Allowed

Natural Fillers Private Ltd. and Anr. v. Union of India and Ors.

Rajasthan HC10 May 2017CW/811/2008

Case brief

AI extract

What is this about?

The Court quashed a demand for Central excise dues raised against a company owning properties mortgaged to a financial corporation. Ruling that dues of one entity cannot be shifted to another distinct entity and citing Supreme Court precedent, the Court held the purchaser under the State Financial Corporations Act is not liable for predecessor's excise dues.

What did the court decide?

The writ petition is allowed and the impugned demand notice dated 27th August, 2007 is quashed.

Natural Fillers Private Ltd. and Anr. Vs Union of… — Landlord and Tenant | Rajasthan HC (2017)

¶1

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

¶2

D.B. Civil Writ Petition No. 811 / 2008

¶3

Natural Fillers Private Limited Plot No.D-19(A) Industrial Area Hanumangarh Junction. Through its Director Padam Jain S/o Shri Jaichand Ji Jain Aged 35 years Resident of Sector 9 Extension, House No.45 Near Indian Oil Depot Road Hanumangarh Junction.

¶4

Padam Jain S/o Shri Jaichand Ji Jain Aged 35 years Resident of Sector 9 Extension, House No.45 Near Indian Oil Depot Road Hanumangarh Junction.

¶5

----Petitioners

¶6

Versus

¶7

Union Of India, through The Commissioner of Central Excise Jaipur.

¶8

Assistant Commissioner Central Excise Division-Sikar 35/5, Kamla Sadan, Behind Rajput Hostel Civil Lines, Jaipur Road, Sikar.

¶9

Branch Manager Rajasthan Financial Corporation Branch Office-Plot No.4, Sector No.9 Hanumangarh Junction.

¶10

----Respondents

¶11

_____________________________________________________ For Petitioner(s) : Mr.Sharad Kothari For Respondent(s) : Mr.Kuldeep Vaishnav Mr.Rakesh Sinha Dr.Pratistha Dave

¶12

HON'BLE THE CHIEF JUSTICE

¶13

HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

¶14

Order

¶15

10/05/2017

¶16

Land, building and machinery of M/s Unipex Bio-chem Private Limited was mortgaged/hypothecated with the Rajasthan Financial Corporation. The Corporation was thus a secured creditor.

¶17

The credit being in default the Corporation proceeded to exercise its statutory right under the State Financial Corporation

¶18

(2 of 3)

¶19

[CW-811/2008]

¶20

Act. The secured assets were put to auction. The petitioner being the highest bidder and the bid being confirmed, bid amount being paid, went into possession of the land, building and machinery of M/s Unipex Bio-Chem Private Limited.

¶21

Challenge is to a demand raised by the Excise Department on 27^th August, 2007 concerning recovery of Central excise dues from M/s Unipex Electrochem Private Limited.

¶22

From the reply filed it is apparent that the owner of the land: RIICO, had initially allotted the same to M/s Unipex Electrochem Private Limited, but on a request made the allotment was subsequently changed in the name of M/s Unipex Bio-Chem Private Limited. In other words, the two Companies are distinct entities and it is not a case where the name of M/s Unipex Electrochem Private Limited was changed to M/s Unipex Bio-Chem Private Limited.

¶23

On this short ground alone the demand has to be set aside for the reason excise dues of M/s Unipex Electrochem Private Limited cannot be fastened on M/s Unipex Bio-Chem Private Limited.

¶24

That apart, as per the law declared by the Supreme Court in the decision reported as AIR 2013 SC 3422 Rana Girders Ltd. V/s Union of India & ors. also requires it to be held that since a secured creditor proceeding under the State Financial Corporation Act sold the secured assets, the purchaser would not be liable to pay any dues of the central excise.

¶25

We note that the decision of the Supreme Court noted that a proviso was inserted to Section 11 of the Central Excise Act, 1944

¶26

(3 of 3)

¶27

[CW-811/2008]

¶28

on 10^th September, 2004. Since the Supreme Court was dealing with a case prior to the date of the insertion of the proviso, and in the instant case we are dealing with the situation post the proviso, we note the proviso added. It reads as under:-

¶29

“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 (Principal Commissioner of Central Excise or 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.”

¶30

A bare reading of the proviso shows that it is applicable to a transfer inter vivos and not where a secured creditor enforces the right under a statute.

¶31

The writ petition is allowed. The impugned demand notice dated 27^th August, 2007 is quashed.

¶32

No costs.

¶33

(DR.PUSHPENDRA SINGH BHATI)J. (PRADEEP NANDRAJOG)CJ.

¶34

Parmar

Natural Fillers Private Ltd. and Anr. v. Union of India and Ors.

Case brief

What is this about?

What did the court decide?

Natural Fillers Private Ltd. and Anr. v. Union of India and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Ram Swaroop Joshi Vs Union of India and Ors.

Union of India Vs M/S. Bhawarlal Gurjar

Union of India Vs M/S Hindustan Zinc Ltd.