2014 (6) TMI 858 - HC - Central Excise

Recovery of duty from lessee of the tea garden - Default to pay excise duty - power to issue the attachment/detention order for realization of dues - Assessee contends that they were placed in possession of the tea garden much after the period for which the impugned demand was issued and hence no recovery could be made of the alleged outstanding central excise dues from them (lessee) and nor the tea manufactured by them from the tea garden/factory could be attached/detained - Held that - The petitioners then in their written submission contended that on the basis of interim order passed in the case the amount mentioned in the demand has been recovered by the Department and hence it cannot be now recovered from any of the petitioners and specially from the petitioner of WP(C) No.3049/2006 i.e. defaulting assessee. If that is the argument, then it is for the petitioner to satisfy the authorities that how, when and in what manner they or any of the writ petitioners satisfied the impugned demand or/and how, when and in what manner, the authorities recovered the entire dues from any of the writ petitioners. In this bunch of petitions, no documents have been filed to show that impugned demand has already been satisfied and if so, in what manner. Neither the petition filed by the defaulting assessee and nor the ones filed by the alleged lessees of defaulting assessee has any merit. - liberty is granted to writ petitioners to file conclusive proof before the competent recovering authorities to show that the petitioners have satisfied the impugned demand and made payment of ₹ 18,64,243. - Decided against the petitioners.

Issues Involved:
1. Legality of the attachment and detention orders.
2. Authority of the Deputy Commissioner to issue the orders.
3. Liability of the lessees for the outstanding central excise dues.
4. Applicability of Section 11 of the Central Excise Act and Section 142 of the Customs Act.
5. Recovery of the demanded amount.

Issue-wise Detailed Analysis:

1. Legality of the Attachment and Detention Orders:
The petitioners challenged the attachment order dated 7.3.2006 and detention order dated 17.5.2006 issued by the Deputy Commissioner of Central Excise, Nagaon. The orders were issued under the provisions of the Central Excise Act read with the Customs Act for the recovery of central excise duty amounting to Rs. 8,86,885 and interest amounting to Rs. 9,77,358, totaling Rs. 18,64,243. The court upheld the demand, attachment, and detention orders, stating that the orders were issued based on an earlier order passed by the Joint Commissioner and were thus valid.

2. Authority of the Deputy Commissioner to Issue the Orders:
The petitioners contended that the orders were invalid as they were not issued by the Commissioner of Central Excise. The court found this submission untenable, noting that the objection was not raised in the writ petitions and that the orders were issued based on an earlier order by the Joint Commissioner. Additionally, Section 2(b) of the Central Excise Act includes various officers, including the Deputy Commissioner, as "Central Excise Officers," thereby empowering them to issue such orders.

3. Liability of the Lessees for the Outstanding Central Excise Dues:
The lessees argued that they could not be held liable for the outstanding dues as they took possession of the tea garden/factory after the period for which the demand was issued. They contended that they were the owners of the tea and had already paid the central excise duty on the tea manufactured by them. The court rejected this argument, stating that Section 11 of the Central Excise Act and Section 142 of the Customs Act allow for the recovery of dues from the defaulting assessee or any transferee who steps into their shoes.

4. Applicability of Section 11 of the Central Excise Act and Section 142 of the Customs Act:
The court emphasized that Section 11 of the Central Excise Act and Section 142 of the Customs Act empower authorities to raise demands and issue attachment/detention orders to detain goods belonging to the defaulting assessee or their transferee. These sections allow for the recovery of sums due to the government by attaching and selling excisable goods.

5. Recovery of the Demanded Amount:
The petitioners contended that the amount mentioned in the demand had already been recovered by the department based on an interim order. The court held that it was the petitioners' responsibility to provide conclusive proof of payment. Since no such documents were filed, the court upheld the demand. The court also noted that the petitioners did not challenge the quantum of dues demanded. Therefore, the court dismissed the writ petitions, allowing the petitioners to file proof of payment before the competent recovering authorities.

Conclusion:
The court found no merit in the writ petitions filed by the defaulting assessee and the lessees. The court dismissed the petitions, upholding the impugned demand, attachment, and detention orders. The petitioners were granted liberty to provide conclusive proof of payment of Rs. 18,64,243 to the competent authorities. All interim orders were vacated, and no costs were awarded.

← Previous Next →