2021 (6) TMI 555 - HC - Customs

Enhancement of rate of duty on the day ship arrived vide Notification dated 17.09.2015 - Reassessment of the subject goods imported by the respondent - Crude Palm Oil of Edible Grade in bulk - whether the enhanced rate of customs duty was liable to be paid by the respondent importer? - Recovery of dues under IBC - HELD THAT - The issuance of the Notification must be followed by its publication in the Official Gazette and on such publication being offered for sale on the date of its issue. If for any reason, the Notification issued by the Central Government is published and offered for sale on the date of its issue, but offered for sale on a later date, then it is only with effect from the date of which it is offered for sale, such a Notification would become enforceable. Mere issuance of a Notification without its publication is of no consequence, inasmuch as unless a Notification is published, the persons to whom it applies would not be aware of the same, unless there is knowledge or awareness of issuance of such a Notification. The person to whom it is to apply cannot be affected by the consequence of such a Notification or have the benefit of such a Notification in the absence of having knowledge about the same - The two requirements are to be complied, namely, publication of the said Notification and offering of the same for sale by the Directorate of Publicity and Public Relations of the Board, New Delhi. This is to ensure that on the date the said Notification comes into force, the same is published and available to the persons to whom it would apply. The learned Single Judge was justified in holding that notification dated 17.09.2015 could not have been made applicable to the imported goods in question and the demand for payment of differential amount of duty was rightly quashed by the learned Single Judge - Appeal dismissed. Recovery of dues under IBC - dues are not part of the resolution plan approved by the adjudicating authority under Section 31 of the IBC - HELD THAT - The provisions of Section 238 of IBC states that the provisions of IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Further, it is noted that crown debts do not take precedence even over secured creditors, who are private persons. This is clear on a reading of Section 238 of IBC which provides for the overriding effect of IBC notwithstanding anything inconsistent contained in other law for the time being in force or effect by any such law. This matter does not require to be remanded to the NCLT, Mumbai, before which forum the resolution plan was approved. This is on the ground that this appeal has been dismissed on merits and the respondent has succeeded on merits in this appeal, and the appellants have not produced any material to demonstrate that the claim in the instant case was part of the resolution plan approved by the NCLT, Mumbai. Appeal dismissed on merit.

Summary

Issues Involved:
1. Applicability of Notification No. 46/2015-Cus. dated 17.09.2015.
2. Compliance with Section 25(4)(b) of the Customs Act, 1962.
3. Impact of the Insolvency and Bankruptcy Code (IBC) on the claim.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 46/2015-Cus. dated 17.09.2015:

The primary issue was whether the enhanced duty rate of 12.5% as per Notification No. 46/2015-Cus. dated 17.09.2015 was applicable to the imported goods. The respondent argued that the reassessment of the bills of entry on 18.09.2015 demanding the higher rate of duty was illegal. The court noted that the inward entry of the vessel was permitted on 17.09.2015, and the bills of entry were assessed on 16.09.2015 at a duty rate of 7.5%. The proviso to Section 15 of the Customs Act was pivotal, stating that if a bill of entry is presented before the date of entry inwards, it shall be deemed to have been presented on the date of such entry inwards. Thus, the court concluded that the bills of entry dated 16.09.2015 should be deemed presented on 17.09.2015, making the notification applicable.

2. Compliance with Section 25(4)(b) of the Customs Act, 1962:

The respondent contended that the notification dated 17.09.2015 was not offered for sale on the same date, violating Section 25(4)(b) of the Customs Act, which mandates that a notification must be published and offered for sale on the date of its issue. The court referred to the Supreme Court's judgment in Param Industries Ltd., which held that both conditions of publication and offering for sale are mandatory. The court found that the notification was available for sale only on 21.09.2015, as per the RTI response, and thus, the enhanced duty could not be applied retrospectively to the goods imported on 17.09.2015.

3. Impact of the Insolvency and Bankruptcy Code (IBC) on the claim:

The respondent filed an application under Section 31 of the IBC, seeking dismissal of the appeal on the grounds that the claim was not part of the resolution plan approved by the adjudicating authority. The court referred to the Supreme Court's judgment in Ghanashyam Mishra, which clarified that once a resolution plan is approved, all claims not part of the plan stand extinguished. The court noted that the appellants did not produce evidence to show that their claim was part of the resolution plan. Consequently, the court allowed the application, holding that the claim stood extinguished and the appeal was dismissed.

Conclusion:

The court dismissed the appeal on merits, holding that the notification dated 17.09.2015 could not be applied to the goods imported on that date due to non-compliance with Section 25(4)(b) of the Customs Act. Additionally, the court allowed the application under the IBC, concluding that the claim was extinguished as it was not part of the approved resolution plan.