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2014 (2) TMI 5 - AT - Central ExciseDuty demand - Recovery from successor The Memorandum of notice of demand was issued by the Assistant Commissioner in terms of section 142 of custom Act for attaching the goods, land and building belonging to the appellant - Held that - Respondent is the third successor of the land and building from where M/s. Shri Purohit Steel Rolling Pvt. Ltd. operating. He is manufacturing goods which are entirely different from the goods being manufactured by M/s. Shri Purohit Steel Rolling Pvt. Ltd. As such, they cannot be held to be successor in business of the defaulter - mere transfer of land and building, appellants could not be consider as successor and Section 11 of Central Excise Act, 1944 cannot be pressed into service to include several generation of successor. In as much as in that case, the appellant was the third owner of the land and building, Tribunal held that recovery of dues pending against the first owner cannot be made against the third owner of land and building - assessee is in any way related to M/s. Purohit Steel Rolling Pvt. Ltd. or M/s. Prabhu Steels Ltd. or in any way connected with the cases wherein demand was confirmed against M/s. Purohit Steel Rolling Pvt. Ltd., I find no reason to direct recovery of the dues from the present respondent - Decided against Revenue.
Issues:
1. Recovery of outstanding dues from the present respondent as the successor of the defaulter. 2. Interpretation of the term "successor in business" in the context of recovery of dues. 3. Application of legal precedent in determining liability for outstanding dues. Issue 1: Recovery of outstanding dues from the present respondent as the successor of the defaulter: The case involves a dispute over the recovery of outstanding dues amounting to Rs.21.80 lakhs against a defaulter, M/s. Shri Purohit Steel Rolling Mills Pvt. Ltd. The Revenue sought to recover these dues from the present respondent, who had acquired the land and building from where the defaulter operated. The jurisdictional Superintendent of Central Excise issued a notice demanding the payment of dues. However, on appeal, the Commissioner (Appeals) observed that the recovery action against the present respondent was premature. The Commissioner suggested that the Revenue should first approach the predecessors of the present respondent for recovery before targeting the present respondent for the outstanding dues. Issue 2: Interpretation of the term "successor in business" in the context of recovery of dues: The Tribunal analyzed whether the present respondent could be considered a "successor in business" of the defaulter, M/s. Shri Purohit Steel Rolling Mills Pvt. Ltd. It was noted that the respondent was the third successor of the land and building, but the goods manufactured by the respondent were different from those of the defaulter. Referring to a legal precedent, the Tribunal held that mere transfer of land and building does not automatically make the transferee a successor in business for the purpose of recovering dues. The Tribunal emphasized that Section 11 of the Central Excise Act cannot be used to hold successive owners liable for the dues of the initial defaulter. Issue 3: Application of legal precedent in determining liability for outstanding dues: Applying the legal precedent cited, the Tribunal concluded that the present respondent, as the purchaser of the land and building, was not a successor in business of the defaulter. The respondent had not acquired the machinery or continued the same manufacturing activities as the defaulter. Therefore, the Tribunal rejected the appeal filed by the Revenue, stating that there was no evidence connecting the present respondent to the defaulter or the confirmed demands against them. Consequently, the Tribunal ruled that the recovery of dues from the present respondent was unwarranted. In summary, the judgment clarifies the legal interpretation of the term "successor in business" in the context of recovering outstanding dues from a new owner of property previously owned by a defaulter. The Tribunal emphasized the need for a direct connection between the new owner and the defaulter's liabilities before holding the new owner responsible for the dues.
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