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2015 (2) TMI 1056 - AT - Central ExciseSuccessor's liability - Recovery of dues from successor company - Held that - The undisputed facts are that the factory premises alongwith all the plant and machineries were taken over by the respondent from its previous owner M/s. Unistar Polymers (P) Ltd. on 31.07.2003 and the Central Excise Registration Certificate was issued to the respondent on 03.12.2003. There was a confirmed duty demand and penalty totalling to ₹ 9,73,676/- pending recovery against M/s. Unistar Polymers (P) Ltd. However, at the time of purchase of business of M/s.Unistar with plant and machinery by the respondent, there was no Provision in Section 11 of the Central Excise Act for recovery of dues pending against a manufacturer- defaulter from the person who purchased his business alongwith his factory. Such a provision was made by inserting proviso to section 11 with effect from 10.09.2004 and by this proviso to section 11, the arrears of Revenue pending recovery from the predecessor could be recovered even after change of ownership of the factory by attaching the machinery, vessels, utensils, implements and articles in possession of the successor of business. Since, there is nothing in this proviso to indicate that this amendment has retrospective effect, the same cannot be applied retrospectively and therefore the Department invoking Proviso to Section 11 could not recover from the respondent the arrears of Revenue of M/s. Unistar Polymers (P) Ltd. We find that same view has been taken by the Tribunal in the case of Eklinggji Finance Pvt. Ltd. (2012 (1) TMI 120 - CESTAT NEW DELHI) and also by Hon ble Karnataka High Court in the case of CCE, Bamgalore-I vs. Press Fab Precision Components Pvt. Ltd. reported in 2006 (8) TMI 206 - HIGH COURT OF KARNATAKA AT BANGALORE . In view of this, we do not find any infirmity in the impugned order. - Decided against Revenue.
Issues:
Recovery of arrears of Central Excise duty and penalty from the new owner of a factory premises after a change in ownership. Analysis: The case involved an appeal by the Revenue regarding the recovery of arrears of Central Excise duty and penalty from the new owner of a factory premises. The respondent had taken over the factory premises along with plant and machinery from the previous owner and obtained Central Excise Registration in their name. The dispute arose when the Revenue sought to recover the pending dues from the previous owner from the respondent, invoking a Proviso to Section 11 of the Central Excise Act, which allowed recovery from a person who purchased the business along with the factory. The Assistant Commissioner initiated recovery proceedings by attaching the land and building of the respondent. However, the Commissioner (Appeals) allowed the respondent's appeal, stating that the dues pending recovery against the previous owner cannot be recovered from the present owner. The Revenue appealed against this decision. During the hearing, the Departmental Representative argued that the Proviso to Section 11 applied to the case, making the arrears recoverable from the new owner. On the other hand, the Respondent's Counsel cited a Tribunal judgment stating that the Proviso would not apply to a successor who purchased the business before the provision came into effect. The Tribunal analyzed the facts and legal provisions, noting that the amendment to Section 11 allowing recovery from a new owner came into effect after the respondent had taken over the factory. As there was no indication of retrospective application in the amendment, the Tribunal held that the Revenue could not recover the arrears from the respondent. The Tribunal referred to previous decisions supporting this interpretation, including a Tribunal case and a judgment of the Karnataka High Court. Consequently, the Tribunal dismissed the Revenue's appeal, upholding the decision of the Commissioner (Appeals) in favor of the respondent. In conclusion, the Tribunal's judgment clarified that the Proviso to Section 11 of the Central Excise Act allowing recovery from a new owner did not have retrospective effect and could not be applied to recover arrears from a new owner for a period before the provision came into force. The decision was based on a thorough analysis of the legal provisions and precedents, ultimately leading to the dismissal of the Revenue's appeal.
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