AMBUJA ELECTRO CASTINGS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner prays for issuance of a writ of certiorari quashing notices, issued under Rule 230 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules'), calling upon the petitioner to discharge liabilities under the Central Excise and Salt Act, 1944 (hereinafter referred to as "the Excise Act"). M/s. Century Iron and Steels" Limited, defaulted in payment of loans to the Punjab Financial Corporation and the Punjab State Industrial Development Corporation. The plant and machinery were possessed, under Section 29 of the State Financial Corporation Act, 1951, and auctioned. The petitioner, admittedly, purchased land, building and machinery, from the Punjab Financial Corporation, in an auction that lead to execution of a sale agreement, dated 28.10.1994. The Central Excise Department served a notice, dated 09.03.1995, calling upon the petitioner to discharge the liabilities of M/s. Century Iron and Steels Limited arising from orders, relating to availment of Cenvat credit etc. The petitioner filed a reply pleading that as it has purchased property under the State Financial Corporation Act, free from all encumbrances, the liability of the original owner cannot be fastened upon the petitioner. The petitioner is before us challenging the show cause notice.

(2.) Counsel for the petitioner submits that the petitioner has not purchased a running concern much less the business of M/s. Century Iron and Steels Limited but has only purchased land, plant and machinery. The Hon'ble Supreme Court, has held while considering a similar dispute in M/s. Rana Girders Ltd. v. Union of India and others,2013 11 SCC 226, that a purchaser is not liable to pay excise duty payable by the original owner as the liability to discharge amounts payable under the Excise Act, arise from manufacture of goods and not from the assets purchased by subsequent buyer. It is further submitted that clauses in the sale agreement require the petitioner to pay taxes etc. arising from the land or property and not any liability that M/s. Century Iron and Steels Limited may have incurred towards payment of excise duty.

(3.) Counsel for the revenue per-contra urges that distinction drawn by the Hon'ble Supreme Court between purchase of land and machinery as opposed to purchase of business has been recorded without considering Rule 230(1) of the Central Excise Rules, 1944, which clearly provide that duty leviable on goods or by any person carrying on trade or business, may be recovered by detaining goods, plant, and machinery till such time as duty is not paid or recovered. It is further submitted that Rule 230(2) of the Rules provides that where any such person transfers or otherwise disposes of his business in whole or in part, or effects any change in the ownership thereof, all excisable goods, material, preparations, plant, machinery, vessels etc., in possession of the person or persons succeeding to the original owner, may also be detained. It is argued that in view of Rule 230(1)(2) of the Central Excise Rules, the petitioner cannot be heard to urge that it is not liable to discharge the liability of M/s. Century Iron and Steels Limited and even otherwise as a mere show cause notice has been issued to the petitioner, the writ petition may be dismissed.