2007 (7) TMI 319 - HC - Central Excise

Summary

Issues involved: Detention of Machinery/Plant by Central Excise department u/s Central Excise Act 1944 for unpaid excise dues by previous owner, Jurisdiction of department to detain machinery of new owner for old liabilities.

Summary:
1. The petitioner-company challenged a detention order dated March 4, 2005, where the Machinery/Plant was detained due to unpaid excise dues by the previous owner, M/s. Ganga Sagar Pvt. Ltd., which was later purchased by the petitioner-company from M.P.F.C.

2. Petitioner claimed the detention was unauthorized as the liabilities of the previous owner were not discharged before the purchase. The respondents relied on proviso to Section 11 of the Act and Rule 230(2) of the Central Excise Rules, 1944, to justify the detention.

3. The petitioner's counsel argued that the new Central Excise (No. 2) Rules, 2001, enforced from June 21, 2001, did not provide for enforcing previous owner's liabilities on the new buyer, and the proviso to Section 11 came into force after the petitioner's purchase in the period from 2001-2004.

4. The jurisdiction and authority of the department to detain the machinery without examining the legality of the action were questioned. The court noted that if there was no provision to enforce the previous owner's liabilities on the new owner, the department's action would be without jurisdiction.

5. The court allowed the Writ Petition to the extent that the Assistant Commissioner was directed to examine whether detaining the Plant/Machinery of the petitioner-company for the previous owner's liabilities was valid. The petitioner could raise all other pleas before the Assistant Commissioner as well.

6. The parties were directed to appear before the Assistant Commissioner on August 9, 2007, who was instructed to conclude the proceedings within two months and adjudicate on all raised pleas. The interim protection granted by the Court would continue until the matter was decided by the Assistant Commissioner.