2023 (5) TMI 1314 - HC - Central Excise

Recovery of dues - different department of State including Excise Revenue will have priority over the secure creditor s debt or not - HELD THAT - Red entries/lien entered in the revenue documents qua secured assets of all the petitioners are ordered to be removed. All orders/directions passed to the contrary by the authorities shall stand quashed. All legal consequences shall follow. All these petitions are allowed.

Summary

Issues involved: Priority of secured creditor's debt over the Excise Department's claim.

Summary:
The main issue in the petitions is whether various State departments, including Excise & Revenue, have priority over the secure creditor's debt. The matter has been settled by the Hon'ble Apex Court in Civil Appeal No. 2196/2012, where it was clarified that the secured creditor will have a first charge on the secured assets, as per the SARFAESI Act, 2002, which has overriding effect on all other laws. The Commissioner of Customs and Central Excise could not confiscate assets when the relevant rule was not in force. Therefore, the dues of the secured creditor will take precedence over the claims of the Central Excise Department. Consequently, the petitions are allowed, red entries/lien on the revenue documents are to be removed, and all contrary orders are quashed.

In conclusion, the judgment emphasizes the priority of a secured creditor's debt over the claims of the Central Excise Department, based on the provisions of the SARFAESI Act, 2002, which have overriding effect over other laws. The Court ruled that the Commissioner could not invoke powers under a rule that was not in force and confirmed the secured creditor's right to the assets. As a result, the petitions are allowed, and all related orders are set aside, with the secured creditor's rights upheld.