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2015 (2) TMI 136 - HC - Central ExciseRecovery of excise duty - First charge or not - Petition a sick company - Protection granted under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - Application of section 11E - Held that - Examining the principles laid down in the said judgment to the facts of the present case, we find that Section 11E of the Excise Act gives overriding effect over the provisions of all Central and State statutes except to the extent of the dues of the workmen and the secured creditors. In Central Bank of India case (2009 (2) TMI 451 - SUPREME COURT OF INDIA), the issue was considered in relation to the first charge given under the statute framed by the State Legislature vis- -vis law framed by the Parliament. But in the present case, the issue pertains to the Statutes framed by the Parliament. Since Section 11E of the Excise Act was inserted after the enactment of the Act giving first charge over the dues of the central excise, thus, it will have overriding operation over the provisions of the Act.
Issues Involved:
1. Legality of the demand raised under the Central Excise and Salt Act, 1944. 2. Protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. 3. Applicability and retrospective effect of Section 11E of the Central Excise Act, 1944. 4. Overriding effect of Section 11E of the Central Excise Act over other laws. Detailed Analysis: 1. Legality of the demand raised under the Central Excise and Salt Act, 1944: The petitioner, a public limited company, challenged the demand of Rs. 81,02,802.73 raised under the Central Excise and Salt Act, 1944. The demand arose from the inclusion of the value of packing material (cartons) in the assessable value of metal containers. The Assistant Collector, Central Excise, issued a show cause notice and subsequently passed an order imposing a penalty and recovering the central excise duty. The petitioner's appeal against this demand was dismissed by the Collector (Appeals) and the Tribunal, leading to the present writ petition. 2. Protection under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985: The petitioner argued that as a sick industrial company, it was protected under Section 22 of the Act, which suspends legal proceedings against sick companies. The petitioner relied on previous judgments, including the Supreme Court's decision in Raheja Universal Limited Vs. NRC Limited, to assert that recovery proceedings should be suspended. However, it was noted that the reference before the BIFR was disposed of on 15.01.2014, and there was no specific mention of central excise dues in the BIFR's order. 3. Applicability and retrospective effect of Section 11E of the Central Excise Act, 1944: Section 11E, inserted by the Finance Act No.8 of 2011, states that any amount of duty, penalty, interest, or other sums payable under the Act shall be the first charge on the property of the assessee. The petitioner contended that Section 11E should not apply retrospectively to dues determined in 1982. However, the court held that Section 11E is declaratory and retroactive, applying to all dues irrespective of when they were determined. The court referenced the Supreme Court's decision in N.K. Bajpai Vs. Union of India, which distinguished between retrospective and retroactive laws, affirming that Section 11E operates retroactively. 4. Overriding effect of Section 11E of the Central Excise Act over other laws: The court examined the interplay between Section 11E of the Excise Act and the provisions of the Sick Industrial Companies Act. It concluded that Section 11E, with its non-obstante clause, gives overriding effect to the excise dues over other central and state statutes, except for workmen's dues and secured creditors' claims. The court referenced the Supreme Court's judgment in Central Bank of India Vs. State of Kerala, which dealt with the precedence of statutory charges. The court held that Section 11E, being a later enactment, overrides the provisions of the Sick Industrial Companies Act concerning the first charge on the property of the assessee. Conclusion: The court dismissed the writ petition, holding that the excise dues have a first charge on the property of the assessee under Section 11E of the Central Excise Act, and the recovery proceedings cannot be stayed under Section 22 of the Sick Industrial Companies Act. The court affirmed that Section 11E applies retroactively and has overriding effect over other laws, including the Sick Industrial Companies Act.
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