2019 (1) TMI 1500 - HC - Central Excise

Attachment of immovable property - recovery of penalty imposed upon the Director from the petitioner company - It was submitted that in the facts of the present case, since no notice as contemplated under rule 4 of the Recovery Rules has been issued upon the petitioner, the question of resorting to the provisions of rule 5 does not arise - Held that - Issue Notice returnable on 31st January, 2019. By way of ad-interim relief, the respondents are restrained from proceeding further pursuant to the attachment order dated 8.1.2019.

Summary

Issues:
1. Amendment of petition
2. Legality of property attachment
3. Compliance with Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995

Amendment of petition:
The petitioner's advocate submitted a draft amendment, which was allowed by the court. The court directed the immediate implementation of the amendment.

Legality of property attachment:
The petitioner's advocate argued that the amount sought for recovery included a penalty imposed on the Director, which should not be recoverable from the petitioner company. It was highlighted that ongoing proceedings were in place for the amounts in question, making the property attachment premature. Reference was made to the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995, emphasizing the necessity of serving a notice to the defaulter before proceeding with attachment. The petitioner contended that since no such notice had been served, the attachment was unjustified. Additionally, it was pointed out that the attachment of a property worth significantly more than the recovery amount violated rule 6 of the Recovery Rules.

Compliance with Customs Rules:
The petitioner's counsel drew attention to specific provisions of the Recovery Rules, highlighting the requirement for a notice to be served on the defaulter before initiating attachment proceedings. The argument stressed that the timeline for action, as per the rules, begins seven days after the notice is served. Since no such notice had been issued to the petitioner, the petitioner contended that the attachment order was premature and unlawful. Moreover, the petitioner argued that the attachment of a property valued in crores for a recovery amount of approximately ?30,00,000 blatantly disregarded the proportionality mandate under rule 6 of the Recovery Rules.

In response to the submissions made by the petitioner's advocate, the court issued a notice returnable on 31st January, 2019. As an interim measure, the respondents were restrained from further action based on the attachment order dated 8.1.2019. Direct service on the respondents No.1 and 2 was permitted on the same day.