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Issues: Confiscation of vessel under Sec. 115 of the Customs Act, priority claim by the Bank due to pledge, interpretation of Sec. 126 and Sec. 142 of the Act.
In this case, the Appellate Tribunal CEGAT MADRAS considered an appeal under Sec. 129A of the Customs Act, 1962 regarding the confiscation of a vessel, MSV Zoodu Salamy MMG 22, used in smuggling wrist watches. The Collector of Central Excise and Customs had ordered the vessel's confiscation along with the watches. The Canara Bank, to which the vessel was pledged as security for a loan, claimed priority in the amount advanced. The Bank's contention was rejected by the Collector, and subsequent appeals were made to the Central Board of Excise and Customs and then to the Tribunal. The appellant argued that due to the pledge, the Bank had a first lien on the vessel, citing the Supreme Court's judgment in "Bank of Bihar v. State of Bihar" and a Madhya Pradesh High Court judgment. The Tribunal noted that the confiscability of the vessel was not disputed, and under Sec. 126 of the Act, confiscated goods vest in the Central Government. The Tribunal differentiated between a situation of confiscation and seizure for satisfying a government demand under Sec. 142, where goods can be sold to recover sums due. The Tribunal held that upon confiscation, the property vests absolutely in the Government, making the appellant's claim for priority not maintainable. Consequently, the appeal was dismissed. This judgment primarily addresses the issue of the Bank's priority claim over a confiscated vessel due to a pledge. The Tribunal analyzed the legal principles governing confiscation under the Customs Act and the relevant provisions of Sec. 126 and Sec. 142. The Tribunal emphasized that upon confiscation, the property vests absolutely in the Government, distinguishing it from a situation where goods are seized to satisfy a government demand. The Tribunal's decision was based on the interpretation of these statutory provisions and the application of relevant case law, including the Supreme Court's ruling in "Bank of Bihar v. State of Bihar." The Tribunal concluded that the appellant's claim for priority based on the pledge was not tenable under the law, leading to the dismissal of the appeal. Overall, the judgment provides a comprehensive analysis of the legal framework surrounding the confiscation of goods under the Customs Act and the implications of pledging property to secure a loan. By examining the nature of confiscation and the vesting of confiscated goods in the Government, the Tribunal clarified the limitations on claims of priority by third parties like the Bank. The judgment underscores the importance of statutory interpretation and case law in resolving disputes related to customs enforcement and property rights, ensuring clarity and consistency in legal outcomes.
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