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2015 (8) TMI 1044 - HC - CustomsClaim over property Right over attachment Customs Department alleged evasion of Duty and initiated proceedings against Respondent-2 Apparently, respondent defaulted upon its contractual liabilities with banks which led to sale of respondent-2 assets Meanwhile Customs Department had issued attachment notice Vide impugned order, as attachment notice was never served either on auction purchaser or borrower therefore, it was not possible to sustain that liability fastened on auction purchaser to pay Customs dues Held that - evident that Customs Department was not aggrieved by ruling of DRAT that it could not be treated as secured creditor to lay claim over immovable property There was no indication in Customs Act that property of defaulter which was put to auction can still be claimed by Customs Department after title passes to auction purchaser once it was held that it has no primacy for its dues Therefore there was no merit in proceedings Decided against Appellant.
Issues:
1. Challenge to the order of the Debts Recovery Appellate Tribunal (DRAT) by the Union of India through the Customs Department. 2. Dispute over Customs dues in relation to a pharmaceutical company's assets sold in recovery proceedings. 3. Impugning of the DRAT order by the auction purchaser regarding payment of Customs dues. 4. Interpretation of the law regarding the Customs Department's claim over auctioned immovable property. 5. Application of statutory provisions in recovering Customs dues from auction purchasers. Issue 1: The Union of India through the Customs Department challenged the DRAT's order, arguing that leaving the decision on the auction purchaser's contractual duty to pay Customs dues to the adjudicating authority was erroneous. The Customs Department contended that it had an overriding claim to recover dues from the auction purchaser despite not being considered a secured creditor. Issue 2: The case involved a pharmaceutical company facing allegations of Customs Duty evasion, leading to recovery proceedings. The Recovery Officer ordered the sale of the company's assets, with the auction purchaser being declared successful. The Customs Department disputed its entitlement over the property and sale proceeds, which was rejected by the DRAT. Issue 3: The auction purchaser challenged the DRAT's order, which upheld the lack of primacy of the Customs Department's claims over the auctioned property. The DRAT ruled that the Customs Department could not be considered a secured creditor and could not claim priority over the dues of the State. Issue 4: The Customs Department argued that despite not being a secured creditor, it could recover dues from the auction purchaser based on an attachment notice and previous legal precedents. However, the court held that without a statutory charge over the property, the Revenue could not claim immovable property after its disposal. Issue 5: The auction purchaser contended that the Customs Department's reliance on an attachment notice was irrelevant as it was not served on the borrower or auction purchaser. The absence of a statutory charge post-property disposal prevented the Revenue from claiming the property. The court emphasized that without a legal provision indicating liability on the auction purchaser, the Customs Department could not recover dues indirectly. In conclusion, the court dismissed the writ petition, affirming that the Customs Department could not assert a claim over auctioned immovable property without a statutory provision or charge in its favor. The court highlighted the lack of primacy of the Revenue's claims and emphasized the need for a positive indication in the law to recover amounts from auction purchasers.
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