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2011 Supreme(Guj) 87
2011 (2) GLR 1404
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
HARSHA DEVANI,H.B.ANTANI
SURAT METALLICS LTD & 1 - Petitioner(s)
Versus
COMMISSIONER OF CENTRAL EXCISE, DIVISION-V, & 1 - Respondent(s)
SPECIAL CIVIL APPLICATION No. 8734 of 2010
Decided on : 23/02/2011
MR BB NAIK, SR. ADVOCATE with MR PAVAN S GODIAWALA for Petitioner(s): 1 - 2.
MR RJ OZA for Respondent(s): 1
MR AL SHAH with MR RAVNIDRA SHAH for Respondent(s): 1,
Headnote:
Central Excise Act, 1944 - Sections 11 and 142 - Central Excise Rules, 2002 - Rule 9 - Customs Act, 1962 - Section 142 - Customs Rules, 1995 - Rules 3, 4, 5 and 9 - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 11 and 13 - Security Interest Rules, 2002 - Rules 9 (6) - Security interest - Enforcement of - Bank took possession of secured assets of borrower Petitioner purchased immovable property from bank in auction sale held in April, 2009 - Excise Department filed suit to enforce attachment order which was issued by it over property in December, 2004 - What was sold to petitioner was immovable property of defaulter company and not business or trade in whole or in part, petitioner not succeeded the defaulter in business or trade - Prima facie provisions of Section 11 of Central Excise Act not applied - Held, Nothing on record to show issuance of any certificate as contemplated under Rule 3 of the Rules - Demand notice issued on 2nd December, 2004 - Amount not paid by defaulter within seven days from the service of notice - Attachment could not continue interminably at whims and fancy of Central Excise authorities - Land in disputes had been sold to petitioners under SRFAESI Act, any attachment made prior thereto would no longer survive - Attachment made in the year 2004 would not continue till the year 2009, in the absence of any further action had been taken by the respondent authorities - Properties could not be simply attached for years together without taking any further action - More so, where the Central Excise permitted third party interests to be created - In such circumstances, excise authorities not justified in refusing to grant registration to petitioners on ground of attachment made under Section 142 of Customs Act - Petition allowed.
(HARSHA DEVANI)
1. This petition under Articles 226 and 227 of the Constitution of India has been filed with the following substantive prayers:
6. The petitioners therefore, pray that the Hon'ble Court be pleased
A. to issue a writ or certiorari or any other appropriate writ, order or direction to quash and set aside the impugned order/notice/ communication dated 16/19.04.2010 at Annexure “A” to the petitioner and impugned order/communication dated 10.05.2010 at Annexure “B” to the petition and consequently be pleased to direct the respondent no.1 and/or his subordinate offices to register the petitioners with all benefits under the Central Excise Act, 1944 and Rules framed thereunder for the property/premises situate at Plot No.8204, GIDC, Sachin, Surat.
B. to issue a writ of mandamus or any other appropriate writ, order or direction declaring that the respondent no.1 or his subordinate officers are not entitled to claim the outstanding dues of Excise of borrower company from the property/premises of the petitioners situate at Plot No.8204, GIDC, Sachin in any manner whatsoever & be further pleased to quash & set aside the attachment at the said premises.
2. The petitioner Company is engaged in the business of manufacturing metalized film, lacquered film, etc., and holds Central Excise Registration No.AAGCS6017GXM001 at the premises situated at Plot No.815, Road No.3, Rajkamal Chokdi, GIDC, Sachin, Surat. The subject property, situated at Plot No.8204, GIDC, Sachin was mortgaged by one Veenutex Dyeing & Printing Mills Pvt. Ltd. for financial assistance of Rs.225 lakhs given by Panchsheel Mercantile Co-operative Bank Ltd. (respondent no.2 herein), on 05th June, 1988 towards a term loan of Rs.225 lakhs. The said loan was secured by the respondent Bank by equitable mortgage of the leasehold rights of plot, buildings as well as hypothecation of the plant and machinery and the first charge of the respondent Bank was registered with the Registrar of Companies on 16th July, 1998. The Company rescheduled the said financial facility on 15th February, 2000 for an amount of Rs.250 lakhs, which was secured by equitable mortgage of leasehold rights of plots and building as well as hypothecation of plant and machinery and the first charge of the respondent Bank was registered with the Registrar of Companies on 13th April, 2000. Since Veenutex Dyeing & Printing Mills Pvt. Ltd failed to pay its dues to the respondent Bank, the Bank took over the possession of the said properties under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Securitisation Act) and advertised for sale of the same. The petitioners purchased the subject property for the purpose of expansion of its manufacturing activities as the said plot was situated very near to the first existing unit of the petitioner Company.
3. The petitioner Company being engaged in the business of manufacturing certain goods which compulsorily requires obtaining licence and registration from the Excise Department under the Central Excise Act, 1944 (the Act) and the Rules framed thereunder, the petitioner had been registered with the respondent No.1 – Commissioner of Central Excise vide the above mentioned registration number at Plot No.815, GIDC, Sachin, Surat. The respondent No.1 required the petitioner to apply for registration of the newly purchased property/premises. The initial application made by the petitioner for addition of the subject property in the existing registered premises for the purpose of Central Excise came to be rejected by the Assistant Commissioner of Central Excise and Customs. The respondent No.1 thereafter required the petitioner to make a fresh application for registration of the newly purchased property/premises. Upon the petitioner making such an application, the Assistant Commissioner rejected the same and refused to register the newly purchased property/premises situated at Plot No.8204, GIDC, Sachi
