TaxTMI 
TaxTMI 
2018 (11) TMI 900
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.... payment of Central Excise duty. The export performance of KTL was reviewed and as they did not fulfil the export obligation and there was a short-fall, show cause notice was issued by the Development Commissioner for taking penal action under the Import and Export Policy. In the interregnum, M/s Andhra Pradesh State Financial Corporation (APSFC, for short) seized the plant and machinery as per the provisions of Section 29 of the State Financial Corporation Act to recover the dues and auctioned the machinery and sold the same to M/s Vijayalaxmi Enterprises; the jurisdictional Superintendent explained the provisions of Customs Bonded Warehouse to the appellant herein and the status of machinery was as if it was still abroad and out of Indian territory and the duty liability on the said goods needs to be discharged which was demanded from APSFC and Vijayalaxmi Enterprises. Show cause notice was issued to APSFC for the demand of duty as also Vijayalaxmi Enterprises. In the interregnum, Vijayalaxmi Enterprises filed a Writ petition in the Hon'ble High Court of Andhra Pradesh against APSFC for declaring them as purchaser of the goods and in a sale under Section 29 of the State Finance C....
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....nsel took us through the entire issue and submitted that as per Sec. 29 read with Sec.46 B of SFC Act, the rights of the Financial Corporation in case of default are first to be enforced; that this appellant acted bonafide in terms of provisions and recovered the amount from defaulters and as leader for the consortium, distributed the sale proceeds with other two Financial Institutions; seizure of the hypothecated machinery, auction and recovery of amount was completed even before the issuance of show cause notice by the department. It is his submission that show cause notice is wrongly issued to APSFC who is neither an importer nor a representative of the importer and hence there is no provision in the Customs Act to make a financial issue in Sec.3 of SFC Act liable or for recovery of any amount from him. It is his further submission that appellant being a secured creditor has priority over excise and custom duties as decided by the Apex Court in the case of UOI vs. Sicom Ltd & another [2009 (2) SCC 121], Rana Girders Ltd vs UOI & others [2013 (295) ELT 12 (SC)] and various other decisions. It is his submission that the appellant is entitled to recover its dues from the defaulters....
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....rein, it is submitted, is misconceived. Admittedly, the show cause notice dt.12.4.2000 was issued during the pendency of the Writ Petition No.6233/2001 filed by M/s Vijayalakshmi Enterprises. Most of the assertions made in the show cause notice dt.12.4.2000 & the impugned order dt.28.3.2002 in OR.65/2001-HYD-III/ADJN, passed by the first respondent herein have been pleaded in the counter affidavit by the defendant, filed opposing the Writ Petition filed by M/s Vijayalakshmi Enterprises in WP No.6233/2001. (2) The show cause notice dt.12.4.2000 & the impugned order dt.28.3.2002 in OR.65/2001-HYD-III/ADJN, passed by the first respondent herein issued contains several misstatements of facts and law. (a) For example, it is mentioned in paragraph 6: "Hence M/s KTL appears to be liable to pay the entire customs duties involved on the indigenously procured machinery". (b) Paragraph 9: "Hence the question of pledging the goods with the financial institutions takes place only after execution of the bond with the customs". Unless the amounts rendered are made available by the financial institutions, the question of importing the machinery of KT....
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....erefore, cannot seek to claim any transgression of law by the A.P. State Financial Corporation, especially in the teeth of the Bond executed by M/s KTL having lapsed. (5) The show cause notice dt.12.4.2000 & the impugned order dt.28.3.2002 in OR.65/2001-HYD-III/ADJN, passed by the first respondent herein is also opposed to the orders passed by the High Court of Andhra Pradesh in W.P.No.6233/2001 where under the Division Bench was pleased to hold as under, after hearing all the points. (a) Customs Act, therefore does not contain any provision that the exported machineries remain charged for the payment of the duties. (b) Once the mortgaged properties are taken over, the corporation will become the absolute owner of the property. Thereafter it can sell the same in any manner to any person. The provisions laid down in the Customs Act as referred to hereinbefore do not in any manner show that a statutory charge created over the properties and as such we are of the opinion that the submission of Sri Narasimhareddy (Counsel) to the effect that the customs authorities can still exercise the right to lien is without any substance. Furthermore the non-obstacle clause co....
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.... we are clear in our mind that the case is squarely covered by the judgment of this Court in Rana Girders Limited v. Union of India and Others [(2013) 10 SCC 746 = 2013 (295) E.L.T. 12 (S.C.)]. In view thereof, there would not be any liability on the part of the respondent/auction purchaser of the machinery to clear the customs duty payable to the appellant. We may, however, record that the High Court has specifically observed that it would not go into the question as regards the liability of the loanee vis-à-vis the State Financial Corporation and have also noted the commitment of the State Financial Corporation in the Sale Confirmation Letter that from the proceeds of the machinery, the dues payable to the appellant shall be paid. In view thereof, the present appeal is dismissed subject to the condition stated therein. Civil Appeal No. 3061 of 2015 @ SLP (C) No. 4502 of 2004. Leave granted. The appeal stand disposed of in terms of aforesaid order in Civil Appeal No. 8191 of 2003." (Emphasis Supplied) 10. In view of the foregoing, no further arguments can be heard on discharge of duty by appellant herein, as the Apex Court very clearly held that duties are pa....