2008 (7) TMI 667 - AT - Central Excise

Summary

Issues:
1. Liability of the appellant for dues pending against the predecessor company.
2. Interpretation of Section 142(c)(ii) of the Customs Rules, 1962.
3. Applicability of the proviso to recover dues from the property of the successor.
4. Effect of the judgment in Macson Marbles Pvt. Ltd. v. Union of India on the case.

Analysis:

1. The case involved a situation where a company, M/s. Vaibhav Steels Ltd., had outstanding excise duty dues amounting to Rs. 15 lakhs, and a penalty was imposed on them. The company was later acquired by U.P. Financial Corporation, which subsequently sold it to the present appellant. The appellant, after acquiring the unit, registered with the Central Excise Authorities and commenced manufacturing activities.

2. The Deputy Commissioner directed the appellant to clear the dues pending against M/s. Vaibhav Steels Ltd. The Commissioner (Appeals) upheld this decision, citing Section 142(l)(ii) of the Customs Rules, which allows for the recovery of government dues, including through the detention and sale of immovable property. The Commissioner relied on a Supreme Court judgment to support the transfer of liability from the predecessor unit to the successor unit upon sale of the property.

3. The appellant contested the applicability of Section 142(c)(ii), arguing that the provision did not authorize recovery from the property of the successor entity during the relevant period. They also disputed the relevance of the Supreme Court judgment cited by the Commissioner (Appeals) as it pertained to a different set of rules not applicable at the time.

4. The Appellate Tribunal, after considering the arguments presented, clarified that Section 142(c)(ii) allows for recovery from the person against whom the dues are to be recovered. The proviso enabling recovery from the property of a successor was introduced in 2004 and was not applicable during the relevant period of the case. Consequently, the Tribunal set aside the Commissioner's decision and remanded the matter for a fresh decision, emphasizing the need to consider the issue in light of the observations provided.

This detailed analysis of the judgment outlines the issues raised, the arguments presented by the parties, and the Tribunal's decision, providing a comprehensive understanding of the legal complexities involved in the case.