Shaniyal Dyeing Printing P Limited Vs C.C.E. (CESTAT Ahmedabad)
Held that it is settled that the government dues against the assessee cannot be recovered from the owner of the property which was leased out to the assessee against whom the dues are pending
Facts-
The appellant had filed an application for cancellation of Central Excise Registration and had given the factory plot to M/s Roma Industries, a partnership firm on lease for the period 25.07.1997 to 14.12.1998.
M/s Roma Industries ran their business at said premises during the period 11.08.1997 to 14.12.1998 and during the said period confirmed Government dues along with interest were pending against M/s Roma Industries. To recover the Government dues pending against the M/s Roma was issued to the Appellant on 10.07.2013 for recovery of Government dues to the tune of Rs. 71,48,901/- along with interest pending with M/s Roma . Since the Appellant did not pay the confirmed Government dues pending against M/s Roma, the property Plot No. 8206, GIDC, Sachin, Surat (Land and Building) owned by the Appellant were attached under Panchnama dated 19.07.2013. Appellant made payment of Rs. 1,40,48,110/- against the outstanding dues pending against M/s Roma. Thereafter, Appellant filed the refund claim for said amount on the ground that they have paid the above amount which were not legally liable to be paid by them only to save their property from the possible auction by the department. The payment were made by them are require to be refunded to them. A show cause notice was issued proposing to reject the refund claim and the adjudicating authority after due process, rejected the appellant’s claim for refund amount. Aggrieved by the said order, the appellant preferred an appeal before the Commissioner (Appeals) rejected the Appeal and, against which, the present appeal is filed.
Conclusion-
In view of the judgment, in the case of M/S. SAHIL TEXTILES V/S. COMMISSIONER OF C.EX.& S.TAX, SURAT-I- 2017 (1) TMI 704- CESTAT, AHMEDABAD, it is settled that the government dues against the assessee cannot be recovered from the owner of the property which was leased out to the assessee against whom the dues are pending accordingly, the revenue has wrongly collected the amount of dues pertaining to M/s. Roma Industries consequently, the said amount is required to be refunded to the appellant along with interest as per law.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The present appeal is directed against Order-in-Appeal No. CCESA – VAD/(APP-II)/MM/39/2016-17 dated 26.05.2016 passed by the Commissioner (Appeals) of Central Excise& Customs, Vadodara
1.1 The fact of the case is that the appellant had filed an application for cancellation of Central Excise Registration and had given the factory plot to M/s Roma Industries, a partnership firm on lease for the period 25.07.1997 to 14.12.1998. Appellant also furnished undertaking for cancellation of Registration that in case M/s Roma Industries did not pay the Central Excise dues due to any reason whatsoever, the director/ partners of Appellant would be responsible and pay the Government dues. Accordingly Registration of the Appellant was cancelled on 08.08.1997 and M/s Roma Industries were issued Central Excise Registration.
1.2 M/s Roma Industries ran their business at said premises during the period 11.08.1997 to 14.12.1998 and during the said period confirmed Government dues along with interest were pending against M/s Roma Industries. To recover the Government dues pending against the M/s Roma an Appendix –II was issued to the Appellant on 10.07.2013 for recovery of Government dues to the tune of Rs. 71,48,901/- along with interest pending with M/s Roma . Since the Appellant did not pay the confirmed Government dues pending against M/s Roma, the property Plot No. 8206, GIDC, Sachin, Surat (Land and Building) owned by the Appellant were attached under Panchnama dated 19.07.2013. Appellant made payment of Rs. 1,40,48,110/- against the outstanding dues pending against M/s Roma. Thereafter, Appellant filed the refund claim for said amount on the ground that they have paid the above amount which were not legally liable to be paid by them only to save their property from the possible auction by the department. The payment were made by them are require to be refunded to them. A show cause notice was issued proposing to reject the refund claim and the adjudicating authority after due process, rejected the appellant’s claim for refund amount. Aggrieved by the said order, the appellant preferred an appeal before the Commissioner (Appeals) of Central Excise and Central Tax, Vadodara who vide impugned Order-In-Appeal dated 26.05.2016 rejected the Appeal and, against which, the present appeal is filed.
