Directors' personal liability for company dues requires express statutory basis; customs recovery cannot reach non-defaulter third parties.

A company has a separate legal personality, so recovery of excise or customs dues cannot be enforced against a director in the absence of an express statutory provision imposing personal liability. Section 142 of the Customs Act, 1962 read with Rule 4 of the 1995 Recovery Rules applies only against the defaulter from whom the dues are recoverable, and the Customs Act contains no equivalent to Section 179 of the Income-tax Act or Section 18 of the Central Sales Tax Act to fasten liability on directors or other third parties. The recovery notice against the director was therefore unsustainable and liable to be quashed.

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Issues: Whether the revenue could proceed against a company's director for recovery of the company's excise dues by invoking the Customs Act recovery provisions.

Analysis: A company has a separate legal personality from its directors and members. In the absence of a specific statutory provision creating personal liability, recovery proceedings against the company cannot be extended to a director merely because he held office during the relevant period. The recovery mechanism under Section 142 of the Customs Act, 1962 read with Rule 4 of the Customs (Attachment of Property of Defaulters for Recovery of Government Dues) Rules, 1995 was treated as applicable only against the defaulter, i.e. the person from whom the dues are recoverable. The Court also followed the view that the Customs Act does not contain a provision corresponding to Section 179 of the Income-tax Act, 1961 or Section 18 of the Central Sales Tax Act, 1956 so as to fasten liability on directors or other third parties.

Conclusion: The director was not liable to be proceeded against for recovery of the company's dues, and the impugned recovery notice was liable to be quashed.

Final Conclusion: Recovery proceedings could not be maintained against the petitioner in his individual capacity for the company's excise liability, as no statutory basis existed to treat him as personally liable for the dues.

Ratio Decidendi: In the absence of an express statutory provision, recovery of a company's tax or duty dues cannot be enforced against its directors or other non-defaulter third parties.

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