( 1 ) IN this writ petition, the petitioner herein which is a proprietary concern had sought for a declaration that a purchaser of goods in a sale under section 29 of the State Financial Corporation act, is not liable for the dues of the loanee payable to the Customs and Excise authorities and for a direction upon the respondents 3 and 4 herein not to interfere with the removal of the machinery from the premises of the loanee and transport the same to the destination.

( 2 ) THE establishment of M/s. Koratla textiles Private Limited, Lingojigud village, choutuppal Mandal, Nalgonda District was a loanee of the A. P. State Financial corporation (hereinafter referred to as the loanee ) machinery, furniture, fixtures and stores of the said company was put in public auction in terms of the provisions of section 29 of the State Financial corporations Act, 1951 (for short the Act ). The petitioner being the highest bidder, the said machinery etc. , were transferred in its name. The loanee is a 100% Export Oriented unit having availed of certain benefits of exemption from paying the customs duty for importing the machinery. It failed to discharge an obligation to pay customs duty to the tune of Rs. 52-34 lakhs. The said failure to make payment, according to the customs authorities, would also attract penal action under Section 112 of the customs Act for payment of penalty.

( 3 ) IT is not in dispute that the said loanee executed a bond on 10-1-1994 for a period of five years which period had already expired (31-3-1998 ). It is also not in dispute that the customs authorities had been preventing the petitioner herein from transporting the said machinery on the ground that it has a charge there over.

( 4 ) THE question which arises for consideration is as to whether in terms of section 29 (2) of the Act, the properties which were purchased in an auction sale under Section 29 of the Act would be subject to any charge under Customs act, 1962.

( 5 ) SRI P. Sri Raghuram, learned counsel appearing on behalf of the petitioner submitted that having regard to the provisions of sub-section (2) of section 29 of the Act, no charge is created on the machinery in terms of the provisions of the Customs Act. In support of the said contention, reliance has been placed on a division Bench decision of this Court in sitani Textiles and Fabrics (P) Limited v. Assistant Collector of Customs and Central excise, 1998 (5) ALD 637. The learned counsel would contend that the customs authorities can enforce the bond only in terms of the provisions of Section 63 of the customs Act so long as the lien subsists. Our attention in this connection has been drawn to the provisions of Section 60 of the customs Act as also the proviso appended to Section 61 thereof. It was pointed out that the liability of the loanee to the customs authorities is not disputed and the said liability having been accepted by the financial Corporation, there is absolutely no reason why the respondents 3 and 4 would prevent the petitioner from lifting the machinery.

( 6 ) SRI Y. N. Lohita, learned Standing counsel appearing on behalf of the State financial Corporation supported the said contention and submitted that Corporation does not have any liability as the bond had expired on 31-3-1998.

( 7 ) MR. L. Narasimha Reddy, learned counsel appearing on behalf of the respondents 3 and 4, however, would submit that having regard to the fact that the loanee had availed of the benefit under 100% EOU, the petitioner is liable to pay the dues to the Customs Department. The status of the goods being of special nature in terms of the said scheme and further having regard to the fact that the loanee had executed a bond for exemption from paying the duty and the goods having been confined to a warehouse the same would be deemed to be in possession of the customs authorities, only. It was contended that by transfer of the properties, in terms of Section 29 of the Act, the liability to pay