2007 (12) TMI 222 - SC - Central Excise

Duty demand - whether the Department was entitled to proceed against the land and building purchased by the present appellant from the auction purchaser in respect of non-payment of excise duty by M/s. Devki Steels (P) Ltd. - Held that - appellant purchased only land and building and not the plant and machinery - Interpretation of Rule 230 also arose for determination before the High Court. None of these questions were decided by the High Court. It dismissed the writ petition only on the ground that the appellant herein was not the owner as the sale deed was not filed - The question whether excise duty would be a charge on the property, was not raised before the High Court. However, we grant liberty to the Department to raise the said question also before the High Court subject to the Department making proper averments in that regard - Matter remitted back - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of Section 11 read with the proviso of the Central Excise Act.
2. Interpretation of Rule 230.
3. Whether the Excise Department can proceed against property purchased by the appellant for non-payment of excise duty.
4. Whether excise duty constitutes a charge on the property.

Analysis:
The case involved M/s. Devki Steel (P) Ltd., a borrower of the State Financial Corporation (SFC) and an alleged defaulter in excise duty payment. The properties were auctioned by SFC and purchased by M/s. Prahlad Steel (P) Ltd., who later sold them to the present appellant. The High Court was tasked with determining if the Excise Department could pursue the appellant for the dues of M/s. Devki Steel (P) Ltd. The High Court did not address the interpretation of Section 11, the proviso of the Central Excise Act, or Rule 230, but dismissed the petition due to lack of proof of ownership by the appellant.

The Supreme Court clarified that the ownership was not disputed, focusing on whether the Excise Department could pursue the property for dues. The Court highlighted the question of whether excise duty could be considered a charge on the property, a point not raised before the High Court. The Supreme Court set aside the High Court's judgment, remitting the matter back for proper consideration. The Department was allowed to raise the question of excise duty as a charge, provided proper averments were made.

The Supreme Court expedited the hearing, urging the High Court to decide the writ petition within six months. The parties were instructed to complete their pleadings promptly. Additionally, the Department was barred from taking coercive action against the appellant until the High Court's final decision. The Civil Appeal was disposed of accordingly, emphasizing the need for a thorough consideration of the legal issues involved.