M/s. A.S.R. Granites v. 1. Commissioner of Customs and Central Excise

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to dispense with the filing of the certified copy of the order dated 24.8-2OOO of the 1st respondent. i,ii ,{r;- t :. i 'r ;'lr)r I . .:..., . " l Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to directing the Andhra Pradesh State Financial Corporation to clear the excise dues if payable and to ensure that the petitioner is not put to inconvenience by the Central Excise authorities during the pendency of the writ petition. Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to directing the Central Excise Department not to take any coercive steps to sell the property of the petitioner during the pendency of the writ petition. l.A. NO: 4 OF 2006(WPMP. NO: 27505 OF 200G) Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to order stay of all further proceedings pursuant to the order of attachment dated 24.8.2006 of the 1st respondent including the sale of the attached properties situate in S.Nos. 56, 60 and 54 at Annaram vilage, Jinnaram Mandal, Medak District admeasuring to an extent of Ac.1.07, Ac.1.00 and 223 sq, yards respectively along with the structures therein, pending the disposal of the above writ petition. l.A. NO: 1 OF 2010(WPMP. NO: 33316 OF 20101 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit the petitioner to sell 1.2 acres out of the total land of 3 acres as described in the plan attached as annexure. Counselfor the Petitioner: SRI K. SAI BABU counsel for the Respondent No.1 & 2: sRl A. RAMA KRISHNA REDDY (sc FoR cBEc) Counsel for the Respondent No.3 & 4: SRI K. VIJAY KUMAR The Court made the following: ORDER i::, rr r!t IN THE HIGH COURT FOR THE STATE OF TETANGANA AT HYDERABAD HONOURABLE SRI IUSTICE P.SAM KOSHY AND HON'BLE SRI IUSTICE SUDDALA CHALAPATHI RAO WRIT PETITION NO- 19220 0F 2006 Between: DATE: 01,.12.2025 M/ s. A.S. R.Granites, Annaram village, Jainnaram Mandal, Medak District, Rep.by its Proprietor, Shri A.Sri Nagesh. Commissioner of Customs and Central Excise, Hyderabad-I Commissionerate, LB Stadium Road, Basheerbagh, Hyderabad and three others. .... Petitioner Respondents ORDER: (per Hon'ble Sri fustice Suddala Chalapathi Rao) The present Writ Petition has been filed prying to grant the following reliefs: " ... to issue a writ, direction or orders more sPecific in the nature of writ of certiorari,

1. Quashing the attachment order issued by the Assistant Commissioner of Cenhal Excise (Arrears Recovery Cell) as illegal and without jurisdiction;

2. Directing the central Excise Deparhnent not to take any coercive steps to sell the property of the petitioner;

3. Directing the Andhra Pradesh State Financial Corporation to clear the excise dues if payable and to ensure that the petitioner is not put to inconvenience by the Central Excise authorities." i \a -- 2

2. The brief facts of the case are that the petitioner purchased the land, buildings and plant & machinery belonging to M/s. Aristocrat Granites Pri'u'ate Limited, in a public auction uicle reference AFC/AMC/BIFR/RSR/DGM/ 2oo2-03 from the 2"d respondent i.e., Andhra Pradesh state Financial Corporation (Telangana), dated

03.12.2002. The 2"d respondent sold the said property under section 29 of the state Financial Corporations Act, 19s1, (for short, 'sFCs Act, 7951,') to the writ petitioner as the previous owner i.e., M/ s.Aristocrat Granites Pvt. Ltd., has failed to pay the outstanding amount due to them. The petitioner contended that as per the condition Nos.4 and 5 mentioned in the sale agreement, they are not liable to pay central excise duty demanded by the Department of Excise on the captioned unit and it is also asserted that as per their Legal opinion, the Corporation shall not be liable to pay any dues either statutory or otherwise including central excise duty. It is also contended that the said unit so purchased by the writ petitioner was delivered unencumbered from the dues, penalties etc., that may be implied on the unit by the appropriate authorities.

3. It is further case of the petitioner, subsequent to the purchase, a show-cause notice dated 29.:_0! 2006 y_e-r. iryued to the writ petitioner, ,. l, ::i3{;rf: , , , TIllil i; ; 3 who has acquired absolute ownership and Possessor of the plant and machinery at Annaram village, Jinnaram Mandal, Medak district, for non-fulfillment of export obligation and for recovery of an amount of Rs.5,48,1.6g/- as cenfral excise duty and fo1 the import duty amount payabte on 512 Nos. of Diamond Segments, imported dufy free under Notification No123/81-Central Excise dated 02.06.7987, as amended, read with the conditions of the B-1 Bond and an amount of Rs.50,000/- as penalty thereon. Vide the show-cause notice, the respondent No.L central excise authorities demanded a total amount of Rs.5,98,169f -, which is allegedly due from M/s. Aristocrat Granites Pvt. Ltd., basing upon the order passed by the Assistant Commissioner of Central Excise, l{yderabad-B Division, Hyderabad-l Commissionerate date d, 22.72.2005. It is contended by the leaned counsel for petitioner that the said company, M/s.Aristocrat Granites Pvt.Ltd., stopped its production and become defunct and failed to pay the debt to the 2'd resPondent. The alleged demand by the 2nd respondent to recover the amounts from the writ petitioner which are Payable by the earlier owner is untenable and the writ petitioner is not liable to pay the same, as such, the orders of the Lrt respondent attaching the plant and machinery of the petitioner -- 4 under Section 11 of the Central Excise Act read with Section 142 (1)(c)(ii) of the Customs Act, 1962, read with Rule 4 of the Customs (Attachment of Property of Defaulters of recovery of Government Dues) Rules, 7995, are nothing but arbitrary and violative of the due procedure of law and liable to be set aside

