Custom, Excise & Service Tax Tribunal
M/S. Shri Kesav Cements & Infra Ltd vs Cce, Belgaum on 12 February, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court I
Date of Hearing:12/02/2010
Date of decision:12/02/2010
Appeal No.E/937/08
(Arising out of Order-in-Appeal No.237/2008 dt. 10/11/2008
passed by CCE(Appeals), Mangalore )
For approval and signature:
Honble Mr. P.Karthikeyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
Yes
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Shri Kesav Cements & Infra Ltd.
..Appellant(s)
Vs.
CCE, Belgaum
Respondent(s)
Appearance Mr.S.R.Savant, Advocate for the appellant.
Mr.M.Ravi Rajendran, JDR for the Revenue.
Coram:
Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per P.Karthikeyan This appeal is directed against an order of the Commissioner(Appeals) vide which he affirmed an order of the adjudicating authority rejecting a claim of refund of Rs.5,13,852/-. The facts of the case are that the appellants have purchased the properties including a cement plant belonging to M/s. Shree Quality Cement Ltd. (SQCL for short) in an auction conducted by the Debts Recovery Tribunal. The Debts Recovery Tribunal had taken over the property of SQCL and others towards unpaid loans taken from the Industrial Development Bank of India. The appellant M/s. Shri Keshav Cements and Infra Ltd. (formerly known as M/s. Katwa Udyog Ltd.) has purchased the properties owned by SQCL. They applied for registration as an assessee under the Central Excise Act, 1944(the Act) which was allowed. The appellant was forced to pay the amount of Rs.5,13,852/- to the Department before they were registered under the Central Excise as an assessee. Subsequently, they sought refund of the said amount. The lower authorities denied the refund on the ground that the arrears owed to the Department by the original owner of the factory SQCL could be validly recovered from the appellant, it being the successor owner of the factory. The lower authorities invoked provisions of Section 11 of the Act and held that the appellants were not entitled to refund of the amount paid by them towards arrears owed by the original owner of the factory.
2. In the appeal and during the hearing, the appellants contested the orders of the lower authorities relying on several case laws including a judgment of the Honble High Court of P&H in the case of T.C. Spinners Pvt. Ltd. Vs. UOI [2009(243) ELT 31 (P&H)] and the decision of the Tribunal in the case of New Tobacco Company Ltd. Vs. CCE, Visakhapatnam [2008(230) ELT 263(Tri. Bang.)]. Ld. JDR reiterates the findings contained in the impugned order.
3. I have carefully perused the case records and the submissions made by both sides. The Commissioner(Appeals) held that the appellants were not entitled to refund of amounts recovered from them towards arrears owed by the predecessor owner of the cement plant purchased by the appellant in an auction conducted by the DRT. In so holding, the Commissioner(Appeals) relied on the following provisions contained in the Section 11 of the Act.
Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.
4. The Commissioner(Appeals) held that by taking over the property of SQCL and selling it in auction, the DRT had facilitated legal transfer of the plant and property of SQCL to the present appellant. On a perusal of the provisions relied on by the Commissioner(Appeals), I find that arrears owed to the Department by an assessee can be recovered from the successor if the original owner disposed of his business or effected any change in the ownership thereof. I find that in the instant case, there has not been such transfer as envisaged in the proviso to Section 11 of the Act relied on by the Commissioner(Appeals). I also find that the judicial authorities relied on by the appellants amply support its case. In the New Tobacco Company Ltd. case, the appellants therein had taken on lease the company M/s. New Tobacco company Ltd. and had not taken over the assets and liabilities of the said company. It was held that the demand outstanding against M/s. New Tobacco Co. Ltd. could not be fastened on the appellant therein. In the T.C. Spinners Pvt. Ltd. case, the Honble High Court of P&H held that the excise authorities could not enforce payment of the dues against the property purchased by the petitioner therein though the Department had liberty to seek redress against the debtors. In passing the said judgment, the Honble High Court relied on a judgment of the Apex Court discussed in para-4 of the judgment, which is reproduced below:-
4.?The matter is not res integra. More than a decade ago, the Honble Supreme Court in M/s. Isha Marbles v Bihar State Electricity Board & another, reported as JT 1995(2) SC 626, held that a bona fide auction-purchaser under a statutory sale was not liable to clear electricity dues of the previous owner by holding as follows :-
What we have discussed above appears to be the law gatherable from the various provisions which we have detailed out above. It is impossible to impose on the purchasers a liability which was not incurred by them.
5. Respectfully following the ratio of the judgment of the Honble High Court of P&H, I hold that the appellants are not liable to pay the dues owed to the Department by the original owner of the cement plant of the appellant and that the appellants are entitled to the refund of the arrears owed by SQCL and recovered from the appellant. The appeal is accordingly allowed with consequential relief.
(Pronounced and dictated in open court) (P.KARTHIKEYAN) Member (Technical) Nr 5