1991 (4) TMI 272 - AT - Central Excise

Issues Involved:
1. Adjustment of refund against confirmed demand.
2. Overriding effect of the Textile Undertaking (Taking Over of Management) Act, 1983 over the Central Excises and Salt Act, 1944.
3. Entitlement of the custodian to receive refunds without liability for pre-takeover debts.

Issue-wise Detailed Analysis:

1. Adjustment of Refund Against Confirmed Demand:
The appellants, a Government of India Undertaking, challenged the adjustment of a refund amount of Rs. 85,071.83 against a confirmed demand of Rs. 1,91,381.80 by the Assistant Collector of Central Excise. The appellants argued that the adjustment was not permissible under the provisions of the Textile Undertaking (Taking Over of Management) Act, 1983 (Take Over Act, 1983), as the refund was due to them post-takeover, while the demand related to a period before the takeover.

2. Overriding Effect of the Take Over Act, 1983 Over the Central Excises and Salt Act, 1944:
The appellants contended that the Take Over Act, 1983, being specific legislation for textile undertakings, should prevail over the general provisions of the Central Excises and Salt Act, 1944 (CESA, 1944). They emphasized Section 3 of the Take Over Act, particularly sub-sections (1), (2), and (7), which vest the management and assets of the textile undertakings in the Central Government while excluding pre-takeover liabilities from being enforceable against the government or the custodian.

3. Entitlement of the Custodian to Receive Refunds Without Liability for Pre-Takeover Debts:
The appellants argued that they were entitled to receive all dues payable to the textile undertakings, including refunds, without bearing the liabilities incurred before the takeover. They cited a legal opinion from the Ministry of Law supporting their stance that the assets vested in the custodian were not liable for pre-takeover debts.

Judgment Analysis:

Adjustment of Refund Against Confirmed Demand:
The Tribunal examined whether the statutory provisions of the Take Over Act, 1983, allowed the appellants to recover dues without corresponding liability for pre-takeover debts. It was noted that both the refund and the demand related to the period before the takeover. However, the Tribunal concluded that the adjustment of the refund against the demand was not permissible, as it would enforce the demand against the custodian, contrary to the provisions of the Take Over Act, 1983.

Overriding Effect of the Take Over Act, 1983 Over the CESA, 1944:
The Tribunal acknowledged that both the Take Over Act, 1983, and the CESA, 1944, were central legislations. However, it emphasized that specific legislation (Take Over Act, 1983) should prevail over general legislation (CESA, 1944) when conflicting provisions exist. The Tribunal held that the provisions of the Take Over Act, 1983, specifically excluded the enforcement of pre-takeover liabilities against the custodian, thereby overriding the general provisions of the CESA, 1944.

Entitlement of the Custodian to Receive Refunds Without Liability for Pre-Takeover Debts:
The Tribunal agreed with the appellants' interpretation of Section 3 of the Take Over Act, 1983. It concluded that the appellants, as custodians, had a statutory right to receive all dues payable to the textile undertakings, including refunds, without being liable for pre-takeover debts. The Tribunal also referred to a similar case involving Tata Mills, where the adjustment was held impermissible, and the Bombay High Court's judgment in National Textile Corporation v. Shramik Janta Union, which supported the appellants' position.

Conclusion:
The Tribunal allowed the appeal, setting aside the order of adjustment of the refund against the confirmed demand. It directed the respondents to pay the sanctioned refund amount to the appellants. The Tribunal's decision was based on the overriding effect of the Take Over Act, 1983, and the statutory entitlement of the custodian to receive refunds without liability for pre-takeover debts.

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