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of <h1>Tribunal confirms corporate debtor assets; Customs auction post-moratorium invalidated.</h1> <h3>Commissioner of Customs, (Preventive) West Bengal Versus Ram Swarup Industries Ltd. & Ors.</h3> Commissioner of Customs, (Preventive) West Bengal Versus Ram Swarup Industries Ltd. & Ors. - 2020 (374) E.L.T. 726 (NCLAT) Issues Involved:1. Ownership and control of imported machineries.2. Applicability of Section 18(1)(f) of the I&B Code.3. Compliance with Section 48 of the Customs Act, 1962.4. Impact of the moratorium under Section 14 of the I&B Code.5. Validity of the Customs Authority's actions post-moratorium.Detailed Analysis:Ownership and Control of Imported Machineries:The core issue revolves around whether the imported machineries are the assets of the Corporate Debtor. The machineries were imported by the Corporate Debtor in 2009 and were assessed by the Assistant Commissioner of Customs, ICD Durgapur. Despite attempts by the Customs Authority to auction these goods due to unpaid duties, the ownership of the machineries remained with the Corporate Debtor as no sale was executed under Section 48 of the Customs Act.Applicability of Section 18(1)(f) of the I&B Code:The Appellant argued that the Interim Resolution Professional (IRP) could only take control of assets recorded in the Corporate Debtor's balance sheet. They contended that the machineries were not recorded as assets due to unpaid customs duties. However, the Tribunal found that the ownership rights of the machineries belonged to the Corporate Debtor, making Section 18(1)(f) applicable. The IRP was thus entitled to take control and custody of the machineries.Compliance with Section 48 of the Customs Act, 1962:Section 48 allows Customs authorities to dispose of uncleared goods after providing a 30-day notice to the importer. The Appellant claimed compliance with this provision. However, the Tribunal noted that no sale had been executed under Section 48, and the ownership of the goods remained with the Corporate Debtor. Therefore, the Customs Authority's possession of the goods did not negate the Corporate Debtor's ownership rights.Impact of the Moratorium under Section 14 of the I&B Code:Section 14 imposes a moratorium prohibiting the alienation, transfer, or sale of the Corporate Debtor's assets during the Corporate Insolvency Resolution Process (CIRP). The Tribunal emphasized that the moratorium was declared on 8th January 2018, and any subsequent actions by the Customs Authority to auction the goods were invalid. The Customs Authority's e-auction notice issued on 15th January 2018 violated the moratorium.Validity of the Customs Authority's Actions Post-Moratorium:The Customs Authority's actions to auction the machineries post-moratorium were scrutinized. The Tribunal found that the Customs Authority was aware of the moratorium and yet proceeded with the auction, which was impermissible under Section 14 of the I&B Code. The Tribunal upheld the Adjudicating Authority's order prohibiting the Customs Authority from selling the Corporate Debtor's assets.Conclusion:The Tribunal dismissed the appeal, affirming that the imported machineries were assets of the Corporate Debtor and that the IRP had the right to take control and custody of these assets. The Customs Authority's actions to auction the goods post-moratorium were invalid, and the moratorium under Section 14 of the I&B Code took precedence over the Customs Act. The appeal was dismissed with no costs.
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