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2019 Supreme(Online)(KER) 65685
HIGH COURT OF KERALA
SHAJI P.CHALY, J
V.BINU – Appellant
Versus
THE COMMISSIONER OF CENTRAL EXCISE – Respondent
WP(C)/36222/2010
SRI.M.R.NANDAKUMAR, SRI.SACHIN VYAS, R1 & R2 - SRI.THOMAS MATHEW NELLIMOOTTIL, SC, R3 - SRI.SREEDHAR RAVINDRAN, R4 - SRI. P.VIJAYAKUMAR, ASGI
The court affirmed the enforceability of provisions allowing attachment of property to recover amounts owed under the Central Excise Act, despite prior transfers intended to defraud creditors.
Headnote:
Recovery - Central Excise - Customs Act, 1962 (Sec. 142(1)(c)(ii)), Customs (Attachment of property of Defaulters for recovery of Customs Dues) Rules, 1995 (Rule 9) - The court upheld the application of these provisions for the recovery of dues from the defaulter through property attachment, despite the transfer of said property to the petitioner.
Fact of the Case:
A writ petition was filed challenging a notice issued for the attachment of property to recover dues owed by the petitioner's father, a defaulter in Central Excise payments, citing that the application of Customs Act provisions to the Central Excise Act was invalid.
Finding of the Court:
The court found that the transfer of property to the petitioner was made with the intent to defeat creditors and upheld the applicability of Customs Act provisions for recovering the defaulter's dues.
Issues: Whether the provisions of the Customs Act applicable to the recovery of Central Excise dues are valid against the petitioner and whether the transfer of property was made to defeat creditors.
Ratio Decidendi: The court determined that the provisions of the Customs Act, specifically relating to property attachment for recovery of dues, are applicable under the circumstances, and fraudulent transfers made with intent to defeat creditors are voidable.
Final Decision: The court dismissed the writ petition, allowing continuance of the notice for property attachment.
JUDGMENT
This writ petition is filed by the petitioner seeking to quash Ext.P1 notice issued to the petitioner by the 2nd respondent, i.e., the Assistant Commissioner of Central Excise, Palakkad, dated 22.l1.2010, whereby informed the petitioner that his father i.e., the 3rd respondent is liable to pay an amount of Rs.86,94,126/- towards duty and Rs.86,94,126/- towards penalty, on account of the business conducted by the 3rd respondent, and further that the said person is not paying the amounts specified in the notice, the Department is proposing to proceed to attach the property mentioned in the said notice under the provisions of Sec.142(1) (c)(ii) of the Customs Act, 1962 , read with Rule 4 of the Customs (Attachment of property of Defaulters for recovery of Customs Dues) Rules, 1995, as is made applicable to Central Excise matters by notification No.68/63-CE dated 04.05.1963, since the defaulter has transferred the property to the petitioner as per Document No.1436/2001 of SRO, Palakkad, and for other related reliefs. Brief material facts for the disposal of the writ petition are as follows:
2. Petitioner was assigned an extent of 11 cents of property with a residential house thereon by his father, the 3rd respondent, in the year 2001. Later, the business of the 3rd respondent ran into rough weather due to the strike that has occurred in the establishment and had to be closed down, thereby virtually rendering the 3rd respondent physically and financially unable to pay any amounts to the respondents. Matters beings so, petitioner is served with Ext.P1 notice by the 2nd respondent as per the provisions specified above, seeking to attach and sell his property to recover the dues of the 3rd respondent under the Central Excise Act . Similarly, Ext.P2 notice is issued to the 3rd respondent, directing the 3rd respondent to pay the afore-specified amounts within 7 days, failing which, proceedings will be initiated in order to recover the amounts in accordance with law.
3. The contention put forth by the petitioner is that, the provisions of Sec.142(1)(c)(ii) of the Customs Act, and Rule 9 of the Rules specified above are not applicable, to recover the dues under the Central Excise Act , and Sec.12 of the does not empower the Central Government to adopt the above provisions of the Customs Act and the Rules to a proceeding under the . Thus the notification issued by the Central Government to the extent to which it incorporates Sec.142(1)(b) and Sec.142(1)(c)(ii) of the Customs Act as applicable to proceedings under the is void and beyond the powers conferred under Sec.12 of the . Moreover, it is alternatively contended that, even if the above provisions are applicable, the property was obtained by the petitioner nearly 10 years ago, and therefore, cannot be proceeded against, in view of the fact that the transfer of the property to the petitioner is long prior to the notice issued to the 3rd respondent under Rule 4 of the Rules specified above.
4. A counter affidavit and additional counter affidavit are filed by respondents 1, 2 and 4, refuting the allegations and claims and demands raised by the petitioner. Among other contentions, it is stated that, the 3rd respondent was conducting a proprietary concern viz., 'Bhaskar Soap Works', and the unit owed the respondents a sum of Rs.173.88 lakhs by way of duty and penalty, and interest for the delayed payment of duty is also recoverable from the 3rd respondent. The Additional Commissioner of Central Excise, Calicut Commissionerate, vide Order-in-Original No.07/2007 dated 30.04.2007 had confirmed the demand raised on the 3rd respondent, the proprietor of the defaulter firm. The Commissioner (Appeals), Cochin has upheld the said Order-in-original vide Order-in-Appeal No.01/2008 dated 15.01.2008. The appeal filed by the defaulter before the CESTAT, Bangalore was dismissed as per Final Order No.1105/2009 dated 14.09.2009, and therefore, the order has become final in the year 2009.
5. In th
