Back
High Court Of Calcutta
RUMA PAL, BASUDEVA PANIGRAHI
COLLECTOR OF CUSTOMS - Appellant
Versus
DYTRON (INDIA) LTD. - Respondent
C. A. 217 Of 1995
Decided On : 11/05/1998
CUSTOMS ACT, 1962 - SECTIONS 68, 71, 72, 111, 2(26) - COMPANIES ACT, 1956 - SECTIONS 529, 529A, 530 - IMPORTED GOODS - PAYMENT OF DUTY AND INTEREST - RIGHT OF CUSTOMS AUTHORITIES - SALE OF GOODS BY COMPANY IN LIQUIDATION - PRIORITY OF CLAIMS - INTERPRETATION OF STATUTORY PROVISIONS.
Fact of the Case:
A company in liquidation imported chemicals and stored them in a bonded warehouse without paying duty. The Official Liquidator took possession of the chemicals and advertised them for sale. The highest bidder, the purchaser, failed to pay the balance purchase price and the Customs Authorities claimed payment of duty and other charges before the goods could be delivered. The Company Court ordered the delivery of the goods without payment of the duty and the Customs Authorities appealed.
Finding of the Court:
The Customs Authorities have a statutory right to detain and sell warehoused goods for non-payment of duty and other charges. The goods could not have been sold by the company in liquidation without payment of the duty and interest. The claim of the Customs Authorities was not covered by Sections 529, 529a and 530 of the Companies Act, 1956, which deal with the priorities of creditors in respect of the sale proceeds of the assets of a company in liquidation. The purchaser was not liable to pay the duty as it had not stepped into the shoes of the company.
Issues: Whether the Customs Authorities had a right to claim payment of duty and other charges in respect of goods imported by a company which had subsequently gone into liquidation.
Ratio Decidendi: The provisions of Sections 68, 71, 72, and 111 of the Customs Act, 1962, read together, make it clear that warehoused goods cannot be removed from the warehouse without payment of duty, interest, rent, and other charges. The Customs Authorities have the right to detain and sell the goods for non-payment of these charges. The claim of the Customs Authorities was not covered by Sections 529, 529a and 530 of the Companies Act, 1956, which deal with the priorities of creditors in respect of the sale proceeds of the assets of a company in liquidation. The purchaser was not liable to pay the duty as it had not stepped into the shoes of the company.
Final Decision: The appeal was allowed and the Official Liquidator was directed to make over to the Customs Authorities the amount claimed, including interest. The Customs Authorities were also entitled to realize the balance claim from any further sums that the purchaser may pay on account of the sale of the chemicals.
( 1 ) THE question which arises in this appeal relates to the right of the Customs Authorities to claim payment of duty and other charges in respect of goods imported by a company which has subsequently gone into liquidation.
( 2 ) THE company in question is Dytron (India) Limited (hereinafter referred to as the 'company' ). The application for winding up of the company was filed by East West Construction and Builders Private Limited in 1998 (O. P No. 510 of 1988 ). Subsequent thereto the company went into liquidation and the Official Liquidator took possession of the assets of the company. The company had, prior to its liquidation, imported certain chemicals. The chemicals were stored with the Bengal Bonded warehouse without payment of Duty. The Official Liquidator took inspection of the chemicals pursuant to an order of Court. The chemicals were valued. Valuation Report was submitted. On 7th February, 1995 and 8th February, 1995 the Official Liquidator issued advertisements for sale of the chemicals describing them as the assets of the company. The terms and conditions of the sale provided that the chemicals were being sold on 'as is where is basis'. The offers were to be accompanied with 20 per cent of the bid amount. The successful bidder was to deposit the balance purchase price within a period of 90 days from the date of sale by the Court. Upon failure to make payment of the balance price the earnest money was to stand forfeited and the chemicals sold at the risk and cost of the defaulting bidder.
( 3 ) THE Subhyog Chemical Industries Limited (hereafter referred to as purchaser) was declared as the highest bidder for the chemicals at a price of Rs. 64. 25 lakh. Its offer was accepted by order dated 6th April, 1995 and it was directed to make payment of the balance consideration money within the time as prescribed by the Sale Notice and/or the terms and conditions of sale. It was made clear by the order dated 6-4-1995 that delivery was to be given only after the payment of the entire balance purchase price. A sum of Rs. 12. 20 lakh had been paid till that date.
( 4 ) THE purchaser, however, did not make payment of the balance amount and prayed for time to make payment of the same by instalments. By order dated 28-4-1995 the purchase was given liberty to deposit the balance purchase price in three instalments. It was again made clear by the said order that the delivery would be only after payment of the entire consideration money.
( 5 ) BY 23rd June, 1995 the purchaser had paid a sum of Rs. 26 lakh. It was directed to pay a further sum of Rs. 4 lakh in course of the day. The purchaser prayed that out of 826 barrels of phenol, 275 barrels of phenol should be delivered to the purchaser in part. As the purchaser had undertaken to Court that he would pay the entire balance purchase price within the time stipulated i. e. 6th July, 1995, the Official Liquidator did not oppose part delivery of 275 barrels of phenol to the petitioner. The purchaser had taken delivery of these barrels.
( 6 ) BY 5th July, 1995 the purchaser had paid Rs. 35 lakh. It prayed before the Company Court for delivery of the balance 551 barrels of phenol. The Official Liquidator was directed to allow a further delivery of 551 barrels of phenol. The purchaser undertook to pay the balance within 13th July, 1995. However, no further payment has been made by the purchaser.
( 7 ) THE Customs authorities and the Bengal Bonded Warehouse approached the Court and prayed that they should not be directed to deliver the goods to the purchaser until and unless their claims on account of Customs Duty, warehousing charges etc. were realised. The Court however, by order dated 28th June, 1995 merely directed the Official Liquidator to retain the sale proceeds in a separate account until further orders and directed the Customs Authorities and the Bengal Bonded Warehouse to deliver the goods in terms of the orders of this Court. As far as the claimants were
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
