2016 (3) TMI 1238 - AT - Central Excise

Detention of goods - recovery of sums due to Government - section 11 of the Central Excise Act - Held that - On perusal of the main part of Section 11 ibid, it reveals that the Central Excise officers are empowered to deduct the amount payable under the statute by the assessee, from the money owing to the person by the Department. Section 11 ibid also mandates that if the amount payable is not recovered from the assessee, the Central Excise officers will proceed to attach and sell the excisable goods and also to prepare the certificate proceedings for recovery of the sums due. The embargo created in the proviso to Section 11 ibid will not have any application to the facts of this case inasmuch as handing over position of assets of the defaulter M/s. AECEL by MPSIDC to the respondent took place on 12.11.2003 and the sale deed was executed on 22.03.2004, which were prior to insertion the proviso clause to Section 11 ibid. Thus, detention order issued by the Department is not in confirmity with the Central Excise statue - the said statutory provisions have no application to the case in hand, for the reason that the said rule is no more in vogue at the material time, when the assets of the defaulting company was handed over to the respondent. Appeal dismissed - decided against Revenue.

Summary

Issues:
Recovery of Central Excise Duty and penalty from a successor of a defaulting company under Section 11 of the Central Excise Act, 1944.

Detailed Analysis:

Issue 1: Recovery of Central Excise Duty and penalty from the successor of a defaulting company under Section 11 of the Act.
The case involved the Respondent purchasing assets from a defaulting company, AECEL, leading to a dispute over the recovery of Central Excise Duty and penalty from the Respondent. The Adjudicating Authority issued a Detention Order under Section 11 of the Act, detaining finished goods of the Respondent. The Commissioner (Appeals) allowed the Respondent's appeal, prompting the Department to file an appeal before the Tribunal. The grounds of appeal included the Commissioner's alleged ignorance of Section 11 provisions, failure to consider MPSIDC's tender terms, and the inability of MPSIDC and the Respondent to mutually decide on not paying AECEL's liabilities. The Tribunal examined the provisions of Section 11, emphasizing the power of Central Excise officers to recover sums due from the government. It noted that the detention order issued was not in conformity with Section 11 and that the proviso clause added in 2004 did not apply to the case, as the asset transfer occurred before its insertion. The Tribunal held that the detention order was not valid under the Central Excise statute and dismissed the Revenue's appeal, ruling in favor of the Respondent.

In conclusion, the Tribunal's judgment focused on the interpretation and application of Section 11 of the Central Excise Act, 1944, in the context of recovering dues from a successor of a defaulting company. The analysis highlighted the timing of asset transfer, the validity of the detention order, and the relevance of statutory provisions in determining the outcome of the case.