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Friday, August 16, 2013

Interpretation of clause in the agreement of sale - Excise duty notice calling upon erst while owner is quashed =Excise dues are not the statutory liabilities which arise out of the land and building or the plant and machinery. = “all these statutory liabilities arising out of the land shall be borne by purchaser in the sale deed” and “all these statutory liabilities arising out of the said properties shall be borne by the vendee and vendor shall not be held responsible in the Agreement of Sale.” As per the High Court, these statutory liabilities would include excise dues. We find that the High Court has missed the true intent and purport of this clause. The expressions in the Sale Deed as well as in the Agreement for purchase of plant and machinery talks of statutory liabilities “arising out of the land” or statutory liabilities “arising out of the said properties” (i.e. the machinery). Thus, it is only that statutory liability which arises out of the land and building or out of plant and machinery which is to be discharged by the purchaser. Excise dues are not the statutory liabilities which arise out of the land and building or the plant and machinery. Statutory liabilities arising out of the land and building could be in the form of the property tax or other types of cess relating to property etc. Likewise, statutory liability arising out of the plant and machinery could be the sales tax etc. payable on the said machinery. As far as dues of the Central Excise are concerned, they were not related to the said plant and machinery or the land and building and thus did not arise out of those properties. Dues of the Excise Department became payable on the manufacturing of excisable items by the erstwhile owner, therefore, these statutory dues are in respect of those items produced and not the plant and machinery which was used for the purposes of manufacture. This fine distinction is not taken note at all by the High Court.= We thus conclude that the judgment of the High Court is unsustainable in law. Accordingly, the appeal is allowed and the impugned judgment of the High Court is set aside. As a consequence the notice of the Excise Department calling upon the appellant to pay the dues of the erstwhile owner of the unit in question also stands quashed. The appellant shall also be entitled to cost of this appeal.

                   
published in     http://judis.nic.in/supremecourt/imgst.aspx?filename=40655                                     
  [REPORTABLE]




                       IN THE SUPREME COURT OF INDIA

                       CIVIL APPELLATE JURISDICTION

                       CIVIL APPEAL NO.6802/2013
                  (arising out of SLP(civil) No. 15278 of 2012)




      M/s. Rana Girders Ltd.                          .....Appellant




                       Vs.

      Union of India & Ors.                        ....Respondents




                             J U D G M E N T

      A.K.SIKRI,J.

      1.    Leave granted.

      2.     One  M/s.  P.J.  Steels  Pvt.   Ltd.   (borrower)   had   taken
      loans/financial  accommodation  from  the  Uttar   Pradesh   Financial
      Corporation (UPFC). Because of the consistent default on the  part  of
      the said borrower in re-paying the loans, the UPFC took possession  of
      the land and building of the borrower  which  were  mortgaged/kept  as
      security with the UPFC.  This action was taken under Section 29 of the
      State Financial Corporation Act.  After taking physical possession  of
      the unit, the UPFC held public auction on  pursuant  to  advertisement
      which was issued on 8th January 2002.   In  the  said  public  auction
      conducted by UPFC, the appellant herein (appellant which was known  as
      M/s. Sarju Steels Pvt.Ltd. at that time and has now converted  into  a
      Public Limited Company known as M/s. Rana Girders Pvt. Ltd. Dated 20th
      March 2002 was the highest and thus, successful bidder in  respect  of
      land and building as well as plant and machinery.    Sale  Deed  dated
      8.3.2002 was executed in favour of the  appellant  qua  the  land  and
      building.  Likewise, Agreement dated 14.3.2002 was executed in  favour
      of the appellant conveying the ownership of the plant and machinery.

      3.    With the aforesaid Sale Deed and Agreement,  the  appellant  has
      become the owner, both of the land and building  and  also  plant  and
      machinery.  The borrower has not questioned the validity of  the  said
      auction which has attained finality.  It appears that the borrower had
      also to discharge the liability qua excise duty which had amounted  to
      Rs.1,00,72,442/-.  To recover that amount, the Commissioner of Customs
      and Central Excise, Meerut-I (respondent No.2 herein) is now  pressing
      the appellant to discharge this liability as purchaser and  successor-
      in-interest of the land and building plus plant and machinery  of  the
      borrower.  The appellant is resisting the demand with the posture that
      since the aforesaid properties have been purchased by the appellant in
      an open auction from the UPFC, free from all encumbrances, it  is  not
      the liability of the purchaser to make payment of the dues  of  excise
      department.

