2016 (3) TMI 706 - AT - Central Excise

Rejection of refund claim - recovery of dues pending against predecessor of the premises from the subsequent purchaser of the premises in auction - rejection of claim on the ground that the Revenue has collected dues confirmed under section 11A of the Central Excise Act which were due to M/s. Regency Industries Ltd. and appellant is a subsequent owner of the said premises and has taken over the liability thereof - Held that - When the appellant took over the possession of the premises in question in July 2004, the provisions of section 11 of the Act was not in force. Therefore, the said provision cannot be enforced on the appellant for dues pertaining to the predecessor which are in challange. Further as find that in the case of M/s. Rana Girders Ltd. 2013 (8) TMI 540 - SUPREME COURT the appellant are not in any legal obligation to pay the dues of predecessors. In these circumstances, the dues paid by the appellant are refundable. - Decided in favour of assessee

Summary

Issues:
Appeal against rejection of refund claim due to liability of predecessor's dues on subsequent owner.

Analysis:
The appellant purchased factory premises through auction, which were previously allotted to M/s. Regency Industries Ltd. Dues of Central Excise from 1992-1993 were confirmed against M/s. Regency Industries Ltd. The premises were later auctioned to M/s. Amco Vinyl Ltd. and then purchased by the appellant in July 2004. The appellant paid a sum after taking possession and filed a refund claim, which was rejected based on liability transfer. Appellant argued they were not liable for predecessor's dues as the relevant law came into effect after their purchase, citing legal precedents.

The Revenue contended that the appellant was contractually obligated to pay predecessor's dues upon acquiring the premises. During the hearing, the Revenue was asked to explain why dues were not recovered earlier. The report provided lacked clarity on the status of the appeal filed by M/s. Regency Industries Ltd. against the dues. The tribunal found that when the appellant acquired the premises, the relevant law was not in force, making them not liable for the predecessor's dues. Referencing a Supreme Court judgment, the tribunal concluded that excise dues are not statutory liabilities arising from the property or machinery, thus the appellant was not obligated to pay the predecessor's dues.

Relying on the Supreme Court decision, the tribunal held that the appellant was not legally bound to pay the predecessors' dues. Consequently, the dues paid by the appellant were deemed refundable. The impugned order rejecting the refund claim was set aside, and the appeal was allowed with consequential relief.