1998 (11) TMI 132 - HC - Customs

Summary

Issues Involved:
1. Right of Customs Authorities to claim payment of duty and other charges for goods imported by a company in liquidation.
2. Liability of the purchaser to pay Customs Duty.
3. Applicability of Sections 529A and 530 of the Companies Act, 1956.
4. Validity of sale of warehoused goods without payment of duty.
5. Limitation and procedural issues regarding the appeal.

Summary:

1. Right of Customs Authorities to Claim Payment of Duty:
The Customs Authorities contended that, under the Customs Act, 1962, goods could not be removed from the warehouse without payment of import duty and accumulated interest. They argued that the statutory right to confiscate and sell the goods for the realization of duty and interest was taken away by the orders under appeal. The Court acknowledged that the Customs Authorities had a statutory right to detain and sell the goods for realizing their duties, as reinforced by Sections 68, 71, and 72 of the Customs Act, 1962.

2. Liability of the Purchaser to Pay Customs Duty:
The purchaser denied liability for Customs Duty over and above the purchase price. The Court held that the duties on the chemicals were payable by the importer, defined u/s 2(26) of the Customs Act, 1962, as the company or its representative in interest, i.e., the Official Liquidator. The sale notice and terms did not obligate the purchaser to pay the duty. Therefore, the purchaser was not liable for the duty, and the duty remained the responsibility of the company or its representative.

3. Applicability of Sections 529A and 530 of the Companies Act, 1956:
The Bank of India argued that the Customs Authorities' claim should be determined u/s 529A and 530 of the Companies Act, 1956. The Court clarified that the Customs Authorities' claim to the chemicals, which included a statutory right of detention and confiscation, had to be met before the chemicals could be sold as assets of the company in liquidation. Thus, the Customs Authorities' claim stood outside the proceedings under Sections 529, 529A, and 530 of the Companies Act, 1956.

4. Validity of Sale of Warehoused Goods Without Payment of Duty:
The Court found that the chemicals were not legally available for sale to the purchasers until the Customs Duties and statutory dues were paid. The sale of the warehoused goods without payment of duty was in contravention of the statutory provisions. The Court directed the Official Liquidator to make over the amount claimed by the Customs Authorities, including interest, and allowed the Customs Authorities to realize the balance claim from any further sums paid by the purchaser.

5. Limitation and Procedural Issues Regarding the Appeal:
The purchaser raised a preliminary objection regarding the limitation, stating that no list of relevant dates was filed. The Court rejected this objection, noting that sufficient particulars were provided in the requisitions. The appeal was allowed, and the Court directed the Official Liquidator to pay the Customs Authorities within two weeks.

Conclusion:
The appeal was allowed, and the Official Liquidator was directed to pay the Customs Authorities the claimed amount, including interest. The Customs Authorities were entitled to realize the balance from any further payments by the purchaser. The Bank of India's prayer for a stay of the judgment was refused.