2022 (10) TMI 1190 - AT - Insolvency and Bankruptcy

Seeking custody of the assets of the Corporate Debtor, seized pursuant to Inventory cum Seizure List - remission of amount to the Liquidator account within two weeks of the receipt of the order - handing over possession of the properties - overriding effect of IBC would prevail over the Customs Act - raising of fresh issue in the appeal instead of taking the side of one of the parties before the Court. Whether the provisions of the IBC would prevail over the Customs Act? - HELD THAT - The answer is no more res-integra in view of the decision of the Supreme Court in the case of Sundaresh Bhatt 2022 (8) TMI 1161 - SUPREME COURT where it was held that Once moratorium is imposed in terms of Sections 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent authority does not have been the power to initiate recovery of dues by means of sale/confiscation, as provided under the Customs Act. Whether the Intervenor can raise a fresh issue in the appeal instead of taking the side of one of the parties before the Court? - HELD THAT - Admittedly the Intervenor had filed its own appeal in order to challenge the findings recorded in its I.A. No. 22 of 2019 but their Appeal No. 94 of 2020 was dismissed on 20.01.2020. The Hon ble Supreme Court in the case of Saraswati Industrial Syndicate Ltd. 1999 (3) TMI 3 - SUPREME COURT has observed that We cannot pass such an order in an intervention application. The only purpose of granting an intervention application is to entitle the intervener to address arguments in support of one or the other side. Having heard the arguments, we have decided in the assessee s favour. The interveners may take advantage of that order. No other point has been raised - there are no merit in the present appeal and the same is hereby dismissed.

Summary

Issues Involved:

1. Whether the provisions of the Insolvency and Bankruptcy Code (IBC) would prevail over the Customs Act.
2. Whether the Intervenor can raise a fresh issue in the appeal instead of taking the side of one of the parties before the Court.

Issue-Wise Detailed Analysis:

1. Prevalence of IBC over the Customs Act:

The core issue was whether the provisions of the IBC would prevail over the Customs Act. The Tribunal referred to the Supreme Court's decision in the case of Sundaresh Bhatt, Liquidator of ABG Shipyard Vs. Central Board of Indirect Taxes and Customs, which clarified that once a moratorium is imposed under Section 14 or 33(5) of the IBC, the customs authorities only have limited jurisdiction to assess and determine the quantum of customs duty and other levies. They do not have the power to initiate recovery of dues by means of sale or confiscation as provided under the Customs Act. The Supreme Court concluded that the IBC would prevail over the Customs Act to the extent that customs authorities cannot claim title over the goods or issue notices to sell the goods once the liquidation process has been initiated. The Tribunal upheld this view, directing that the assets seized by the Directorate of Revenue Intelligence (DRI) must be handed over to the Liquidator.

2. Intervenor's Right to Raise Fresh Issues:

The second issue was whether the Intervenor could raise a fresh issue in the appeal instead of supporting one of the existing parties. The Tribunal cited the Supreme Court's decision in Saraswati Industrial Syndicate Ltd. Vs. Commissioner of Income Tax Haryana, which stated that the purpose of granting intervention is to allow the Intervenor to support one of the existing parties, not to introduce new issues. The Intervenor had already filed its own appeal against the findings in I.A. No. 22 of 2019, which was dismissed. Therefore, the Intervenor was not entitled to raise new arguments in the current appeal.

Conclusion:

The Tribunal dismissed the appeal, affirming that the provisions of the IBC prevail over the Customs Act concerning the seizure and recovery of assets during the insolvency process. The Tribunal also clarified that the Intervenor could not introduce new issues but could only support existing arguments. The stay granted by the Tribunal was vacated, and the time spent during litigation was excluded from the Liquidator's available period. The application for condonation of delay in filing the appeal was dismissed due to the excessive delay beyond the permissible period.