Central Excise department does not have any preferential charge over recovery
THE Assistant Commissioner, Central Excise, Allahabad intimated State Bank of India that in view of Section 11 of the CEA, 1944 empowering the department to recover government dues, the land, plant and machinery and also any property in the name of respondent company should not be brought/sold/leased/transferred by the petitioner without his permission.
Against this restraint order the bank filed a Writ Petition in the Allahabad High Court pleading that the said order be quashed.
The banker submitted that they being the secured creditor under Section 2(zd) of the SARFAESI Act have the first charge over the property and that there is no statutory provision under the Central Excise Act giving priority to the excise department to recover government dues over the debts owed to the petitioner bank; that the respondent CE department has no authority of law to restrain the petitioner from not recovering its dues.
The Counsel for the Central Excise department submitted that the CE dues were prior in point of time to the loan granted by the petitioner bank and since pursuant to the demand raised by them, the property has been attached, consequently, the Central Excise department had the first right to recover the amount.
The High Court observed that the Central Excise department had failed to show any provision by which government dues could be recovered as the first charge.
And, therefore, the Writ Petition was allowed.
Please see Breaking News.
Also see /27.12.2006, , & 2012-TIOL-803-HC-AP-CX.