2016 (6) TMI 812 - HC - Customs

Recovery of duty of customs - can the payment be made in installments - Held that - The Central Board of Excise and Customs, by Circular dated 28.02.2015, decided to allow recovery of arrears of taxes, interest and penalty in instalments. The power to allow such payment in monthly instalments was to be exercised by the Commissioner in his discretion for granting sanction to pay arrears in instalments upto a maximum of 24 monthly instalments, and by the Chief Commissioners for granting sanction to pay arrears in monthly instalments greater than 24 and upto a maximum of 36 monthly instalments. As the Circular issued by the Central Board of Excise and Customs dated 28.02.2015 confers a discretion on the Chief Commissioner to grant sanction to pay arrears in instalments, such discretion can only be exercised by the Chief Commissioner and not by this Court in proceedings under Article 226 of the constitution of India. As the petitioner has submitted a representation to the Chief Commissioner on 03.12.2015, ends of justice would be met if the Chief Commissioner is directed to dispose of the representation with utmost expedition, and in accordance with law. The Writ Petition is, accordingly, disposed of.

Summary

Issues:
Challenge to notice of demand for recovery of customs dues; Doctrine of merger in appellate proceedings; Priority of secured debts over crown debts; Discretion to grant instalments for payment of arrears.

Analysis:

1. The petitioner challenged a notice of demand for the recovery of customs dues, arguing that the dismissal of their appeal by the CESTAT did not attract the doctrine of merger. They also cited a subsequent ruling by the CESTAT, Bangalore, to support their claim of not being liable to pay customs duty. Additionally, the petitioner invoked the Corporate Debt Restructuring undertaken by various banks to prioritize their debts over crown debts. Moreover, they sought installment payment of arrears based on a circular by the Central Board of Excise and Customs.

2. The High Court noted that the CESTAT, Chennai, had dismissed the petitioner's appeal, and the Supreme Court had also dismissed the appeal filed against the CESTAT's order. The doctrine of merger applied in this case, making the Supreme Court's judgment binding. The subsequent ruling by the CESTAT, Bangalore, could not be used to reopen the matter as the appeal had been finally dismissed by the Supreme Court.

3. Regarding the priority of secured debts over crown debts, the Court referred to a Supreme Court case where it was held that the Crown's preferential right for debt recovery did not extend over secured creditors. The Court emphasized that a defaulter could not avoid paying customs duty by claiming precedence for secured debts. The issue of secured creditors' preference over central excise dues could be examined if raised by the secured creditor in court.

4. The Court acknowledged the circular allowing installment payments of arrears issued by the Central Board of Excise and Customs. The petitioner had made a representation for installment payments to the Chief Commissioner, and the Court directed the Chief Commissioner to decide on the representation promptly and in accordance with the law.

In conclusion, the writ petition challenging the notice of demand for customs dues was disposed of, along with any pending miscellaneous petitions, without costs. The Court upheld the doctrine of merger, clarified the priority of secured debts over crown debts, and directed the Chief Commissioner to address the petitioner's representation for installment payments expeditiously.