Court dismisses appeal due to non-compliance with Customs Act, allows application under Insolvency and Bankruptcy Code

The court dismissed the appeal, ruling that the notification dated 17.09.2015 could not be applied to goods imported on that date due to non-compliance with Section 25(4)(b) of the Customs Act. Furthermore, the court allowed the application under the Insolvency and Bankruptcy Code, finding that the claim was extinguished as it was not part of the approved resolution plan.

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Issues Involved:
1. Applicability of Notification No. 46/2015-Cus. dated 17.09.2015.
2. Compliance with Section 25(4)(b) of the Customs Act, 1962.
3. Impact of the Insolvency and Bankruptcy Code (IBC) on the claim.

Issue-wise Detailed Analysis:

1. Applicability of Notification No. 46/2015-Cus. dated 17.09.2015:

The primary issue was whether the enhanced duty rate of 12.5% as per Notification No. 46/2015-Cus. dated 17.09.2015 was applicable to the imported goods. The respondent argued that the reassessment of the bills of entry on 18.09.2015 demanding the higher rate of duty was illegal. The court noted that the inward entry of the vessel was permitted on 17.09.2015, and the bills of entry were assessed on 16.09.2015 at a duty rate of 7.5%. The proviso to Section 15 of the Customs Act was pivotal, stating that if a bill of entry is presented before the date of entry inwards, it shall be deemed to have been presented on the date of such entry inwards. Thus, the court concluded that the bills of entry dated 16.09.2015 should be deemed presented on 17.09.2015, making the notification applicable.

2. Compliance with Section 25(4)(b) of the Customs Act, 1962:

The respondent contended that the notification dated 17.09.2015 was not offered for sale on the same date, violating Section 25(4)(b) of the Customs Act, which mandates that a notification must be published and offered for sale on the date of its issue. The court referred to the Supreme Court's judgment in Param Industries Ltd., which held that both conditions of publication and offering for sale are mandatory. The court found that the notification was available for sale only on 21.09.2015, as per the RTI response, and thus, the enhanced duty could not be applied retrospectively to the goods imported on 17.09.2015.

3. Impact of the Insolvency and Bankruptcy Code (IBC) on the claim:

The respondent filed an application under Section 31 of the IBC, seeking dismissal of the appeal on the grounds that the claim was not part of the resolution plan approved by the adjudicating authority. The court referred to the Supreme Court's judgment in Ghanashyam Mishra, which clarified that once a resolution plan is approved, all claims not part of the plan stand extinguished. The court noted that the appellants did not produce evidence to show that their claim was part of the resolution plan. Consequently, the court allowed the application, holding that the claim stood extinguished and the appeal was dismissed.

Conclusion:

The court dismissed the appeal on merits, holding that the notification dated 17.09.2015 could not be applied to the goods imported on that date due to non-compliance with Section 25(4)(b) of the Customs Act. Additionally, the court allowed the application under the IBC, concluding that the claim was extinguished as it was not part of the approved resolution plan.

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