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2023 (7) TMI 599 - HC - CustomsValidity of demand of duty as per precondition of re-export for violation of Advance Authorization Scheme - Petitioner was before NCLT in CIRP and moratorium was declared, and later to be liquidated - unexplained delay in complying with the direction in order of this Court - whether at all the import of the goods in question by the petitioner would come within the ambit of ‘security interest’ under Section 3(31) of the Act? HELD THAT:- The attempt of R1 is misconceived on a plain reading of the definition. Security interest as envisaged, must be created by virtue of a ‘transaction’ securing payment or performance of an obligation. In the present case, there is no cause of action whatsoever that would construe a ‘transaction’ inter se R1 and the petitioner, much less one which secures payment or performance of an obligation inter se the two parties. Thus, there has been no creation of security interest giving rise to any scope for action by R2 as against the petitioner - That apart, there has been no communication of any sort between R1 and the petitioner till the passing of impugned order, wherein also, the stand of R2 is that its claim cannot be entertained as the petitioner ‘is not a party to dispute adjudged by this office’. The aforesaid conclusion reflects the categoric stand of R2 that the petitioner is wholly unconnected with the customs department. However, re-export requires the permission of the customs department, and it is to this limited extent that they have a role to play. The Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (2016 Regulations) provide for a clear and transparent procedure by which the public/creditors are made aware of the proceedings before the NCLT. The proceedings of the NCLT are stated to be uploaded promptly and advertisements are issued in publications with sufficient circulation to enable the creditors to be aware of pending proceedings - It is thus necessary for the concerned creditor, whether operational or financial to file a claim within the time limit stipulated under Regulation 16 of the 2016 Regulations that is, within 30 days from date of publication of advertisements in order to secure its rights. In the present case, it is nobody’s case that R1 has filed a claim and the fact that it has not, is admitted. Consequence would have to flow from this position. Sufficient time is available for submission of claim even beyond the initial period granted, till such time the resolution process itself was complete. The customs department has not taken the benefit of the wide timeframe available - The scheme of the IB Code proceeds on the basis that the CIRP shall be time bound and adhere to the statutory time frame, in a scrupulous manner. This is made clear by the provisions of Section 12 which sets out the time limit for completion of insolvency resolution process. A second proviso has been inserted to Section 12(3) making it clear that the outer time limit for completion of CIRP shall mandatorily be within a period of 30 days from commencement of insolvency taking into account any exemptions granted and the time taken in legal proceedings in relation to such process. The Court had not found the request of that petitioner for re-shipment unacceptable and had permitted it to make a representation before the authorities seeking re-export, though on terms. That apart, an added dimension in the present case is that the assessee/R2 has been liquidated and no valid claim has been made before the authorities - the show cause notice has been issued after moratorium has been imposed by the NCLT and the order determining liability has been issued long past the date of liquidation. This, when the customs department was well aware of the assessee/R2 being before the NCLT. Thus, and all the more, would the petitioner in the present case be eligible for re-export upon payment of charges alone. It is only re-export charges that would be payable by the petitioner and not duty and penalty as computed under the impugned order, for the following reasons: i) It is an admitted position that the petitioner is an unpaid exporter. R2 has, admittedly, not settled the amounts relating to 11,000 MT of sugar. ii) Order dated 30.08.2022 has been passed on R2 post the date of liquidation. In any event, any liability under that order would attach only to R2 and not to the petitioner or R3. iii) R1, ought to have, if convinced of the violation committed by R2, secured its interest at the relevant point in time and in any event prior to 07.06.2019, when moratorium was imposed. iv) Securing of interest could have been of two kinds: a) by issuance of notice and passing of order-in-original denying the benefit of exemption granted under advance authorization scheme in a timely fashion or b) by filing a claim before the Resolution Professional appointed by the NCLT. Neither of the two options were availed. v) R1 was well aware of the proceedings pending before the NCLT even as early as in July, 2021 when order dated 09.07.2021 had been passed in the Writ Petition. Hence, the consequences from the failure to file a claim in time before the authority must be suffered. As a matter of prudence, the Departments must consider appointing a Nodal officer who would monitor the proceedings before the NCLT on a regular basis. This process does not appear very cumbersome as the proceedings are stated to be available online for periodical reference and timely action. The impugned order dated 30.08.2022 insofar as it raises a demand on duty and penalty as a pre-condition to re-export by the petitioner, is quashed - Petition allowed.
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