Insolvency Code Prevails over Customs Act: Customs Authorities' Jurisdiction Limited

The Tribunal affirmed that the Insolvency and Bankruptcy Code (IBC) prevails over the Customs Act, limiting customs authorities' jurisdiction during the insolvency process. The Tribunal held that customs authorities cannot claim title over goods or initiate recovery once liquidation commences. Additionally, the Tribunal ruled that an Intervenor cannot introduce new issues but can only support existing arguments. The appeal was dismissed, the stay was vacated, and time spent in litigation was excluded from the Liquidator's available period. The application for condonation of delay was rejected due to excessive delay.

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Issues Involved:

1. Whether the provisions of the Insolvency and Bankruptcy Code (IBC) would prevail over the Customs Act.
2. Whether the Intervenor can raise a fresh issue in the appeal instead of taking the side of one of the parties before the Court.

Issue-Wise Detailed Analysis:

1. Prevalence of IBC over the Customs Act:

The core issue was whether the provisions of the IBC would prevail over the Customs Act. The Tribunal referred to the Supreme Court's decision in the case of Sundaresh Bhatt, Liquidator of ABG Shipyard Vs. Central Board of Indirect Taxes and Customs, which clarified that once a moratorium is imposed under Section 14 or 33(5) of the IBC, the customs authorities only have limited jurisdiction to assess and determine the quantum of customs duty and other levies. They do not have the power to initiate recovery of dues by means of sale or confiscation as provided under the Customs Act. The Supreme Court concluded that the IBC would prevail over the Customs Act to the extent that customs authorities cannot claim title over the goods or issue notices to sell the goods once the liquidation process has been initiated. The Tribunal upheld this view, directing that the assets seized by the Directorate of Revenue Intelligence (DRI) must be handed over to the Liquidator.

2. Intervenor's Right to Raise Fresh Issues:

The second issue was whether the Intervenor could raise a fresh issue in the appeal instead of supporting one of the existing parties. The Tribunal cited the Supreme Court's decision in Saraswati Industrial Syndicate Ltd. Vs. Commissioner of Income Tax Haryana, which stated that the purpose of granting intervention is to allow the Intervenor to support one of the existing parties, not to introduce new issues. The Intervenor had already filed its own appeal against the findings in I.A. No. 22 of 2019, which was dismissed. Therefore, the Intervenor was not entitled to raise new arguments in the current appeal.

Conclusion:

The Tribunal dismissed the appeal, affirming that the provisions of the IBC prevail over the Customs Act concerning the seizure and recovery of assets during the insolvency process. The Tribunal also clarified that the Intervenor could not introduce new issues but could only support existing arguments. The stay granted by the Tribunal was vacated, and the time spent during litigation was excluded from the Liquidator's available period. The application for condonation of delay in filing the appeal was dismissed due to the excessive delay beyond the permissible period.

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