      4.    Therefore, the issue which has arisen for our  consideration  in
      this appeal is as to whether excise department can recover the  amount
      in question from the appellant.  This issue  has  cropped  up  in  the
      following factual background:

      5.    As already pointed out above, after  taking  possession  of  the
      unit  of  the  borrower  under  Section  29  of  the  State  Financial
      Corporation Act, the UPFC issued an advertisement  dated  8.1.2002  in
      the newspapers for public auction of the said properties.  By the said
      advertisement, offers for sale of land and building consisting of land
      area 13390 sq. meter and covered area of 2429  sq.  meter,  plant  and
      machinery and other fixed assets of the borrower were invited on  (“as
      is where is basis”).  This public notice also stipulated certain terms
      and conditions on which offer were invited.  First condition  thereof,
      which is relevant for our purpose, is reproduced below:

           “All the statutory liabilities arising  out  of  land  shall  be
           borne by purchaser (except electricity dues).  Other  terms  and
           conditions of sale may be sent at the office.”




      6.    The appellant turned out to be the successful bidder  whose  bid
      in the sum of Rs.43 Lakh for  land  and  building  being  highest  was
      accepted by the UPFC.  Sale Deed dated 8th March  2002  was  executed.
      In this Sale Deed it was specifically mentioned that the  property  is
      free from all encumbrances by stating that “the vendor herein confirms
      that the property purchased through the sale deed in favour of  vendee
      is free from all charges and encumbrances.......”  The  appellant  had
      paid a sum of Rs.21.50 Lakh at the time of registration  of  the  Sale
      Deed and balance amount of  Rs.21.50  lakh  was  to  be  paid  by  the
      appellant to the UPFC which was payable together with interest at  the
      rate of 16% P.A. in instalments as specified in the  Schedule  to  the
      said Sale Deed.  There is no dispute that this  balance  consideration
      has been paid by the appellant to the UPFC.  Another condition in  the
      Sale Deed, which was also mentioned in the public notice was that:

           “All the statutory liabilities arising out  of  said  properties
           shall be borne by the  vendee  and  vendor  shall  not  be  held
           responsible.”




      7.    The appellant also purchased plant and  machinery  in  the  said
      auction for a total consideration of Rs.1  Crore  93  Lakh  for  which
      Agreement dated 15th March 2002 was executed  by  the  parties.   This
      Agreement also contained both the clauses, similar to the  clauses  in
      the Sale Deed, namely, the said plant and machinery was free from  all
      encumbrances and that all the statutory liabilities arising out of the
      plant and machinery of the industrial unit were to  be  borne  by  the
      purchaser i.e. the appellant.

      8.    At that time, some demands of dues on account of Central  Excise
      payable to respondent No.2 were pending.  It appears that the borrower
      had filed two appeals against the Order-in-Original dated 29.8.2002 in
      this behalf.  These two appeals were dismissed by the CESTAT  on  30th
      April 2003 on account of  non-compliance  of  the  pre-deposit  amount
      directed in its stay order dated 18th March 2003.  Some penalties were
      also imposed by the adjudicating authority, under the  Central  Excise
      Act which were appealed again by the borrower.  That appeal  was  also
      dismissed on 30th April 2003 and 25th May 2004 thereby confirming  the
      demand of Customs and Excise.

      9.    After the conclusion of the aforesaid legal proceedings  between
      the respondent No.2 and the borrower, following amount became  due  on
      account of duty and penalty payable by the borrower to the  respondent
      No.2:

      Adj.Order No. &        Amount of confirmed demands

      Date                        Duty (In Rs.)    Penalty  (In  Rs)    R.F.
       Penalty

      28/Commr/MRT/0           4298571              4298571             ----
      1000000

      2/dated 29.8.02

      16/Jt.                                    669862                669862
      ----         -----

      Commr/2003/

      Dated 22.7.2003

      82/Off/136/01/02        115576                20000           ----

      Dated 22.11.02

      -----------------------------------------------------------------------
      -------------

      10.   Since the appellant had purchased the land and building as  well
      as plant and machinery of the borrower in the auction conducted by the
      UPFC, the  respondent  No.2  issued  notice  dated  25.8.2004  to  the
      appellant stating that the amount  in  question  had  now  become  the
      liability of the appellant and demanded the aforesaid payment.  It was
      mentioned in the notice that this amount was payable by the  appellant
      in view of the law laid down by this Court in the case of M/s.  Macson
      Marbles Pvt. Ltd. Vs. Union of India2003 (158) ELT 424 SC.

