TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 359
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....g the final hearing and disposal of the present application, this Tribunal be pleased to restrain the Respondent from either auctioning, selling or appropriating the Materials owned by the Corporate Debtor which are lying at the Custom Bonded Warehouses or acting in any manner by which the liquidation estate of the Corporate Debtor will be altered to its disadvantage; (d) That this Tribunal may be pleased to grant interim and ad interim reliefs in terms of the prayer clauses (c); and (e) To pass such other orders as may be necessary in the interest of justice. 2. The brief facts of the present case those are relevant for disposal of the present IA are stated as under; 2.1 It is stated that by an order dated April 25,2019, this Tribunal ordered for Liquidation of the Corporate Debtor company, under section 33(2) of the Insolvency and Bankruptcy Code, 2016 (I & B Code) and appointed the present applicant as Liquidator of the Corporate Debtor company. 2.2 It is stated that certain material (Material) were imported by the Corporate Debtor company, presently are lying in customs bonded warehouses at certain locations. A copy of list of customs bonded warehouses has been annexed w....
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....the Companies Act, 1956, the Recovery of Debts Due to Banks and the Financial Institutions Act, 1993, the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016, be the first charge on the property of the assessee or the person, as the case may be". 2.4 It is further stated that section 142A of the Customs Act, as a result of the Amendment, provides for an express provision giving priority to the provisions of the Code over the Customs Act. Section 238 of the Code read with Amendment has a saving effect on the provisions of the Code. Therefore, it is stated that the provisions of the Code would prevail over the provisions of the Customs Act. 2.5 The relevant provisions contained in section 238 of the Code, providing a non obstante clause, read as follows:- "The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law". 2.6 It is stated the Customs Act and the Code, both contain respective non obstante provisions. Further, it is stated that....
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....ts of a corporate debtor under liquidation are to be distributed under the provisions of the Code, viz. Section 53, would deal with priority and charges of Customs Authority, over the goods/material in question, which is part of the assets of the Corporate Debtor company (in liquidation). 2.9 It is further stated that the applicant-liquidator sent a communication to the Respondent, by bringing their notice about the aforesaid provisions of law and requesting them to act in accordance with the applicable laws and follow due process while the Applicant seeks to sell or otherwise deal with the Material in the liquidation process. The applicant has annexed a copy of the said communication with the application as Exhibit C. 2.10 It is further stated that section 35(1)(b) of the Code casts a duty on the Applicant to take into his custody all the assets and property of the Corporate Debtor. The Material, being an asset of the Corporate Debtor forms part of the liquidation estate of the Corporate Debtor and, therefore, the Applicant sought to take the same into his custody. The Applicant's authorised representative visited the JNPT warehouse which is one of the Customs Bonded Warehou....
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....ble to the various statutory authorities in accordance with the provisions of section 53 of the Code. 3. Since the present application was moved by the Liquidator on 12th July 2019, this Adjudicating Authority issued formal notice to the Respondents, i.e. Central Board of Indirect Taxes and Customs (CBIC) and other respondents, i.e. 1) Office of the Chief Commissioner of Customs, Mumbai Zone; 2) Office of the Chief Commissioner of Customs, Gujarat Zone; 3) Office of the Commissioner of Customs (Export), EPCG (Monitoring Cell) Mumbai; and 4) Office of the Commissioner of Customs (Export), EPCG Section, Mumbai. 4. In response to above notices, Respondent No. 1, i.e., Central Board of Indirect Taxes and Customs appeared, through its representative Mr. Dinesh Kumar Goyal, on 6-9-2019 and sought time for engaging a counsel to argue the matter. Thereafter, the matter was adjourned to 26-9-2019. On 26-9-2019, Ms. Prajeela Nambiar, the representative of Respondent No. l appeared. Thereafter, on 3-10-2019, the representative of respondents 2 and 3 appeared and sought time to file reply. Hence, final opportunity was granted. However, no reply was filed by the respondents till 11-10-2019. ....
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....nd also perused the material available on record and judicial precedents, i.e., both the Acts, Insolvency and Bankruptcy Code, 2016 as well as Central Excise Act, on the subject, as both the statutes are having status of special law and contains non obstante clause under section 142A of the Customs Act, 1962, as well as section IIE of the Central Excise Act, 1994, and, thus, having priority for distribution of proceeds including the liquidation of assets. 9. Notwithstanding the above, the I & B Code, 2016, is also a special law and make provision for non obstante clause under section 238 of the Code, which is having overriding effect over other prevailing law and statue, time being in force. Section 238 of the Code speaks as under; "238. Provisions of this Code to override other laws The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law". 10. Further section 53 of the Code provides a Waterfall Mechanism, as under Section 53: Distribution of Assets (1) Notwithstanding anything to the contrary contained in any law enacted b....
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....ion 326 of the Companies Act, 2013. 11. In addition to the above, Hon'ble Supreme Court came to an occasion to examine similar legal position in its landmark decision in Solidaire India (P.) Ltd. (supra) and Maruti Udyog Ltd. (supra) wherein Their Lordships have pleased to observe and rule that if there are two special statues, which contain non obstante provisions, the later statute must prevail. Therefore, by virtue of section 238 of the Code being the later statute, the Applicant submits that section 238 of the Insolvency and Bankruptcy Code, 2016, being a subsequent law, the proceedings contained therein shall have overriding effect on the other proceedings of Custom Act and Central Excise Act. Therefore, by following the above stated ruling, in our humble view, the provisions of section 53 described about the Insolvency and Bankruptcy Code, which provides manner for priority to be given for making distribution of proceedings from sale of liquidation assets shall prevail over the provisions of section 11(e) of the Central Excise Act and other provisions of Customs Act. Hence, the Respondents' Department cannot legally withhold the releasing of the material/goods, which....