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TMI Blog2014 (11) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural Plot at Block No.210, village Kerala, District: Ahmedabad (hereinafter referred to as "the subject property"), the tender committee of G.S.F.C on 4.1.2008 and the subsequent Recovery Committee considered the offer of M/s. India Steel Traders Ltd. (the petitioner in Special Civil Application No.5194 of 2009) in exercise of powers conferred under section 29 of the State Financial Corporations Act, 1951 and accepted the offer of Rs. 381 lakhs and by a sale letter dated 22nd January, 2008 the subject property came to be sold to M/s. India Steel Traders for Rs. 381 lakhs subject to the conditions stated therein. One of the conditions was that the offerer was not liable for unpaid dues/liabilities towards G.I.D.C, G.E.B, Central Excise, Sales-tax and Income-tax. M/s. India Steel Traders had deposited the entire amount with G.S.F.C, pursuant to which the possession of property was handed over to M/s. India Steel Traders. 2.2) The petitioner company is one of the partners of M/s. India Steel Traders. The subject property comprised of 42,000 square metres of land, out of which M/s. India Steel Traders executed a lease deed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the petitioner inquired from the respondent No.3 as to why the same was not being processed and learnt that the Central Excise Department was refusing to grant registration because of the outstanding amount of the previous occupier M/s. Shri Pramukh Industries Private Limited. It appears that the petitioner had approached the Central Excise Authorities pointing out that the petitioner could not be refused registration when the petitioner had purchased the land, building, plant and machinery from the G.S.F.C pursuant to a public advertisement given by the G.S.F.C for selling the subject property and drawing their attention to the decision of the Supreme Court in Union of India v. SICOM, (2009) 2 SCC 151, however, registration was not granted. Being aggrieved the petitioner has filed the present petition seeking a direction to the respondents No.2 and 3 to issue Central Excise Registration Licence to the petitioner pursuant to the application dated 23.3.2009 without insisting for payment of outstanding dues of the earlier occupier M/s. Shri Pramukh Industries Private Limited 2.6) By an order dated 16.7.2009 pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the Department would be considered on merits. It is further stated in the affidavit that the assessee-M/s. Shri Pramukh Industries Private Limited had submitted an application dated 5.5.2009 for cancellation of its licence which was received by the respondents on 11.5.2009, however, the said application was sent without enclosing the original licence and without submitting required indemnity bond and, as such, the said licence had not been cancelled till date. According to the respondents, since one licence is in operation on the plot, another licence cannot be granted to any other person on the same plot. It is further the case of the respondents that though the petitioner has taken over the subject property from G.S.F.C through tender, it is to be treated as a successor of the business of M/s. Shri Pramukh Industries Private Limited. Also, the application for fresh Central Excise Licence of the petitioner is neither refused nor rejected but it is kept pending as in respect of such premises, a Central Excise Licence has been granted in the name of M/s. Shri Pramukh Industries Private Limited which has not been cancelled till date. 3) Mr. B. T. Rao, learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready been granted in favour of M/s. Shri Pramukh Industries Private Limited, which has not yet been cancelled. Under the circumstances, the applications of the petitioners for grant of Central Excise Licence had not been considered at the relevant time. Reliance was placed upon the decision of the Supreme Court in the case of Macson Marbles Private Limited v. Union of India, 2003 (158) E.L.T. 424 (S.C.) for the proposition that when an industrial unit is sold in terms of section 29 of the State Financial Corporation Act, 1951, such sale is deemed to be a sale made by the owner of the property. Hence, rule 230(2) of the Central Excise Rules would be attracted. The said Act though a special enactment would not prevail upon the Central Excise Act because the Central Excise Act is also a special enactment. It was submitted that in the light of the aforesaid decision, the petitioner would step into the shoes of M/s. Shri Pramukh Industries Private Limited and the provisions of section 11 of the Act would be squarely attracted. 5) Reliance was also placed upon the decision of the Bombay High Court in the case of Manibhadra Processors Vs. Additional Commissioner of Central Excise, 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 35F of the Act. M/s. Pramukh Industries Private Limited filed a reference with B.I.F.R under section 15(1) of the Sick Industrial Companies (Special Provisions) Act,1985 and was declared to be a sick industrial company in terms of section 3(1)(o) of the said Act. In the said proceedings, Dena Bank was declared as the operating agency. By a communication dated 25.7.2007, the Superintendent of Central Excise, Ahmedabad-II lodged a claim of Rs. 39,98,580/- towards Central Excise duty and penalty of Rs. 76,29,630/- plus interest. Thus, it appears that insofar as the assessee-M/s. Shri Pramukh Industries Private Limited is concerned, in the light of the fact that the said unit has been declared a sick industrial unit, the Central Excise Authorities were not in a position to recover the outstanding amount. 