2010 (7) TMI 458 - HC - Central Excise

Recovery of Govt. dues of Central Excise duty from subsequent buyer of land - principle of liability which culled out is that the subsequent purchaser cannot be fastened with the liability relating to the dues of the Government unless there is a specific provision in the statute, claiming first charge for the purchaser - Excise Department could not recover the amount of Rs. 2,21,532/- from the appellant which was the liability of the original owner, simply because the appellant bought the piece of a land - appellant was not liable to pay the dues of Excise Department in respect of which primary liability was that of M/s Aryavat Plywood Pvt. Ltd. Revenue directed to refund the aforesaid amount of Rs. 2,21,532/- along with interest payable under the Act within eight weeks from the receipt of the order.

Summary

Issues involved:
Interpretation of liability for excise duty on purchased land.

Detailed Analysis:

Issue 1: Liability of purchaser for excise duty on purchased land
The case revolved around the question of whether the excise duty adjudication order against the defaulting company could be enforced against the appellant company, which had only purchased land and not assets attracting Central Excise Duty. The appellant, after purchasing a plot of land, was demanded to pay excise duty dues by the Excise Department. The authorities below held the appellant liable for the dues. The appellant argued that the liability does not automatically transfer to the purchaser of land unless specific conditions are met. The appellant relied on judgments like Macson Marbles Pvt. Ltd. v. Union of India and Union of India v. SICOM Ltd. to support their case. The Division Bench of the Punjab & Haryana High Court also laid down principles emphasizing that the dues to the government get priority only when there is a specific provision in the statute claiming "first charge" over the property. The absence of such a provision in the Central Excise Act led to the conclusion that the subsequent purchaser cannot be held liable for the original owner's dues.

Issue 2: Application of statutory provisions
The respondent argued that there was a specific provision in the Central Excise Act and Rules, referring to the proviso to Section 11 and Rule 230. However, the court held that these provisions were not applicable in the case at hand. Rule 230 outlined the circumstances under which goods, machinery, and materials could be detained for non-payment of duty by the person carrying on the trade or business. The court concluded that the appellant was not liable to pay the excise duty dues of the original owner, and the statutory provisions did not apply in this situation.

Conclusion:
The High Court allowed the appeal, setting aside the orders passed by the CESTAT. It held that the appellant was not liable to pay the excise duty dues of the original owner. The Excise Department was directed to refund the amount demanded from the appellant along with interest. The appellant was also awarded costs. The judgment clarified the principles governing the liability of subsequent purchasers for excise duty dues and emphasized the importance of specific statutory provisions in determining such liabilities.