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TMI Blog2020 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... o special statues, which contain non obstante provisions, the later statute must prevail. Therefore, by virtue of section 238 of the Code being the later statute, the Applicant submits that section 238 of the Insolvency and Bankruptcy Code, 2016, being a subsequent law, the proceedings contained therein shall have overriding effect on the other proceedings of Custom Act and Central Excise Act. Therefore, by following the above stated ruling, in our humble view, the provisions of section 53 described about the Insolvency and Bankruptcy Code, which provides manner for priority to be given for making distribution of proceedings from sale of liquidation assets shall prevail over the provisions of section 11(e) of the Central Excise Act and other provisions of Customs Act. Hence, the Respondents' Department cannot legally withhold the releasing of the material/goods, which the property of the Corporate Debtor company (in liquidation) as pre-requisite condition for making the Customs duty by the Liquidator of Corporate Debtor company (in liquidation), because the claims of the respondents' departments have to be treated as Government dues and needs to be dealt with under the Wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case those are relevant for disposal of the present IA are stated as under; 2.1 It is stated that by an order dated April 25,2019, this Tribunal ordered for Liquidation of the Corporate Debtor company, under section 33(2) of the Insolvency and Bankruptcy Code, 2016 (I B Code) and appointed the present applicant as Liquidator of the Corporate Debtor company. 2.2 It is stated that certain material (Material) were imported by the Corporate Debtor company, presently are lying in customs bonded warehouses at certain locations. A copy of list of customs bonded warehouses has been annexed with the present application as Exhibit A . It is further stated that the Material, those were imported by the Corporate Debtor was to be used for construction and building the ships. These ships were further to be exported after manufacturing was complete. Hence, the Corporate Debtor company availed the benefit available to it under the Export Promotion Capital Goods Scheme (EPCG Scheme), (the Notification 12/2012 dated March 17, 2012) and other related schemes/notifications. Consequently, the Corporate Debtor was provided a license under the EPCG Scheme with respect to the Material. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has a saving effect on the provisions of the Code. Therefore, it is stated that the provisions of the Code would prevail over the provisions of the Customs Act. 2.5 The relevant provisions contained in section 238 of the Code, providing a non obstante clause, read as follows:- The provisions of this Code 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 . 2.6 It is stated the Customs Act and the Code, both contain respective non obstante provisions. Further, it is stated that Section 142A of the Customs Act was introduced into the Customs Act by way of an amendment and the same was brought into effect from May 28, 2012. However, section 238 of the Code came into force with effect from December 1, 2016. Therefore, the applicant contends that if it is a trite law when there are two special statues which contain non obstante provisions, the later statute must prevail. In support of his contention, the applicant has placed reliance on decisions of the Hon'ble Supreme Court of India in the matter of Solidaire India (P.) Ltd. v. Fairgrowth Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r otherwise deal with the Material in the liquidation process. The applicant has annexed a copy of the said communication with the application as Exhibit C. 2.10 It is further stated that section 35(1)(b) of the Code casts a duty on the Applicant to take into his custody all the assets and property of the Corporate Debtor. The Material, being an asset of the Corporate Debtor forms part of the liquidation estate of the Corporate Debtor and, therefore, the Applicant sought to take the same into his custody. The Applicant's authorised representative visited the JNPT warehouse which is one of the Customs Bonded Warehouses with a request to release the Material. However, it is submitted that the Respondent's officials present at the said warehouse refused to release the material without payment of Customs Duty. In fact, the Respondent is demanding a payment of Customs Duty as pre-requisite to get released the Material. The applicant submits the payment to Respondent in priority to other debts would be contrary to the mechanism provided under section 53 of the Code. Further, the Applicant submits that obtaining a release of the material is imperative for the Applicant to disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Customs (Export), EPCG Section, Mumbai. 4. In response to above notices, Respondent No. 1, i.e., Central Board of Indirect Taxes and Customs appeared, through its representative Mr. Dinesh Kumar Goyal, on 6-9-2019 and sought time for engaging a counsel to argue the matter. Thereafter, the matter was adjourned to 26-9-2019. On 26-9-2019, Ms. Prajeela Nambiar, the representative of Respondent No. l appeared. Thereafter, on 3-10-2019, the representative of respondents 2 and 3 appeared and sought time to file reply. Hence, final opportunity was granted. However, no reply was filed by the respondents till 11-10-2019. 5. Thereafter, arguments from both sides, i.e., Advocate, Mr. Maulik Nanavati, appearing for the Applicant-Liquidator, and Advocate, Mr. Kshitij Amin, Central Government Standing Counsel, appearing for Respondents 2 and 3, were heard. 6. The learned counsel appearing for the Central Government (Customs Departments) fairly submitted about the relevant statutory provisions of the Customs Act read with relevant circular of the Central Board of Excise and Custom (CBE C) Circular No. l053/02/2017-CX dated March 10,2017, which was issued in the light of non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for non obstante clause under section 238 of the Code, which is having overriding effect over other prevailing law and statue, time being in force. Section 238 of the Code speaks as under; 238. Provisions of this Code to override other laws The provisions of this Code 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 . 10. Further section 53 of the Code provides a Waterfall Mechanism, as under Section 53: Distribution of Assets (1) Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority and within such period and in such manner as may be specified, namely :- (a) the insolvency resolution process costs and the liquidation costs paid in full; (b) the following debts which shall rank equally between and among the following :- (i) workmen's dues for the period of twenty-four months preceding the liquidation commencement date; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that section 238 of the Insolvency and Bankruptcy Code, 2016, being a subsequent law, the proceedings contained therein shall have overriding effect on the other proceedings of Custom Act and Central Excise Act. Therefore, by following the above stated ruling, in our humble view, the provisions of section 53 described about the Insolvency and Bankruptcy Code, which provides manner for priority to be given for making distribution of proceedings from sale of liquidation assets shall prevail over the provisions of section 11(e) of the Central Excise Act and other provisions of Customs Act. Hence, the Respondents' Department cannot legally withhold the releasing of the material/goods, which the property of the Corporate Debtor company (in liquidation) as pre-requisite condition for making the Customs duty by the Liquidator of Corporate Debtor company (in liquidation), because the claims of the respondents' departments have to be treated as Government dues and needs to be dealt with under the Waterfall Mechanism of section 53 of Insolvency and Bankruptcy Code. Further, the adequate interest of the respondents/Central Excise Department to be taken care of by the Liquidato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents are directed to allow the applicant-liquidator to remove the Material, which is lying in the Customs Bonded Warehouses without any condition, demur and/or payment of Customs Duty. (ii) The Respondents are at liberty to lodge its claim with the Applicant-Liquidator with regard to the Customs Duty charges payable on the release of material, which form part of the assets of the Corporate Debtor company (in liquidation), before the Liquidator under the provisions of Insolvency and Bankruptcy Code, 2016 and in accordance with law. (iii) The Customs Department shall allow removal of goods/material within two weeks, from the date of receipt of an authentic copy of this order from the Liquidator. (iv) Meanwhile, the Respondents shall not proceed for auctioning, selling or appropriating the Materials owned by the Corporate Debtor company, for the purpose of recovery of its Customs Duty, which may tantamount to violation of the I B Code and put the applicant/liquidator of the Corporate Debtor company (under liquidation) in disadvantageous position. 15. With the aforesaid observations and directions, IA 474 of 2019 in CP (IB) No. 53 of 2017 is allowed and disposed of. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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