      11.   The appellant herein initially requested the  Excise  Department
      to provide the copies of the adjudication orders relating to the three
      cases  mentioned  in  the  notice.   Thereafter,  vide   reply   dated
      7.12.2004, the appellant  disputed  the  liability  stating  that  the
      amount was not recoverable from it  in  terms  of  the  provisions  of
      Section 11 of the Central Excise Act as it had purchased the aforesaid
      properties in auction from UPFC “free  from  all  encumbrances”.   The
      Central Excise Department, however, insisted that it  had  become  the
      liability of the appellant and sent  further  communication  demanding
      payment failing with the threat that on failure in making payments the
      properties would be attached.

      12.   At this juncture, the appellant filed the Writ Petition  in  the
      High Court of Judicature at Allahabad, questioning the validity of the
      demands raised by the Revenue. After  hearing  the  matter,  vide  the
      impugned judgment dated 1st December 2011, the  High  Court  has  been
      pleased to hold that in view of the covenants in  the  Sale  Deed  and
      Agreement it is the liability of the appellant to pay the excise duty.
       It is this order which is the subject matter of present appeal.

      13.  A perusal of the order of the High Court would demonstrate  that
      the  Excise  Department  had  contested  the  petition  filed  by  the
      petitioner herein on the ground that the appellant being the successor-
      in-interest which had purchased the land and building as well as plant
      and machinery, was liable to make the payment  having  regard  to  the
      judgment of this Court in M/s. Macson case.   The  appellant,  on  the
      other hand, had argued that since the appellant had not purchased  the
      entire unit of the principal borrower the judgment of M/s. Macson case
      was not applicable.  On the contrary it is the law laid down in  Union
      of India vs.  SICOM  Ltd.   2009  (2)  SCC  121,   ratio  whereof  was
      attracted. It was argued that the M/s. Macson  case  was  specifically
      distinguished by this Court in SICOM Ltd. holding that  the  ratio  of
      M/s. Macson case would be applicable only in transfer   of  “ownership
      of business”  i.e. when there is a sale  of  business  as  an  ongoing
      concern and not in case of mere  transfer  of  its  specified  assets.
      Significantly, the  High  Court  took  note  of  this  distinction  by
      referring to various other judgments as well on  the  lines  of  SICOM
      Ltd.  of this Court as well as some High Courts.  However, leaving the
      discussion on this aspect inconclusive, the High Court chose  to  rest
      its decision on an altogether different foundation, namely stipulation
      in the Sale Deed dated 8.3.2002  to  the  effect  that  the  statutory
      liabilities arising out of the property shall be borne by  the  vendee
      (i.e. the appellant). These clauses Sale Deed pertaining to  land  and
      building and Agreement of Sale qua plant and  machinery  have  already
      been noted  above.  According  to  the  High  Court,  these  covenants
      provided clear and unambiguous stipulation as per which the appellants
      agreed to discharge the statutory liabilities  and  since  the  excise
      dues were statutory in nature, it had  become  the  liability  of  the
      appellant to pay the same. However, in so far as penalty is concerned,
      it is held that such a burden cannot be fastened on to  the  appellant
      as it is in the nature of quasi-criminal liability which was  leviable
      only on the defaulter viz. the borrower. The writ  petition  is  thus,
      partly allowed.

      14.   Before us, it was strenuously argued by the learned counsel  for
      the Revenue that since the excise duty is a statutory liability such a
      duty has to be paid by  the  person  who  purchased  the  property  of
      borrower in default even when sold in auction under section 29 of  the
      State Financial Corporation Act. He further argued that  in  any  case
      the High Court was right in holding that by virtue of the stipulations
      in the Sale Deed as well as in the Agreement of Sale, so  far  as  the
      appellant  is  concerned,  it  was  liable  to  discharge  the  excise
      liability. In the circumstances, two questions arise for consideration
      namely (1) on the interpretation of stipulation contained in the  Sale
      Deed of the land and building and  Agreement  of  Sale  of  plant  and
      machinery, whether the appellant had  agreed  to  discharge  the  dues
      payable to the excise department by the borrower. (2) Whether  such  a
      liability  arises  in  law  (de-hors  the  stipulation  in  Sale  Deed
      /Agreement of Sale) having regard to the legal provisions contained in
      the Excise Act and State Financial Corporation Act?

      15.   We shall discuss the second question in the first instance.   As
      noted above, in so far as second question  is  concerned,  though  the
      High Court has discussed  the  position  in  law  in  detail  but  has
      refrained from giving its final opinion on this question.

