ORDER
K.S. Dilipsinhji, Member (T)
1. M/s Rajen (Textile) Mills Pvt. ltd., have filed an appeal dated 17.9.1982 under old Section 35 of the Central Excises and Salt Act 1944 against the order F.No.V(18)15-118/Adj/79 173 dated 4th July 1982 of the Collector of Central Excise and Customs, Pune, levying duty amounting to Rs.29,889.80 Ps. on 7,939 kgs. of cotton yarn found short in stock as indicated by the RT. 12 return for January 1977 and the next RT.12 return for the month of April 1979. The mills stopped working in January 1979 on account of financial difficulties and the mills were entrusted to the. care of the Court Receiver. The present Appellants, M/s Rajen (Textile) Mills Pvt. Ltd. purchased the mills from the Court Receiver in February 1979 and started the operation of the mill thereafter. They, therefore, filed the first RT. 12 return under their ownership and management for the mills for the month of April 1979. Thereafter, the Central Excise authorities issued a show cause nsotice dated 22.3.1980 to M/s Rajen (Textile) Mills Pvt. Ltd. asking them to show cause why central excise duty amounting to Rs.27,889.86 should not be recovered from them on the quantity of 7,937 kgs. of cotton yarn which was found short as per the last RT.12 return which was filed for the month of January 1977, after which the mill had closed down due to financial difficulties. The demand was ultimately confirmed under the impugned order of the Collector of Central Excise, Pune. M/s Rajen (Textile) Mills Pvt. Ltd., filed appeal against that order under old Section 35 of the Act which has been transferred to the Tribunal in terms of Section 35P and is to be treated as an appeal before this Tribunal.
2. The appeal was fixed for hearing on 21.10.1985 when Advocate shri N.T. George appeared on behalf of the Appellants and requested for adjournment. Next hearing was fixed on 7th February 1986 when none represented the Appellants. Thereafter another opportunity was given and hearing of the appeal was fixed on 28.2.1986, but the Appellants’ representative failed to avail of the same. Accordingly, the hearing was adjourned to 10.4.1986 and even on this date none represented the Appellants nor any cause was shown for the absence. The notice for hearing on 10.4.1986 has been served on the Appellants in good time and their acknowledgement is available on the record. Therefore, no purpose would be served in either adjourning the hearing or keeping the appeal pending. Accordingly I am proceeding to consider the appeal on merit with a view to disposing of the same.
3. In their Memo of Appeal dated 17.9.1982 the Appellants contended that they were not on the scene from January 1977 till February 1979 when they purchased the mill in auction from the Court Receiver. The Central Excise authorities knew very well that when the mills were auctioned by the Court Receiver the aforesaid quantity of yarn was less in the bonded stock of the mills. The yarn was therefore removed from the mills when it was under the Court Receiver’s custody. Hence they contended that they are not liable for the duty on the aforesaid quantity of the yarn. They further contended that the Collector in his impugned order had improperly held that there was a continuity in the licence of the mills and therefore the liability of the previous owners could be transferred to the new owners. They contended that in lieu of the old B-2 bond, the Appellants executed a new B-2 bond as required under Rule 48 of the Central Excise Rules 1944. When they took over the liabilities of the mills, the loss of the cotton yarn from the bonded store room of the mills through pilferage did not come into the category of liabilities taken over by the Appellants. Besides the Maharashtra Government had issued a Notification under the Bombay Relief Undertakings (Special Provisions) Act, 1958, declaring M/s Rajen (Textile) Mills Pvt. Ltd., as a relief undertaking. Under this Notification the Appellants were -exempted from certain legitimate dues as a special relief measure. The illegal dues towards Central Excise duty could not therefore be collected in view of the aforesaid circumstances. The Collector’s order has also been attacked as non-speaking. The Appellants therefore submitted that the Collector’s order is not just or lawful and hence their appeal should be allowed.
