Appeal Dismissed, Exemption Granted with Exceptions. Delay Condoned. Auction Sale Upheld. Customs Negligence.

The appeal was dismissed, and the exemption application was granted subject to exceptions. The delay in filing the appeal was condoned. The court upheld the auction sale, noting the Customs Department's failure to identify confiscated goods, leading to the appeal's failure. The court found the Customs Department negligent and dismissed the appeal without costs.

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Issues Involved:
1. Exemption Application
2. Condonation of Delay
3. Setting Aside Auction Sale
4. Claims of Customs Department
5. Identification of Confiscated Goods
6. Confirmation of Auction Sale

Issue-wise Detailed Analysis:

1. Exemption Application:

Exemption granted subject to all just exceptions. Application stands disposed of.

2. Condonation of Delay:

This is an application praying for condonation of 69 days delay in filing the appeal. Delay condoned. Application stands disposed of.

3. Setting Aside Auction Sale:

This appeal is directed against the order dated 26th April, 2013 passed by the learned Company Judge in CA Nos.910/2008 and 1297/2008. The first application (CA No.910/2008) was filed by the Appellant (Customs Department) seeking the setting aside of the auction sale of the capital goods and raw materials belonging to M/s. Yuil Measures (India) Limited (hereinafter referred to as "YMIL") pursuant to the order dated 7th December, 2006 passed by the learned Company Judge. The second application (CA No.1297/2008) was filed by the auction purchaser, Mr. Vilas Gupta for permission to further sell the plant and machinery of YMIL purchased by him in the auction sale to enable him to generate capital for his company.

4. Claims of Customs Department:

On 18th January, 2007, the Official Liquidator informed the Court that the auction purchaser had deposited the entire amount. At this juncture, while the claims of the workmen and the creditors were being processed, the Customs Department filed CA No.910/2008 on 15th July, 2008. It was submitted in the said application that vide an order dated 4.11.1997, the Commissioner of Customs, ICD, Tuglakabad, New Delhi had held that capital goods and raw material valued at Rs. 3,63,62,019/- and Rs. 36,84,288/- respectively which had been imported by YMIL were liable to be confiscated under Section 126 of the Customs Act, 1962 subject to redemption on payment of fine. Since the amount was not paid, the capital goods and raw material were in fact confiscated. It was also ordered that Customs and Excise Duty amounting to Rs. 2,09,54,801/- be paid by YMIL, failing which interest would be charged in addition to duty. Penalty of Rs. 10 lacs was also imposed on YMIL. YMIL failed to deposit the duty for the redemption of the goods and instead filed an appeal before the Central Excise and Gold Appellate Tribunal, New Delhi (CEGAT). The CEGAT vide its order dated 18th June, 1999 upheld the order of the Commissioner of Customs.

5. Identification of Confiscated Goods:

The learned Company Judge noted that in the absence of the inventory of the goods of YMIL, which was drawn up at the time confiscation of the goods in 1997 and which was critical for considering the plea of the Customs Department for cancellation of the auction sale, there was nothing to verify that the goods which had been sold by auction sale in 2007 were in fact the very goods that were confiscated by the Customs Department in 1997. What had been produced by the Customs Department were Bills of Exchange and Packing List dated 1990 and 1991 recording 'capital goods and 'raw materials. In the absence of any inventory prepared by the Customs Department at the time of confiscation in 1997, it was not possible to verify whether the 'capital goods described in the Bills of Exchange and Packing List nearly six years earlier to the confiscation were the ones that were in fact confiscated. Another reason and in our opinion a very cogent one, which was given by the learned Company Judge, was that in the absence of any mark on said 'capital goods to indicate that they had been confiscated by the Customs Department, it was not possible to conclude that they were the 'plant and machinery which were sold to and handed over to the auction purchaser in February, 2007. The learned Company Judge concluded and we think rightly so that the laxity of the Customs Department and its failure to mark the goods confiscated by it rendered the goods incapable of identification.

6. Confirmation of Auction Sale:

We have given the matter our anxious consideration and see no reason to differ from the view taken by the learned Company Judge. The Customs Department has been not only extremely lax but appallingly negligent in the matter. It is more than evident that no inventory was drawn up by the Customs Department at the time when the goods were confiscated way back in the year 1997. The goods were not even marked for the purpose of identification at the time of confiscation. Then again, having confiscated the goods the Customs Department sat on the fence and watched the auction sale take place. The application for setting aside of the auction sale was eventually filed by it in the year 2008, i.e., eleven years after it had confiscated the goods in question. There being nothing with the Official Liquidator to indicate that the goods were confiscated by the Customs Department, the Department sought to rely upon the Bills of Exchange dated 1990 and 1991 prepared six years earlier to the confiscation, which in no way are indicative of the goods confiscated by the Department. In such circumstances, the Company Judge in our opinion rightly concluded that it was not possible to speculate at this stage that the goods sold to the auction purchaser in 2007 were in fact the very goods that were confiscated by the Customs Department in 1997. The Customs Department not only failed to inform the Official Liquidator that goods had been confiscated by it, but also could not place on record any material to identify the goods confiscated by it 11 years ago. Suffice it to state that at this stage when the workmen and secured creditors have been paid pro rata by the Official Liquidator from out of the proceeds of the auction sale, it is not possible to turn back the clock and entertain the prayer of the Customs Department to cancel the auction sale and return the auctioned goods to the Customs Department (which in any case are incapable of identification).

Conclusion:

The result is that the appeal must fail. The appeal is accordingly dismissed but in the circumstances without any order as to costs.

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