      16.   Whether UPFC would have priority being  a  secured  creditor  by
      virtue of Deed of Mortgage or the Central Excise  in  respect  of  its
      dues having regard to the Rule 230(2) of  the  Central  Excise  Rules,
      came up for consideration before this Court in State  of  Karnataka  &
      Anr. Vs. Shreyash Papers (P) Ltd. & Ors. JT 2006 (1) SC 180.   Dealing
      with the provisions of Rule 230 of the Excise Rules,  the  Court  held
      that this provision  authorises  detention  of  all  excisable  goods,
      materials,  preparations,   plant,   machinery,   vessels,   utensils,
      implements and articles, in the custody or possession of the person or
      persons carrying on such trade or business or from  person  succeeding
      the business or trade or part thereof for such time till dues are paid
      or recovered.  However, the rule does not in any way create  a  charge
      over any of the goods enumerated therein. After  explaining  the  term
      “charge” as defined in Section 100 of Transfer of Property Act, it was
      held that charge would be different from the word “detained”.  As Rule
      230 only empowers detention and there was no other provision under the
      Central Excise Act or the Rules which envisages to create  any  charge
      over the assets of a unit to enable the  realization  of  the  Central
      Excise Duty on top priority.  The Court held that UPFC had a  priority
      being a secured creditor on the one hand and Central Excise having  no
      “charge” over the property.  The Court specifically took note  of  the
      fact that the petitioner in that case was not  the  successor  of  the
      erstwhile owner in business or trade and having acquired the  property
      without any charge independent of business or trade  of  the  previous
      owner, was not a person in custody or possession of the property as  a
      successor of the previous owner against whom there  was  a  demand  of
      excise duty.

      17.   Learned counsel for  the  respondents,  heavily  relied  on  the
      judgment of this Court in M/s. Macson (supra), reference to  which  is
      also made in the notice dated 25.02.1984  that  was  served  upon  the
      appellant by the Excise Department.  He submitted that  in  that  case
      this Court had held that even the successor in interest is  liable  to
      discharge the liability of the Excise Department.   We  may,  however,
      note that this case was considered and specifically  distinguished  in
      SICOM Ltd. (supra).  In that case, considering the statutory right  of
      the Financial Corporation under the State Financial  Corporation  Act,
      1951  and  the  non-obstante  clause   occurring   therein,   it   was
      categorically held that  State  Financial  Corporation  shall  have  a
      preferential claim in relation to its secured debts.  This position is
      explained in paragraphs  16  and  23  of  the  said  judgment  in  the
      following manner:


           “16.  If a company had a subsisting interest  despite  a  lawful
                 seizure, there  cannot  be  any  doubt  whatsoever  that  a
                 charge/mortgage over immovable property will have the  same
                 consequence.
                            xxxxxxxxxxxxx


           23. Furthermore, the right of a State Financial Corporation is a
                 statutory one. The Act contains a non  obstante  clause  in
                 Section 46-B of the Act which reads as under:
                 “46-B. Effect of Act on other laws.—The provisions of  this
                 Act and of any rule or orders made  thereunder  shall  have
                 effect  notwithstanding  anything  inconsistent   therewith
                 contained in any other law for the time being in  force  or
                 in  the  memorandum  or  articles  of  association  of   an
                 industrial concern or in any other instrument having effect
                 by virtue of any law other  than  this  Act,  but  save  as
                 aforesaid, the provisions of this Act shall be in  addition
                 to, and not in derogation of, any other law  for  the  time
                 being applicable to an industrial concern.”



      18.   In so far dues of the Government in the form of  tax  or  excise
      etc. are concerned, the Court was of the opinion that  rights  of  the
      Crown to recover the dues would prevail over the right of the subject.
      Crown debt means the debts  due  to  the  State  or  the  King.   Such
      creditors, however, must be held to  mean  unsecured  creditors.   The
      principle of Crown debt pertains to the common  law  principle.   When
      Parliament or State Legislature makes an  enactment,  the  same  would
      prevail over the common law and thus the common law  principles  which
      existed on the date of coming into force of the Constitution of India,
      must yield to a statutory provision.  A  debt,  which  is  secured  or
      which by reason of the provisions  of  a  statute  becomes  the  first
      charge over the property must be held to prevail over the  Crown  debt
      which is an unsecured one. On this  reasoning,  the  debt  payable  to
      secured creditor like the Financial Corporation was prioritised vis-a-
      vis the Central Excise Dues.

