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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 ..... CE HARSHA DEVANI) 1) Since common issues are involved in both these petitions and facts are also substantially similar, the same were taken up for hearing together and decided by this common judgment. 2) The facts of each case may be stated briefly. 2.1) Special Civil Application No.5193 of 2009: The petitioner is engaged in the business of manufacture of steel ingots and steel products. Pursuant to a tender issued by the G.S.F.C through public advertisement for sale of land, building, plant and machinery of M/s. Shri Pramukh Industries Private Limited, situated at plot Nos.1514/1515, G.I.D.C Estate, Kerala, District: Ahmedabad and Nonagricultural 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 ₹ 381 lakhs and by a sale letter dated 22nd January, 2008 the subject property came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Private Limited 2.5) The facts of Special Civil Application No.5194 of 2009 are more or less similar. The petitioner, M/s. India Steel Traders purchased the subject property as narrated hereinabove from the G.S.F.C. Being desirous of setting up a furnace for stainless steel, on 23rd March, 2009 the petitioner applied for registration with the proper officer under section 6 of the Act read with rule 9 of the Central Excise Rules, 1944. Since the said application was not processed 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, (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers under section 29 of the State Financial Corporation Act, 1951 to liquidate the public money and had taken over the charged assets of the unit being a secured creditor of the unit. It was also informed that being a secured creditor, it had first charge to liquidate its dues from the charged properties and that if there was any surplus amount, after adjusting the Corporation's dues, the claim 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 bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthorities to recover the outstanding duty from a person who transfers or otherwise disposes of this business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which, such person is succeeded in such business or trade by any other person. It was further submitted that in respect of the subject land, a Central Excise Licence under the Central Excise Act has already 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of ₹ 39,98,580/- came to be confirmed against the erstwhile unit-M/s. Shri Pramukh Industries Private Limited with penalty of ₹ 76,29,630/-. M/s. Shri Pramukh Industries Private Limited carried the matter in appeal before the Commissioner (Appeals), however, by an order dated 15.12.2003, the said appeal came to be dismissed on account of failure of the said appellant to make the pre-deposit in terms of 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 ₹ 39,98,580/- towards Central Excise duty and penalty of ₹ 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 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be held to prevail over the Crown debt which is an unsecured one. The court further held that the right of a State Financial Corporation under the State Financial Corporation Act, 1951 is a statutory one and the non obstante clause contained in section 46-B thereof shall prevail not only over the contract but also other laws. Under the circumstances, the G.S.F.C, having a first charge over the property in question, the same would 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits. (ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the section or by necessary implication. The principle is based on the well-known rule of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 142 of the Customs Act, 1962. 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 regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. The right of revenue however, would subsist for recovery of dues both again ..... X X X X Extracts X X X X X X X X Extracts X X X X
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