In Brief
Punjab National Bank challenged confiscation orders passed by the Commissioner of Central Excise against Rathi Ispat Ltd., whose assets were mortgaged to the bank. The Supreme Court held that Rule 173Q(2) of Central Excise Rules 1944, which authorized confiscation of land, buildings, and machinery, stood omitted from 12 May 2000 onwards. The confiscation orders dated 26–29 March 2007 were therefore passed without statutory backing and are nullities. The Court found that subsequent rules (2001, 2002, 2017) did not restore this power and changed the vesting language from 'anything' to 'goods'. As a secured creditor under SARFAESI Act 2002, the bank has priority over unsecured Central Excise dues. Section 35 of SARFAESI gives it overriding effect. The appeal was allowed and confiscation orders quashed.
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