      19.   For this principle, the Court referred to its  earlier  judgment
      in Dena Bank v.. Bhikhabhai Prabhudas Parekh & Co. & Ors. (2000) 5 SCC
      694 explaining the doctrine of priority to Crown Debts, thus:

           “What is the common law doctrine of priority  or  precedence  of
           Crown debts/ Halsbury, dealing with general rights of the  Crown
           in relation to property, states that where the Crown’s right and
           that of a subject meet at one and the same  time,  that  of  the
           Crown is in general preferred, the rule  being  “detur  digniori
           (Laws of England, 4th Edn.,Vol.8, para 1076,  at  p.666).Herbert
           Broom states:

                 “Quando jus domini regis et subditi concurrunt  jus  regis
           praegerri debat. – Where the title of the kind and the tile of a
           subject concur, the king’s title must be preferred. In this case
           detur digniori is the rule. .....where the titles  of  the  kind
           and of a subject concur, the kind takes the whole. ....where the
           king’s title and that of a subject concur, or are  in  conflict,
           the  king’s  title  is  to  be  preferred.”(Legal  maxims;  10th
           Edn.,pp.35-36)

                 This Common law doctrine of priority of State’s debts  has
           been recognised by the High Courts of  India  as  applicable  in
           British India before  1950  and  hence  the  doctrine  has  been
           treated as “law in force” within the meaning of  Article  372(1)
           of Constitution.”




           It was, furthermore, observed :

                        “However,,  the  Crown’s  preferential   right   to
           recovery of debts over other creditors is confined  to  ordinary
           or unsecured  creditors.  The  common  law  of  England  or  the
           principles of equity  and  good  conscience  (as  applicable  to
           India) do not accord the Crown a preferential right for recovery
           of its debts over a mortgagee or pledge of goods  or  a  secured
           creditor. It is only in cases where the Crown’s right  and  that
           of the subject meet at one and the same time that the  Crown  is
           in general preferred. Where the right of the subject is complete
           and perfect before that of the king commences, the rule does not
            apply, for there is no point of time at which  the  two  rights
           are at conflict, nor can there be a question which  of  the  two
           ought to prevail in a case where one, that of the  subject,  has
           prevailed already.In Giles v.Grover it has been  held  that  the
           Crown has no precedence over a pledge of goods. In Bnk of  Bihar
           v. State of Bihar the principle  has  been  recognised  by  this
           Court holding that the rights of the pawnee who has parted  with
           money in favour of the pawner  on  the  security  of  the  goods
           cannot be extinguished even by lawful seizure of goods by making
           money available to other creditors of  the  pawnor  without  the
           claim of the pawnee being first fully satisfied.Rashbehary Ghose
           states in Law of Mortgage (TLL,7th Edn.,p.386)  –  “it  seems  a
           government debt in India is not entitled to  precedence  over  a
           prior secured debt.”




      20.   Coming to the liability of the successor in interest, the  Court
      clarified the legal position enunciated in M/s.  Macson  by  observing
      that such a liability can be fastened on that person who had purchased
      the entire unit as an  ongoing  concern  and  not  a  person  who  had
      purchased land and building or the machinery of the erstwhile concern.
       This distinction is brought out and explained in paragraph 24 and  25
      and it would be useful for us to reproduce herein below:

                 “Reliance has also been placed by Ms.Rao on Macson Marbles
           Pvt.Ltd. (supra) wherein the dues under Central Excise  Act  was
           held to be recoverable from an auction purchaser, stating:

                 We are not impressed with the argument that the State  Act
           is a special enactment and  the  same  would  prevail  over  the
           Central Excise Act. Each of them  is  a  special  enactment  and
           unless in the operation of the same  any  conflict  arises  this
           aspect need not be examined. In  this  case,  no  such  conflict
           arises between the corporation and the Excise Department.  Hence
           it is unnecessary to examine this aspect of the matter.

                 The Department  having  initiated  the  proceedings  under
           Section 11A of this Act adjudicated liability of respondent No.4
           and held that respondent No.4 is also liable to pay penalty in a
           sum of Rs.3 lakhs while the Excise dues liable would be  in  the
           order of a lakh or so. It is  difficult  to  conceive  that  the
           appellant had any opportunity to participate in the adjudication
           proceedings  and  contend  against  the  levy  of  the  penalty.
           Therefore, in the facts and circumstances of this case, we think
           it appropriate to direct that the said amount, if already  paid,
           shall be refunded within a period  of  three  months.  In  other
           respects,  the  order  made  by  the  High  Court  shall  remain
           undisputed. The appeal is disposed of accordingly.”