02. Shri S. Suriyanarayan, Learned Counsel appearing on behalf of the appellant submits that refund claim is disallowed on the ground of alleged undertaking. However, neither the provisions of the Central Excise Act, nor the Rules, enable the department to extract commitment, which is nowhere provided in law. The provisions of Section 11, new Section 11A, Section 142 of the Customs Act and various Rules made thereunder, adequately, provided for protection to the department, when a unit is to be transferred or sold. It is clearly not open to the Department to exercise their vast power and render assesse liable beyond the clear provisions of the Act and the Rules. Such an exercise of power, apart from being illegal, cannot enable the department to create future right in their favour.
2.1 He also submits that alleged undertakings were extracted out of sheer compulsion, coercion and pressure. There is no such provision in the Central Excise Act and/or Rules. Such documents cannot even be created by utilizing any departmental instruction. If an assessee wishes to surrender registration, or to obtain registration, it is only the department who can grant the same or accept surrender. Merely because the act grants such power, cannot mean that the department can force the assessee at that stage to take undertaking accepting the liabilities beyond the four corners of law. Such undertaking have clearly no enforceable value and cannot lead to any rights being crystallized in the department. At the stage of receiving registration or surrendering them, it is clearly at the mercy of the departmental officers. Such a situation cannot be exploited to extract such undertaking.
2.2 Without prejudice he also submits that the said undertaking has absolutely no connection with the dues of M/s Roma Industries. The said undertaking has been erroneously interpreted by the department, the undertaking is in the context of surrender of registration of Appellant and issuance of registration to M/s Roma Industries. The said undertaking states that, if there are old dues of the appellant, then the appellant will pay the same. It also state that, if the appellant does not pay the same, then M/s Roma Industries will pay the same. But, if M/s Roma Industries does not pay, then the appellant will definitely be liable to pay. The said undertaking has absolutely no connection with the dues of M/s Roma Industries. Hence the entire undertaking has been misconstrued by the department. It is not open to the department to take an undertaking from a person in such situations.
2.3 He also submits that second undertaking of 2002 is concerned, the same is not even executed by Appellant. There is no resolution of the appellant company permitting anyone to give such an undertaking. The said undertaking is given by the Vikesh Jayantilal Mandiviwala. Now, at the relevant time, he was not even director of the Appellant company.
2.4 He further submits that leave and licence does not create any interest in M/s Roma Industries, question of enforcing the demand of M/s Roma Industries against the assets of the appellant under Section 11 also cannot arise. M/s Roma Industries has no interest, whatsoever, on land, plant and building given to them under a leave and licence. Hence provisions of Section 11 can never apply. For the same reason, there can be no question of attaching the said properties, in as much as, the said properties do not belong to M/s Roma Industries at all. It is also pertinent to note that name of Roma Industries has never been entered in the record of the GIDC. There is no application made for transferring the unit to them, nor any application was made for leasing out the premises to them by way of lease or transfer. Thus even otherwise, M/s Roma Industries have absolutely no proprietary interest of any nature, whatsoever, in the land, plant and machinery of the Appellant. In such circumstance, the question of binding the appellant to any undertaking can never arise.
2.5 He also submits that even if the provisions of Section 11 are pressed in to service, it cannot be said that M/s Roma Industries was successor-in-business of the appellant. The Appellant had shut down the business. It is settled law that, to be a successor-in-business, the unit must be taken over as going concern. It is clearly not the case. This issue stands settled by a catena of decisions. It is therefore, even section 11 does not apply to the present case. For the aforesaid reason the provisions of Section 142 of the Customs Act also do not apply for the fundamental reason that Roma Industries had no interest in the property in question at all. Furthermore, at the stage when Annexure-II, was issued, land, plant, building and machinery were also not in control of M/s Roma Industries, nor were being used the same. He placed reliance on the following decisions:-