5. Appearing on behalf of the Collector, Shri Senthivel submitted that the main question. involved in the appeal was the transfer of liability towards payment of Central Excise duty on behalf of the previous owners of the mill to the new owners of the mill who were the Appellants in the present appeal. He contended that this question had been examined and concluded under this Bench’s order in an identical case of Estrela Batteries Ltd., Pune v. Collector of Central Excise, Pune in order on Appeal No. E.D.(BOM) No. 32 of 1982 dated 4.3.1982. The only difference between the facts of the two appeals was that in the appeal of M/s Estrela Batteries Ltd. the show cause notice for demand of duty had been issued to the earlier management while in the present appeal the demand was made from the new owners. However, there was no dispute about the fact that the quantity of 7,937 kgs. of cotton yarn had been illegally removed from the mills’ premises between January 1977 and April 1979. But this loss was reflected in the RT.12 return for the month of April 1979 which was filed by the Appellants. Therefore the present Appellants could not disclaim any liability to duty on this quantity of yarn. The Collector had already taken a very sympathetic view and he had not demanded any penalty from the Appellants. The Collector’s order confined itself to the payment of duty only which was leviable under the law as the removal of the quantity of cotton yarn was without payment of duty and in contravention of the provisions of the Central Excise Rules. Shri Senthi-vel therefore submitted that there was no merit in the appeal of M/s Rajen (Textile) Mills Pvt. Ltd. and that the same should be dismissed.
5. I have examined the submissions made on both the sides. In the Memo of Appeal it has been stated that when the Court Receiver issued a public notice regarding the sale of mills, it was well known that a quantity of 7,937 kgs. of cotton yarn from the bonded store room of the mills had been pilfered. It has been urged that the Central Excise authorities did not take action at that time but only on 22.3.1980 when they demanded the duty from the present Appellants. This would mean that the Appellants also would have known of this pilferage and they would have taken care about the legal liability in this behalf. If they had not done so, they have only themselves to blame for it, and cannot pass on the responsibility to the Central Excise authorities. Another argument advanced by the Appellants is that there was no continuity in the management of the mills from the previous to the present owners. In this behalf the fresh execution of B-2 bond by the present Appellants is cited. Examining this contention, it is seen that under Rule 230 of the Central Excise Rules 1944, the transfer of the business in whole or any part does not affect the Department’s right to recover the “duties leviable, if necessary through coercive action by detention of excisable goods, materials, preparations, plant, machinery, vessels, utensils, implements and articles in the custody or possessiosn of the person who succeeds in the business. Therefore, under this law, the Appellants are not saved from the liability of the previous owners. In addition, the learned Senior Departmental Representative has cited the case of Estrela Batteries Ltd., which has been decided in the same manner by this Bench of the Tribunal. The ratio of the decision will also apply in the present case. There is, therefore, not an iota of doubt about the legality of the demand made on the Appellants. Yet another plea taken up by the Appellants is the Maharashtra Government’s Notification declaring the mills as a relief undertaking and therefore extinguishing all their liabilities. The Appellants contend that in view of this Notificatin the demand made by the Central Excise Officer is legally untenable. There is no force in this contention. The declaration of the mills as a relief undertaking is by the Government of Maharashtra under an Act which is passed by that Government. The levy of Central Excise duty is governed under the Central Excises and Salt Act 1944 which is administered by the Union Government. Therefore, the Government of Maharashtra cannot have any legal authority to liquidate any liabilities of a relief undertaking under the Central Excises and Salt Act, 1944. Therefore I cannot accept the Appellants’ contention that the Collector’s order of the levy of Central Excise duty is not legally tenable. However, I find from the Collector’s order that the notice for demand for duty was issued on 22.3.1980 to the Appellants. The period of short levy involved is from January 1979 to April 1979. Therefore the demand has been made after the limitation period of six months as available under old Rule 10 of the Central Excise Rules 1944. The demand is therefore time barred. However, no plea is taken by the Appellants in this behalf. All the same, it is necessary that when this legal position is brought to my notice during the perusal of records it is not possible to ignore the same. It is also seen on the basis of the contentions contained in the Memo of Appeal that the pilferage of 7,937 kgs. of cotton yarn was known to everybody including the, Appellants who bought the mills from the Court Receiver in February 1979 and commenced trial production of the mill in April 1979. The Appeal Memo also mentions that the Central Excise authorities were aware of this loss. There is no denial of this fact on behalf of the Collector of Central Excise, Pune, Therefore, there is no question of the extension of the limitation period to five years as there are no ingredients to sustain such an interpretation. In this view, I find that the demand is time-barred and the appeal has to be allowed on these grounds even though these are not urged by the Appellants. In the aforesaid circumstances, though I find that the Collector’s order is legal and valid, the demand contained therein is hit by limitation and therefore I allow the appeal only on this ground and direct that consequential relief be extended to the Appellants.