will apply and will create a first charge on the property of the assessee or the purchaser of such property as the case may be in the event, the same is not contrary to the provisions of the Act of 2002. In the present case, the Bank claims first charge over the properties put up for sale. Moreover, as noted about, the entire business was not put u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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