2014 (3) TMI 419 - HC - Central Excise

Default of predecessor company - Liability of successor company - Property sold in auction - Held that - The Central Excise Act provides the mechanism of recovery of excise duties. It permits recovery of such duties from the merchandise of the assessee in his control. It does not permit even recovery from those merchandise, which have gone to the buyers of the assessee. Upon failure to recover the same, the Act permits the dues to be recovered as land revenue. The word land revenue connotes revenue, which is lawfully recoverable from the person, who is liable to pay the same for his properties. The fact remains that the property in question is not of the assessee, but of the appellant / writ petitioner. Therefore, by taking measures available for recovery of land revenue, dues due and owing by the assessee cannot be recovered from the properties of the appellant, who is a bona fide purchaser in auction - Decided in favour of appellant.

Summary

Issues:
1. Liability of the appellant to pay dues of the assessee to Excise Department.
2. Rejection of Central Excise Appeal by Appellate Authority and Tribunal.
3. Maintainability of the writ petition challenging recovery proceedings.

Analysis:

Issue 1: Liability of the appellant to pay dues of the assessee to Excise Department
The appellant's unit was mortgaged to U.P. State Financial Corporation, which later sold it to the appellant. The Excise Department claimed that the appellant, as the successor of the assessee, is liable to pay the dues. The Appellate Authority and Tribunal rejected the appeal due to delay in filing. However, the High Court held that the appellant cannot be held liable for the dues of the assessee, as the recovery of dues cannot be made from the properties of a bona fide purchaser in auction.

Issue 2: Rejection of Central Excise Appeal by Appellate Authority and Tribunal
The Appellate Authority and Tribunal rejected the appeal on the grounds of delay in filing, stating that the Statute does not authorize condoning such delays. The High Court upheld this decision, emphasizing that the right to prefer an appeal is statutory and must be exercised within the prescribed time limit. The Court dismissed the Central Excise Appeal, affirming the decision of the lower authorities.

Issue 3: Maintainability of the writ petition challenging recovery proceedings
The Excise Department argued that the writ petition was not maintainable as it challenged recovery proceedings based on the Assessing Officer's order. However, the High Court ruled that the right to file a writ petition under Article 226 of the Constitution is a constitutional right, not a statutory one. The Court clarified that if an action is void ab initio, it can be challenged even after a long period. The Court allowed the writ petition, quashing all steps taken for recovering dues from the appellant's assets and properties.

In conclusion, the High Court dismissed the Central Excise Appeal, held the appellant not liable for the assessee's dues, and allowed the writ petition to challenge the recovery proceedings, emphasizing the constitutional right to seek remedy against actions that are void from the beginning.