Customs department can’t sell assets of ‘companies in bankruptcy’ to recover dues: Supreme Court

NEW DELHI: In an essential ruling, the Supreme Court docket on Friday mentioned that after proceedings underneath the Insolvency and Chapter Code (IBC) are initiated in opposition to an importer or exporter firm, the customs division authorities can not sell-off items of that firm for realisation of dues.
A bench of Chief Justice N V Ramana and Justices J Ok Maheshwari and Hima Kohli quashed an NCLAT order permitting the customs authorities to dispose of products of their warehouse belonging to an organization, ABG Shipyard, to understand dues referring to customs responsibility on imported objects.
Writing the judgment, the CJI mentioned, “The IBC would prevail over the Customs Act, to the extent that after moratorium is imposed by way of Sections 14 or 33(5) of the IBC, because the case could also be, the respondent authority solely has a restricted jurisdiction to evaluate/decide the quantum of customs responsibility and different levies. The Customs Authority doesn’t have energy to provoke restoration of dues via sale/confiscation, as supplied underneath the Customs Act.”
Permitting the attraction filed by the liquidator of ABG Shipyard in opposition to the NCLAT judgment, the bench mentioned, “The respondent authority doesn’t have the ability to provoke restoration of dues via sale/confiscation, as supplied underneath the Customs Act.”
It mentioned the customs authorities might assess the worth of the products and the customs responsibility thereon and “submit its claims (regarding customs dues/operational debt) by way of the process laid down, in strict compliance of the time durations prescribed underneath the IBC, earlier than the adjudicating authority. In any case, the IRP/RP/liquidator can instantly safe items from the Customs authority to be handled appropriately, by way of the IBC. Resultantly, we permit the attraction and put aside the impugned order and judgment of the NCLAT.”