COMMISSIONER OF CUSTOMS Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) The Commissioner of Customs, Cochin, has filed this Company Application for a direction to the Official Liquidator to pay to the Customs Department of Government of India the amount of Rs. 21,14,748/-, which was the amount received by them on sale of goods imported by the company in liquidation and warehoused as per the provisions of the Customs Act and not cleared within the time stipulated under law and handed over to the Official Liquidator under orders of this Court, on the ground that the Customs Department is entitled to appropriate the same towards customs duty and interest remaining unpaid on the goods, as authorised by the provisions of the Customs Act and cannot be added to the assets of the company in liquidation for distribution in accordance with the priority. He also seeks preferential payment of an amount of Rs. 2,08,209/- due to the Department as customs duty short levied, from the company in liquidation.

(2.) The company in liquidation imported certain consignments of "cross-linkable polyethylene" and warehoused them in the bonded warehouse of the Central Warehousing Corporation, after executing bonds for payment of twice the duty assessed, if the conditions of the bond are not fulfilled under Sub-sections (a), (b) and (c) of Section 59(1) of the Customs Act. The company did not clear the goods, even within the extended time granted. Notices were issued to the company under Section 72(2) of the Customs Act for recovering the statutory dues under the Customs Act, by sale of the warehoused goods in public auction/tender. The company challenged the notices by filing O.P. Nos. 1300/92 and 3942/92 and this Court passed interim orders restraining the Department from selling the goods. While so in C.P. No. 2/1996 this Court ordered winding up of the company and the Original Petitions were disposed of holding that the grounds against sale of the goods do not survive for consideration. The Department sold the goods and the sale proceeds of Rs. 21,14,748/- was handed over the Official Liquidator as directed by this Court. Another amount of Rs. 2,08,209/- is also pending payment by the company in liquidation to the Department towards short levy of Customs Duty, demand for which was also challenged by the company in liquidation in O.P. No. 4957/1992, which Original Petition was also disposed of after the winding up order on an undertaking by the Official Liquidator to pay the amount in the liquidation proceedings. The Department, after getting the delay in filing condoned, filed proof of debt to the tune of Rs. 38,84,613/- towards statutory duties and interest. Because of delay on the part of the Official Liquidator in considering that claim the applicant filed W.P. (C) No. 37758/2008 which was disposed of directing him to approach the Company Court. C. A. No. 17/2009 was filed, in which the Company Court directed the Official Liquidator to adjudicate the claim Of the petitioner. The Official Liquidator adjudicated the claim and admitted the debt for an amount of Rs. 38,84,613/- towards duty on the goods, which remained uncleared after the expiry of the permitted time and short collection of duty, under Section 530 of the Companies Act and an amount of Rs. 24,32,249/- towards interest as an ordinary creditor, by Annexure A6 order. By Annexure A7 letter the Official Liquidator informed the applicant that the said amounts can be paid only after settling claims of secured creditors and workmen under Section 529A of the Companies Act. It is under the above circumstances the applicant has filed this company application for a direction to the Official Liquidator to give preferential payment of the said amounts to the petitioner, before meeting claims of secured creditors and workers.

(3.) The contention of the applicant is that by virtue of Sections 59, 61, 72, 73 and 150 of the Customs Act, 1962, the applicant has a statutory lien on the warehoused goods and the sale proceeds thereof, which is above the priorities fixed by Sections 529A and 530 of the Companies Act and therefore, the sale proceeds of the warehoused goods have first to be adjusted against the dues of the applicant, before the priorities of payment under the Customs Act can even be considered. It is also contended that since insolvency rules are applicable to winding up proceedings, going by the definition of 'secured creditor' in the Provincial Insolvency Act, 1920, a person holding a charge or lien on the property of the company in liquidation is also a secured creditor and since this charge is not one enumerated in Section 125(4) of the Companies Act, the requirement of registration of charges under Sub-section (1) thereof, is not applicable to this charge. It is the contention of the Senior Standing Counsel for Customs, Central Excise and Service Tax, appearing for the petitioner, that the customs authorities are entitled to realise the customs duty on those goods by sale of the goods before the goods can be validly treated as assets of the company in liquidation, in the liquidation proceedings. He relies on the decision of the Supreme Court in Board of Trustees, Port of Mumbai v. Indian Oil Corporation and Anr., 1998 2 CompLJ 337 and that of the Calcutta High Court in Collector of Custom, Calcutta v. Dytron (India) Ltd., 1999 108 ELT 342 in support of his contentions.