                 The decision, therefore, was rendered in the facts of that
           case. The issue with which we are  directly  concerned  did  not
           arise for consideration therein. The Court also did  not  notice
           the binding precedent of  Dena  Bank  as  also  other  decisions
           referred to hereinbefore.”




      21.   A harmonious reading of the judgments in Macson and SICOM  would
      tend us to conclude that it is only in those cases where the buyer had
      purchased the entire unit i.e. the entire  business  itself,  that  he
      would be responsible to discharge the liability of Central  Excise  as
      well.  Otherwise, the subsequent purchaser cannot be fastened with the
      liability relating to the dues of the Government  unless  there  is  a
      specific provision in the Statute,  claiming  “first  charge  for  the
      purchaser”.  As far as Central Excise Act is concerned, there  was  no
      such specific provision as noticed  in  SICOM  as  well.   Proviso  to
      Section 11 is now added by way of amendment in  the  Act  only  w.e.f.
      10.9.2004.  Therefore, we are eschewing our discussion regarding  this
      proviso as that is not  applicable  in  so  far  as  present  case  is
      concerned.  Accordingly, we  thus,  hold  that  in  so  far  as  legal
      position is concerned, UPFC being a secured creditor had priority over
      the excise dues.  We further hold that since  the  appellant  had  not
      purchased the  entire  unit  as  a  business,  as  per  the  statutory
      framework he was not liable for discharging the  dues  of  the  Excise
      Department.

      22.    With  this,  we  now  revert  to  the   first   issue,   namely
      interpretation of  the clause in the Sale Deed for land  and  building
      and similar clause in Agreement of Sale for machinery on the basis  of
      which appellant is held to be liable to pay the dues.   These  clauses
      have already been incorporated in the earlier portion of our judgment.



      23.   We may notice that in the first instance it  was  mentioned  not
      only in the public notice but there is a specific clause  inserted  in
      the Sale Deed/Agreement as well, to the effect that the properties  in
      question are being sold free from all encumbrances.  
At the same time,
      there is also a stipulation  that  “all  these  statutory  liabilities
      arising out of the land shall be borne by purchaser in the sale  deed”
      and  “all  these  statutory  liabilities  arising  out  of  the   said
      properties shall be borne by the vendee and vendor shall not  be  held
      responsible in the Agreement of Sale.”  
As per the High  Court,  these
      statutory liabilities would include excise dues.  
We  find  that  the
      High Court has missed the true intent and purport of this clause.
The
      expressions in the Sale Deed as well as in the Agreement for  purchase
      of plant and machinery talks of statutory liabilities “arising out  of
      the  land”  or  statutory  liabilities  “arising  out  of   the   said
      properties” (i.e. the machinery).  Thus, it  is  only  that  statutory
      liability which arises out of the land and building or  out  of  plant
      and machinery which is to be discharged by the purchaser.
Excise dues
      are not the statutory liabilities which arise  out  of  the  land  and
      building or the plant and machinery.  
Statutory  liabilities  arising
      out of the land and building could be in the form of the property  tax
      or other types of cess relating to property etc.  
Likewise,  statutory
      liability arising out of the   plant and machinery could be the  sales
      tax etc. payable on the said machinery.
As far as dues of the Central
      Excise are concerned, they were not related  to  the  said  plant  and
      machinery or the land and building and thus did not arise out of those
      properties.  
Dues of the  Excise  Department  became  payable  on  the
      manufacturing of excisable items by the  erstwhile  owner,  therefore,
      these statutory dues are in respect of those items  produced  and  not
      the  plant  and  machinery  which  was  used  for  the   purposes   of
      manufacture.  
This fine distinction is not taken note at  all  by  the High Court.

      24.   We thus  conclude  that  the  judgment  of  the  High  Court  is
      unsustainable in law.  Accordingly, the  appeal  is  allowed  and  the
      impugned judgment of the High Court is set aside.   As  a  consequence
      the notice of the Excise Department calling upon the appellant to  pay
      the dues of the erstwhile owner of the unit in  question  also  stands
      quashed.  The appellant shall also be entitled to cost of this appeal.


                                 .........................................J.
                                                              [Anil R. Dave]








                                 .........................................J.
                                                                 [A.K.Sikri]




      New Delhi.
      Dated: August 16, 2013





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