9) The G.S.F.C, a secured creditor, for the purpose of recovering its dues, issued a public advertisement for sale of the subject property belonging to the erstwhile owner M/s. Shri Pramukh Industries Private Limited by inviting tenders in this regard. The petitioner-M/s. India Steel Traders, being the highest bidder, its tender came to be accepted and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld prevail over the dues of the Central Excise Authorities. The contention that the proviso to section 11 of the Act would be applicable in the facts of the present case, therefore, does not merit acceptance inasmuch as the subject property, having been sold by the G.S.F.C for securing its dues as a secured creditor, the Central Excise Authorities cannot seek to recover the outstanding dues of the erstwhile owner from the said property once again. 12) However, on behalf of the respondents reliance has been placed on the provisions of section 11E of the Act for the purpose of contending that the Central Excise Authorities have first charge over the property of M/s. Shri Pramukh Industries Private Limited. The said section reads thus: 11-E. Liability under Act to be first charge.- Notwithstanding anything to the contrary contained in any Central Act or State Act, any amount of duty, penalty, interest, or any other sum payable by an assessee or any other person under this Act or the rules made thereunder shall, save as otherwise provided in Section 529-A of the Companies Act, 1956 (1 of 1956), the Recovery of Debts D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though remedial is substantive in nature. (iii) Every litigant has a vested right in substantive law but no such right exists in procedural law. (iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished. (v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication." 16) In Ahmedabad Manufacturing and Calico Printing Co. Ltd. v. S.G. Mehta, Income-tax Officer, (1963) 48 ITR 154 (SC), the Supreme Court held thus: "A statute which is not declaratory of a pre-existing law nor a matter relating to procedure but affects vested rights cannot be given a greater retrospective effect than its language renders necessary, and even in construing a section which is to a certain extent retr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f interpretation that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time. 18) Applying the aforesaid principles to the facts of the present case, the GSFC at the relevant time had a first charge over the subject property as a secured creditor. In its capacity as a secured creditor, the GSFC sold the subject property to M/s India Steel Traders to recover the outstanding dues of the erstwhile unit. Thus, the right of the secured creditor over the subject property stood exhausted much before section 11E came to be inserted in the Act and the property stood vested in the buyer. As held by the Apex Court in the above decisions, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time. Here, the petitioner had already acquired rights in the subject property much before section 11E was brought on the statute book. Under the circumstances, the said provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 28.Though not expressly stated in the order refusing registration, before the Court, on behalf of the respondent No.1, it has been contended that premises can be registered under the Central Excise Act only in relation to one person; that the defaulter M/s. Veenutex Dyeing & Printing Mills Private Limited having already been registered in relation to the subject premises, unless such registration is revoked and cancelled, registration cannot be granted to the petitioners in relation to the said property. Attention was invited to notification No.35/2001 C.E. (N.T.) dated 26th June, 2001 as amended from time to time, issued in exercise of powers under rule 9 of the Central Excise Rules, 2001 which provides for the conditions, safeguards and procedures for registration and exemption in specified cases. Reference was made to clause (2) thereof which says that if the person has more than one premises requiring registration, separate registration certificate shall be obtained for each of such premises; clause (4) thereof which says that where a registered person transfers his business to another person, the transferee shall get himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rule 9 and the notification contemplates that it is the person who must be registered. Neither Section 6 nor Rule 9 and the Notification is a provision for enforcing the claim for dues of the department. That is contained in different provisions. An immovable property by itself cannot be sold unless the owner of the premises is defaulter and that too under a certificate as arrears of land revenue. That sale would be subject to the priority of claims. In case of a lease hold property given for a particular period, there would be no question of sale of the property except the limited interest. In our opinion, the case of bona fide transferee was not in issue in the case of M/s. Manibhadra Processors (supra) or the instances we have cited above. The Respondent No. 3 has therefore, clearly acted without jurisdiction in refusing to grant registration on the specious plea that M/s. Usha Ispat whose assets has been sold and purchased by the Petitioners has not applied for deregistration. In the absence of a specific power to deny registration, the alternate would be whether there would be implied power. Neither section 6 or rule 9 or for that matter the notification confers such power ..... 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