L. NARASIMHA REDDY, J :-In the event of a company being wound-up, in any of the three recognized modes, viz., by the Court, or voluntarily by a company itself, or subject to the supervision of the Court, preparation of list of assets and liabilities becomes essential. The Companies Act, 1956 (for short 'the Act') recognizes certain priorities, in the matter of distribution of assets of a company, under winding-up. It is not uncommon that the assets of certain companies are burdened with liability of payment of tax of different kinds, excise duty, customs duty etc.

2. The question, as to whether the claim of a secured creditor has precedence over the right of the concerned Government department, to recover dues of tax, the customs duty in particular, arises for consideration in this appeal.

3. M/s. Sri Vishnupriya Industries Limited, the 1st respondent herein, was incorporated under the Act, with an objective of undertaking manufacturing activity. It established a factory at Panyam in Kurnool District. To carry on its activity, it intended to import machinery and components, from foreign countries. Accordingly, it submitted an application to the Customs Department, to provide the facility of Private Bonded Customs Warehouse, under the Export Promotion Capital Goods (EPCG) Scheme.

On a permission being accorded for this purpose, it imported machinery, packed in 128 wooden cases, in three different consignments from Italy, and the same was stored in the private customs godown. Under the Law in force, at the relevant point of time, the company was under obligation to pay customs duty to the tune of about Rs.13.75 crores, and the goods were to have been cleared on payment of the said amount. Inasmuch as the 1st respondent did not get the imported goods cleared, even after the lapse of the stipulated period, the appellant initiated proceedings.

Initially, a demand notice was issued. Thereafter, the amount payable towards customs duty, under the relevant provisions of the Customs Act, was determined. Sale of the imported goods was also attempted, to recover the dues, by conducting auction on 30.10.2002. Before the sale could take place, the winding - up of the company was ordered by this Court, on 1.12.2003 in Company Petition No.168 of 2002, and an Official Liquidator was appointed.

4. The company, through Official Liquidator, the 1st respondent, filed CA No.906 of 2004 under Section 468 of the Act, with a prayer to direct the appellant herein to handover the imported goods, which were detained under the provisions of the Customs Act, and lying in CMR Complex, Vishnupriya Nagar, Panyam. It was pleaded that, with the order of winding-up, all the assets of the company vest in the Official Liquidator, and inspite of demand, the appellant did not hand over the goods. It was also pleaded that the detention of the goods, and various proceedings initiated by the appellant, are contrary to Sections 72 and 142 of the Customs Act. The appellant opposed the application, claiming that, the goods carry with them, the liability, to pay the customs duty, and till the same is paid, they cannot be cleared or delivered to the company, or for that matter, the Official Liquidator.

5. A learned Single Judge of this Court dealing with the company matters, allowed the CA No.906 of 2004, through order dated 3.9.2004. It was held that the detention of the goods by the appellant and the proceedings initiated thereafter, are void ab initio, and that the Official Liquidator is entitled to take custody of, all the assets of the company, including the goods in question, under Section 456 of the Act. The appellant preferred this OSA, under Clause 15 of the Letters Patent, read with Section 48 of the Act.

6. In the course of hearing of the appeal, the appellant relied upon a judgment of the Calcutta High Court in Collector of Customs v. Dytron (India) Ltd., 1999 ELT 108 p.342, in support of their contention, that the right to recover customs duty, takes precedence over a

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