4. Per contra, the respondent No.1 filed counter contending that M/ s. Aristocrat Granites Pvt. Ltd., is liable to pay an amount of Rs,5,48,169/- as duty alorrg with penalty of Rs.50,0OO/- as per the order-in-original No.88/95, dated 2s.07.7995 and the order-in- original No.51/2005 dated 22.12.2005 passed by the Assistant Commissioner of Central Excise, Hyderabad-B Division, Hyderabad. It is further contended that as on the date of purchase of land and building, plant & machinery of M/s. Aristocrat Granites pvt. Ltd.,by the writ petitioner through the Andhra pradesh State Financial Corporation (AI5FC), M/s. Aristocrat Granites have neither paid the above amounts nor they obtained any stay order from.the appellate authority and in view of the same, the respondent No.L has initiated action as per the law by issuing demand notice C.No.HQ /TRC/ 17 /2006, dated 25.08.2006, which is legal and sustainable. .r , .., , ,,,*i,..,,1,t ;,, ' i ..,'] -'!l i 5

5. We have heard Mr. K.Sai Babu, learned counsel for the petitioner and Mr. A.Ramakrishna Reddy, learned Standing Counsel appearing for the 1't respondent and none appeared for the 2"d respondent. Perused the record

6. Admittedly, the plant and machinery of M/s. Aristocrat Granites Pvt. Ltd., Annaram village, Jinnaram Mandal, Medak District, was purchased by the writ petitioner in a public auction conducted by the 2"d respondent and that they were due of central excise duty of Rs.5,98,1.6g/- and under Section lL of the Central Excise Act,7944, the subsequent purchaser is brought into the ambit for payment of arrears of tax of previous owner and the subsequent purchaser is liable to pay arrears of central excise duty.

7. From a combined reading of the above Section 11 of the Central Excise Act read with Section 742 of the Customs Act, it is evident that where the plant and machinery along with the premises are purchased from a previous owner, who has defaulted in payment of central excise drty, the said dues are recoverable from the subsequent purchaser of the premises and though there is a condition of the agreement entered with the 2"d respondent at the time of auction, the same does not absolve the writ petitioner from i{ I I I I I i I I t t t I I I I I I I i i I i i t I 5 payment of the tax arrears of central excise duty which are admittedly due from the previous owner, as such, we are of the considered opinion that the issuance of order of attachment in pursuance of demand notice for an amount of . Rs.5,9g,169/- to the writ petitioner is valid and tenable. There are no impediments in the order passed by the 1't respondent for attachment and recovery of amount due from the petitioner, in pursuance of order-in-originals issued by the 1't respondent against previous owner of the property. Thus, in our considered view the impugned orders are sustainable in law.

8. When the matter was posted for admission before this Court, at the first instance on 20.11 .2006, this Hon'ble Court was pleased to grant an'interim stay as prayed' on condition that the petitioner shall not alienate or create any encumbrance on the property, which is subject matter of dispute, in the writ petition. The matter is being adjourned from time to time. In the light of the findings of this Court supra and also in a peculiar circumstances, admittedly, as the writ petitioner has purchased the property from the previous defaulter through a public auction conducted by the 2"d ,"rpordunt, though the liability of the writ petitioner does not completely cease to effect. ,' I ;:;. i'i ;1.. 7 To meet ends of justice, in the circumstances of the case, we deern it appropriate to direct the 1st respondent to receive an amount of Rs.5,98,169/- from the petitioner as full and final of all the dues along with applicable interest on the principal amount of Rs.5,40,1,69/- from the date of default to the date of interim order i.e., upto

20.77.2006. The writ petitioner is directed to pay the said amount within a period of 60 days from the date of receipt of the copy of the order and on such payment, the 1't respondent shall issue'No Due Certificate' in respect of the arrears pursuant to the Order-in-Original No.88/95 dated 25.07.7995, and consequential order dated 22.72.2005, failing which the 1't respondent is entitled to recover the same from the writ petitioner in accordance with law. Accordingly, the Writ Petition is partly allowed.

9. There shall be no order as to costs. Miscellaneous petitions pending if any shall stand closed SD/. P. PONNA KRISHNA SISTANT REGISTRAR /ffRUE COPY// SECTION OFFICER To, u.

1. The Commissioner of Customs and Central Excise, Hyderabad - | Commissionerate, L.B. Stadium Road, Basheerabagh, Hyderabad - 5_09 gg1. n 2. Dy. General Mandger, Andhra Pradesh State Financial Corporation, 5-9-194, ll Chirag Ali Lane, P.B. No. 165, Hyderabad - 500 001 . - 3. The deneral Manager, Andhra Pradesh State Financial Corporation, 5-9-194, Chirag Air Lane, P.B. No.165 Hyderabad '500001 North Block, New Delhi

4. The Sicretary, Union of lndia, Ministry of Finance Department of Revenue, 5. One CC to SRI K. SAI BABU, Advocate [gFUqL -- 6: oil CC io Snt A nntytA knisnN[neoov (Sc FoR cBEc) toPUC] 7. One CC to SRI K. VIJAY KUMAR, Advocate IOPUC] 8. Two CD Copies

1... : ' HIGH COURT DATED i0111212025 ., *,,/ ORDER WP.No.19220 of 2006 -i;r.5- S i !l 9 23 [tC :t; /)r.- '? ;:.,,,;'!-.ir: * PARTLY ALLOWING THE WRIT PETITION WITHOUT COSTS 0, '.:..:.. . *,:-'. -irirr(,.:.*' . iri*S,* .:';{li'i,